UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 23, 2013
The Travelers Companies, Inc.
(Exact name of registrant as specified in its charter)
Minnesota |
|
001-10898 |
|
41-0518860 |
(State or other jurisdiction of |
|
(Commission File Number) |
|
(IRS Employer Identification |
incorporation) |
|
|
|
Number) |
485 Lexington Avenue |
|
|
New York, New York |
|
10017 |
(Address of principal executive offices) |
|
(Zip Code) |
(917) 778-6000
(Registrants telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On April 23, 2013, The Travelers Companies, Inc. (the Company) issued a press release announcing the results of the Companys operations for the quarter ended March 31, 2013, and the availability of the Companys first quarter financial supplement on the Companys web site. The press release and the financial supplement are furnished as Exhibits 99.1 and 99.2 to this Report and are hereby incorporated by reference in this Item 2.02.
As provided in General Instruction B.2 of Form 8-K, the information and exhibits contained in this Form 8-K shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
|
Description |
|
|
|
99.1 |
|
Press Release, dated April 23, 2013, reporting results of operations (This exhibit is furnished and not filed.) |
99.2 |
|
First Quarter 2013 Financial Supplement of The Travelers Companies, Inc. (This exhibit is furnished and not filed.) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: April 23, 2013 |
|
THE TRAVELERS COMPANIES, INC. | ||
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|
| ||
|
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By: |
/s/ Matthew S. Furman | |
|
|
|
Name: |
Matthew S. Furman |
|
|
|
Title: |
Senior Vice President |
Exhibit 99.1
|
|
NYSE: TRV
Travelers Reports First Quarter Net Income per Diluted Share of $2.33, Up 15% from Prior Year Quarter
Record Quarterly Operating Income per Diluted Share of $2.31
Return on Equity and Operating Return on Equity of 14.1% and 15.8%, Respectively
Board of Directors Approves 9% Increase in the Companys Regular Quarterly Dividend per Share to $0.50
· Net and operating income of $896 million and $887 million, respectively, both up 11% from prior year quarter.
· Continued improvement in underlying underwriting margins in all segments.
· Written rate gains continued to exceed expected loss cost trends in all segments. Renewal rate change of 8% in Business Insurance, including nearly 10% in Commercial Accounts.
· Repurchased 3.7 million shares for $300 million in the quarter.
· Book value per share of $68.00, up 7% from end of prior year quarter and 1% from year-end 2012.
New York, April 23, 2013 The Travelers Companies, Inc. today reported net income of $896 million, or $2.33 per diluted share, for the quarter ended March 31, 2013, compared to $806 million, or $2.02 per diluted share, in the prior year quarter. Operating income in the current quarter was $887 million, or $2.31 per diluted share, compared to $801 million, or $2.01 per diluted share, in the prior year quarter. The increase in net and operating income in the current quarter compared to the prior year quarter resulted from higher underlying underwriting margins (i.e., excluding net favorable prior year reserve development and catastrophe losses) and lower catastrophe losses, which more than offset lower net investment income and lower net favorable prior year reserve development.
Consolidated Highlights
($ in millions, except for per share amounts, |
|
Three Months Ended March 31, |
| ||||||
and after-tax, except for premiums & revenues) |
|
2013 |
|
2012 |
|
Change |
| ||
Net written premiums |
|
$ |
5,597 |
|
$ |
5,497 |
|
2 |
% |
|
|
|
|
|
|
|
| ||
Total revenues |
|
$ |
6,328 |
|
$ |
6,392 |
|
(1 |
) |
|
|
|
|
|
|
|
| ||
Operating income |
|
$ |
887 |
|
$ |
801 |
|
11 |
|
|
|
|
|
|
|
|
| ||
per diluted share |
|
$ |
2.31 |
|
$ |
2.01 |
|
15 |
|
|
|
|
|
|
|
|
| ||
Net income |
|
$ |
896 |
|
$ |
806 |
|
11 |
|
|
|
|
|
|
|
|
| ||
per diluted share |
|
$ |
2.33 |
|
$ |
2.02 |
|
15 |
|
|
|
|
|
|
|
|
| ||
Diluted weighted average shares outstanding |
|
381.9 |
|
395.8 |
|
(4 |
) | ||
|
|
|
|
|
|
|
| ||
GAAP combined ratio |
|
88.5 |
% |
92.2 |
% |
(3.7 |
)pts | ||
|
|
|
|
|
|
|
| ||
Operating return on equity |
|
15.8 |
% |
14.7 |
% |
1.1 |
pts | ||
|
|
|
|
|
|
|
| ||
Return on equity |
|
14.1 |
% |
13.1 |
% |
1.0 |
pts | ||
|
|
|
|
|
|
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As of March 31, |
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|
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2013 |
|
2012 |
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Change |
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Book value per share |
|
$ |
68.00 |
|
$ |
63.81 |
|
7 |
% |
|
|
|
|
|
|
|
| ||
Adjusted book value per share |
|
$ |
60.39 |
|
$ |
56.53 |
|
7 |
|
See Glossary of Financial Measures for definitions and the statistical supplement for additional financial data. |
We are pleased to report our highest quarterly operating income per diluted share since Travelers initial public offering in 2002, commented Jay Fishman, Chairman and Chief Executive Officer. Operating income of $887 million and operating return on equity of 15.8% reflect continued improvement in our underlying underwriting margins primarily due to the pricing and underwriting actions we have taken across all segments. Our high quality investment portfolio continued to perform well, with returns modestly declining in line with our expectations given continued low interest rates.
We continue to be encouraged by the fact that in each of our segments renewal pricing exceeded expected loss cost trends and retentions remained stable. In Business Insurance, renewal rate change of 8% was generally consistent with levels achieved over the last five quarters and new business volumes modestly improved. In Financial, Professional and International Insurance, renewal rate change was consistent with the most recent quarter and improved meaningfully from a year ago, driven primarily by our Management Liability business. In Personal Insurance, we continue to achieve the improvements in pricing and terms and conditions needed to improve profitability.
We are very pleased with the current quarter results and remain committed to our strategy of improving returns through selectively seeking price increases and improved terms and conditions given the continued low interest rates and uncertain weather patterns, concluded Mr. Fishman.
First Quarter 2013 Consolidated Results
|
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Three Months Ended March 31, |
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|
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2013 |
|
2012 |
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2013 |
|
2012 |
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($ in millions) |
|
Pre-tax |
|
After-tax |
| ||||||||
Underwriting gain |
|
$ |
602 |
|
$ |
393 |
|
$ |
385 |
|
$ |
248 |
|
Underwriting gain includes: |
|
|
|
|
|
|
|
|
| ||||
Net favorable prior year reserve development |
|
231 |
|
304 |
|
154 |
|
200 |
| ||||
Catastrophes, net of reinsurance |
|
(99 |
) |
(168 |
) |
(65 |
) |
(109 |
) | ||||
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|
|
|
|
|
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|
|
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Net investment income |
|
670 |
|
740 |
|
542 |
|
593 |
| ||||
|
|
|
|
|
|
|
|
|
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Other, including interest expense |
|
(62 |
) |
(66 |
) |
(40 |
) |
(40 |
) | ||||
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|
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|
|
|
|
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Operating income |
|
1,210 |
|
1,067 |
|
887 |
|
801 |
| ||||
Net realized investment gains |
|
10 |
|
10 |
|
9 |
|
5 |
| ||||
Income before income taxes |
|
$ |
1,220 |
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$ |
1,077 |
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|
|
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Net income |
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|
|
|
|
$ |
896 |
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$ |
806 |
| ||
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|
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|
|
|
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|
| ||||
GAAP combined ratio |
|
88.5 |
% |
92.2 |
% |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
GAAP combined ratio excluding incremental impact of direct to consumer initiative |
|
87.8 |
% |
91.4 |
% |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
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Impact on GAAP combined ratio |
|
|
|
|
|
|
|
|
| ||||
Net favorable prior year reserve development |
|
(4.1 |
)pts |
(5.5 |
)pts |
|
|
|
| ||||
Catastrophes, net of reinsurance |
|
1.8 |
pts |
3.1 |
pts |
|
|
|
|
Operating income of $887 million after-tax increased $86 million, or 11 percent, from the prior year quarter primarily reflecting higher underlying underwriting margins and lower catastrophe losses, partially offset by lower net investment income and lower net favorable prior year reserve development. Included in net prior year reserve development in the current quarter was a $42 million pre-tax ($27 million after-tax) charge that was precipitated by legislation in New York enacted during the first quarter 2013 related to the New York Fund for Reopened Cases for workers compensation.
The underwriting gain in the current quarter reflected a GAAP combined ratio of 88.5 percent, as compared to 92.2 percent in the prior year quarter. This improvement of 3.7 points in the combined ratio resulted from higher underlying underwriting margins (3.8 points) and lower catastrophe losses (1.3 points), partially offset by lower net favorable prior year reserve development (1.4 points). Catastrophe losses in the current quarter were due to tornadoes and hail storms in the Southeastern United States. Net favorable prior year reserve development in the current quarter occurred in all segments.
The current quarter underlying GAAP combined ratio was 90.8 percent, as compared to 94.6 percent in the prior year quarter. This improvement of 3.8 points primarily resulted from earned rate increases exceeding loss cost trends in each segment.
Total revenues of $6.328 billion in the current quarter decreased 1 percent from the prior year quarter. Within total revenues, net investment income decreased from the prior year quarter due to lower real estate partnership and private equity returns in the non-fixed income portfolio and lower reinvestment rates in the fixed income portfolio.
Net written premiums of $5.597 billion in the current quarter increased 2 percent from the prior year quarter. Renewal rate gains continued in all segments and retention rates remained strong and generally consistent with recent quarters. New business volumes in Business Insurance increased from the prior year quarter but decreased in Financial, Professional & International Insurance and Personal Insurance.
Capital Management
During the quarter, we repaid $500 million of maturing debt from existing holding company liquidity and returned approximately $500 million in capital to our shareholders through share repurchases and dividends, commented Jay S. Benet, Vice Chairman and Chief Financial Officer. We announced today a 9% increase to our quarterly dividend per share, which brings the compound annual growth rate of our quarterly dividend per share to approximately 10% since our 2004 merger.
During the first quarter of 2013, the company repurchased 3.7 million shares under its existing share repurchase authorization at a total cost of $300 million, leaving $1.859 billion of capacity under that authorization for future share repurchases. Shareholders equity was $25.596 billion at the end of the first quarter of 2013, a 1 percent increase from year-end 2012. Included in shareholders equity were after-tax net unrealized investment gains of $2.864 billion, compared to $3.103 billion at year-end 2012. Adjusted shareholders equity (which excludes after-tax net unrealized investment gains) increased 2 percent from year-end 2012. Statutory surplus was $20.692 billion, and the ratio of debt-to-capital (excluding after-tax net unrealized investment gains) was 20.5 percent, within the companys target range of 15 percent to 25 percent.
The Board of Directors declared a regular quarterly dividend of $0.50 per share. This dividend, which is $0.04 higher than the last regular quarterly dividend, is payable June 28, 2013, to shareholders of record as of the close of business June 10, 2013.
Business Insurance Segment Financial Results
In Business Insurance, our underlying underwriting results continued to increase meaningfully as evidenced by the four point improvement in the underlying combined ratio, commented Brian MacLean, President and Chief Operating Officer, and we achieved a record level of net written premiums. Production results were very strong and generally consistent with the fourth quarter. Written rate gains were between 6% and 10% across all lines, led by Workers Compensation and Commercial Auto, retentions were stable and new business levels improved.
|
|
Three Months Ended March 31, |
| ||||||||||
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
| ||||
($ in millions) |
|
Pre-tax |
|
After-tax |
| ||||||||
Underwriting gain |
|
$ |
298 |
|
$ |
284 |
|
$ |
188 |
|
$ |
177 |
|
Underwriting gain includes: |
|
|
|
|
|
|
|
|
| ||||
Net favorable prior year reserve development |
|
113 |
|
248 |
|
75 |
|
162 |
| ||||
Catastrophes, net of reinsurance |
|
(35 |
) |
(53 |
) |
(23 |
) |
(34 |
) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Net investment income |
|
487 |
|
532 |
|
394 |
|
425 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other |
|
13 |
|
14 |
|
8 |
|
10 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
|
$ |
798 |
|
$ |
830 |
|
$ |
590 |
|
$ |
612 |
|
|
|
|
|
|
|
|
|
|
| ||||
GAAP combined ratio |
|
89.4 |
% |
89.6 |
% |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Impact on GAAP combined ratio |
|
|
|
|
|
|
|
|
| ||||
Net favorable prior year reserve development |
|
(3.9 |
)pts |
(8.6 |
)pts |
|
|
|
| ||||
Catastrophes, net of reinsurance |
|
1.2 |
pts |
1.8 |
pts |
|
|
|
|
Operating income of $590 million after-tax decreased $22 million, or 4 percent, from the prior year quarter primarily reflecting lower net favorable prior year reserve development and lower net investment income, partially offset by higher underlying underwriting margins and lower catastrophe losses. Included in net prior year reserve development in the current quarter was a $42 million pre-tax ($27 million after-tax) charge that was precipitated by legislation in New York enacted during the first quarter 2013 related to the New York Fund for Reopened Cases for workers compensation.
The underwriting gain in the current quarter reflected a GAAP combined ratio of 89.4 percent, as compared to 89.6 percent in the prior year quarter. This improvement of 0.2 points in the combined ratio resulted from higher underlying underwriting margins (4.3 points) and lower catastrophe losses (0.6 points), mostly offset by lower net favorable prior year reserve development (4.7 points). Net favorable prior year reserve development in the current quarter primarily resulted from better than expected loss experience in the general liability product line for accident years 2010 and prior and in the property product line for accident years 2010 through 2012.
The current quarter underlying GAAP combined ratio was 92.1 percent, as compared to 96.4 percent in the prior year quarter. This improvement of 4.3 points primarily resulted from earned rate increases exceeding loss cost trends.
Business Insurance net written premiums of $3.260 billion in the current quarter increased 5 percent from the prior year quarter primarily due to continued increases in renewal premium change. Retention rates remained strong, and new business volumes increased from the prior year quarter.
Select Accounts
· Net written premiums of $724 million increased 1 percent from the prior year quarter primarily due to higher renewal premium change.
· Renewal premium change remained strong and was driven by both renewal rate change and higher insured exposures.
· Retention rates increased from the prior year quarter.
· New business volumes decreased from the prior year quarter.
Commercial Accounts
· Net written premiums of $908 million increased 5 percent from the prior year quarter primarily due to higher renewal premium change.
· Renewal premium change remained strong and was primarily driven by renewal rate change.
· Retention rates remained at a high level and increased from the prior year quarter.
· New business volumes increased from the prior year quarter.
Other Business Insurance (Includes Industry-Focused Underwriting, Target Risk Underwriting and Specialized Distribution)
· Net written premiums of $1.351 billion increased 5 percent from the prior year quarter primarily due to higher renewal premium change.
· Renewal premium change remained strong and was primarily driven by renewal rate change.
· Retention rates remained at a high level and increased from the prior year quarter.
· New business volumes increased from the prior year quarter.
National Accounts
· Net written premiums of $277 million increased 18 percent from the prior year quarter due to continued strong renewal premium change, high retention rates and favorable audit and retrospective premiums. In addition, growth in workers compensation residual market pools also contributed to premium growth.
Financial, Professional & International Insurance Segment Financial Results
In our Financial, Professional & International Insurance segment, the combined ratio continued to improve, dropping to 82.3% in the first quarter of 2013, commented MacLean. The underlying loss ratio for the quarter benefited from underwriting actions across the segment and increased rate in our Management Liability businesses, and has now improved sequentially for nine consecutive quarters. Net written premiums in the segment increased 7% from the first quarter
of 2012, primarily driven by favorable reinsurance costs, as well as increased rate in our Management Liability businesses.
|
|
Three Months Ended March 31, |
| ||||||||||
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
| ||||
($ in millions) |
|
Pre-tax |
|
After-tax |
| ||||||||
Underwriting gain |
|
$ |
128 |
|
$ |
88 |
|
$ |
85 |
|
$ |
59 |
|
Underwriting gain includes: |
|
|
|
|
|
|
|
|
| ||||
Net favorable prior year reserve development |
|
58 |
|
46 |
|
40 |
|
31 |
| ||||
Catastrophes, net of reinsurance |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net investment income |
|
92 |
|
104 |
|
75 |
|
85 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other |
|
5 |
|
8 |
|
3 |
|
5 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
|
$ |
225 |
|
$ |
200 |
|
$ |
163 |
|
$ |
149 |
|
|
|
|
|
|
|
|
|
|
| ||||
GAAP combined ratio |
|
82.3 |
% |
87.8 |
% |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Impact on GAAP combined ratio |
|
|
|
|
|
|
|
|
| ||||
Net favorable prior year reserve development |
|
(7.8 |
)pts |
(6.1 |
)pts |
|
|
|
| ||||
Catastrophes, net of reinsurance |
|
|
pts |
|
pts |
|
|
|
|
Operating income of $163 million after-tax increased $14 million, or 9 percent, from the prior year quarter primarily reflecting higher underlying underwriting margins and higher net favorable prior year reserve development, partially offset by lower net investment income.
The underwriting gain in the current quarter reflected a GAAP combined ratio of 82.3 percent, as compared to 87.8 percent in the prior year quarter. This improvement of 5.5 points in the combined ratio resulted from higher underlying underwriting margins (3.8 points) and higher net favorable prior year reserve development (1.7 points). Net favorable prior year reserve development in the current quarter primarily resulted from better than expected loss experience in the Surety business for accident years 2006 through 2008 and 2010 within Bond & Financial Products, as well as in several lines of business within International.
The current quarter underlying GAAP combined ratio was 90.1 percent, as compared to 93.9 percent in the prior year quarter. This improvement of 3.8 points primarily resulted from earned rate increases exceeding loss cost trends, as well as a lower level of large losses within International.
Financial, Professional & International Insurance net written premiums of $647 million increased 7 percent from the prior year quarter primarily driven by Bond & Financial Products.
Retention rates, renewal premium changes and new business volumes, as discussed below, exclude the surety line of business as surety products are generally sold on a non-recurring, project-specific basis.
Bond & Financial Products
· Net written premiums of $395 million increased 11 percent from the prior year quarter primarily driven by lower reinsurance costs (resulting from price decreases and slightly higher retention levels), as well as renewal rate increases in Management Liability.
· Renewal premium change remained strong and continued to increase from recent quarters primarily driven by renewal rate change.
· Retention rates were down slightly from the prior year quarter but remained strong and consistent with recent quarters.
· New business volumes, while below the prior year quarter, increased from recent quarters.
International
· Net written premiums of $252 million increased 2 percent from the prior year quarter.
· Renewal premium change was essentially flat as the impact of positive renewal rate change was offset by lower insured exposures.
· Retention rates improved slightly from the prior year quarter.
· New business volumes decreased from the prior year quarter.
Personal Insurance Segment Financial Results
In Personal Insurance, underlying underwriting margins in both Auto and Homeowners improved, commented MacLean. Pricing gains and retention rates were consistent with recent quarters in both products, and new business levels, while lower than historical norms, were generally consistent with the fourth quarter of 2012. We were pleased that earned rate increases in Auto continued to exceed loss cost trends and we will continue to execute on our underwriting and product strategies.
|
|
Three Months Ended March 31, |
| ||||||||||
|
|
2013 |
|
2012 |
|
2013 |
|
2012 |
| ||||
($ in millions) |
|
Pre-tax |
|
After-tax |
| ||||||||
Underwriting gain |
|
$ |
176 |
|
$ |
21 |
|
$ |
112 |
|
$ |
12 |
|
Underwriting gain includes: |
|
|
|
|
|
|
|
|
| ||||
Net favorable prior year reserve development |
|
60 |
|
10 |
|
39 |
|
7 |
| ||||
Catastrophes, net of reinsurance |
|
(64 |
) |
(115 |
) |
(42 |
) |
(75 |
) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Net investment income |
|
91 |
|
104 |
|
73 |
|
83 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other |
|
18 |
|
19 |
|
12 |
|
13 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
|
$ |
285 |
|
$ |
144 |
|
$ |
197 |
|
$ |
108 |
|
|
|
|
|
|
|
|
|
|
| ||||
GAAP combined ratio |
|
89.4 |
% |
97.8 |
% |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
GAAP combined ratio excluding incremental impact of direct to consumer initiative |
|
87.5 |
% |
95.7 |
% |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Impact on GAAP combined ratio |
|
|
|
|
|
|
|
|
| ||||
Net favorable prior year reserve development |
|
(3.3 |
)pts |
(0.5 |
)pts |
|
|
|
| ||||
Catastrophes, net of reinsurance |
|
3.5 |
pts |
6.0 |
pts |
|
|
|
|
Operating income of $197 million after-tax increased $89 million, or 82 percent, from the prior year quarter primarily reflecting higher underlying underwriting margins, lower catastrophe losses and higher net favorable prior year reserve development, partially offset by lower net investment income.
The underwriting gain in the current quarter reflected a GAAP combined ratio of 89.4 percent, as compared to 97.8 percent in the prior year quarter. This improvement of 8.4 points in the combined ratio was primarily due to higher underlying underwriting margins (3.1 points), higher net favorable prior year reserve development (2.8 points) and lower catastrophe losses (2.5 points). The net favorable prior year reserve development in the current quarter primarily resulted from better than expected loss experience in Homeowners & Other for accident year 2011.
The current quarter underlying GAAP combined ratio was 89.2 percent, as compared to 92.3 percent in the prior year quarter. This improvement of 3.1 points was primarily due to earned rate increases exceeding loss cost trends in both Automobile and Homeowners & Other, as well as lower non-catastrophe weather-related losses.
Personal Insurance net written premiums of $1.690 billion decreased 6 percent from the prior year quarter primarily due to lower new business volumes, largely as a result of the companys pricing strategy, increasing deductibles and other profitability improvement initiatives.
Agency Automobile and Agency Homeowners & Other, as discussed below, represent business sold through agents, brokers and other intermediaries and exclude direct to consumer.
Agency Automobile
· Net written premiums of $831 million decreased 8 percent from the prior year quarter.
· Policies in force decreased 11 percent from the prior year quarter.
· Renewal premium change remained strong and consistent with recent quarters.
· Retention rates remained strong and generally consistent with recent quarters.
· New business volumes, while below the prior year quarter, were generally consistent with the most recent quarter.
Agency Homeowners & Other
· Net written premiums of $820 million decreased 4 percent from the prior year quarter.
· Policies in force decreased 8 percent from the prior year quarter.
· Renewal premium change remained strong and consistent with recent quarters.
· Retention rates remained very strong and consistent with recent quarters.
· New business volumes, while below the prior year quarter, were generally consistent with the most recent quarter.
Financial Supplement and Conference Call
The information in this press release should be read in conjunction with a financial supplement that is available on our website at www.travelers.com. Travelers management will discuss the contents of this release and other relevant topics via webcast at 9:30 a.m. Eastern (8:30 a.m. Central) on Tuesday, April 23, 2013. Prior to the webcast, a slide presentation pertaining to the quarterly earnings will be available on the companys website. Following the live event, an audio playback of the webcast and the slide presentation will be available on the companys website.
To view the slides or to listen to the webcast or the playback, visit the Webcasts & Presentations section of the Travelers investor relations website at http://investor.travelers.com.
About Travelers
The Travelers Companies, Inc. (NYSE: TRV) is a leading provider of property casualty insurance for auto, home and business. The companys diverse business lines offer its customers a wide range of coverage sold primarily through independent agents and brokers. A component of the Dow Jones Industrial Average, Travelers has more than 30,000 employees and operations in the United States and selected International markets. For more information, visit www.travelers.com.
From time to time, Travelers may use its website and/or social media outlets, such as Facebook and Twitter, as distribution channels of material company information. Financial and other important information regarding the company is routinely accessible through and posted on our website at http://investor.travelers.com, our Facebook page at https://www.facebook.com/travelers and our Twitter account (@TRV_Insurance) at https://twitter.com/TRV_Insurance. In addition, you may automatically receive email alerts and other information about Travelers when you enroll your email address by visiting the Email Alert Service section at http://investor.travelers.com.
Travelers has organized its businesses into the following reportable business segments:
Business Insurance: The Business Insurance segment offers a broad array of property and casualty insurance and insurance-related services to its clients primarily in the United States. Business Insurance is organized into the following six groups, which collectively comprise Business Insurance Core operations: Select Accounts; Commercial Accounts; National Accounts; Industry-Focused Underwriting including Construction, Technology, Public Sector Services, Oil & Gas and Agribusiness; Target Risk Underwriting including National Property, Inland Marine, Ocean Marine, Excess Casualty, Boiler & Machinery and Global Partner Services; and Specialized Distribution including Northland and National Programs. Business Insurance also includes the Special Liability Group (which manages the companys asbestos and environmental liabilities) and the assumed reinsurance and certain other runoff operations, which collectively are referred to as Business Insurance Other.
Financial, Professional & International Insurance: The Financial, Professional & International Insurance segment includes surety and financial liability coverages, which primarily use credit-based underwriting processes, as well as property and casualty products that are primarily marketed on a domestic basis in the United Kingdom, Canada and the Republic of Ireland, and on an international basis through Lloyds. The businesses in Financial, Professional & International Insurance are Bond & Financial Products and International.
Personal Insurance: The Personal Insurance segment writes a broad range of property and casualty insurance covering individuals personal risks. The primary products of automobile and homeowners insurance are complemented by a broad suite of related coverages.
* * * * *
Forward-Looking Statements
This press release contains, and management may make, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. Words such as may, will, should, likely, anticipates, expects, intends, plans, projects, believes, estimates and similar expressions are used to identify these forward-looking statements. Specifically, statements about the companys share repurchase plans, expected margin improvement, future pension plan contributions and the potential impact of investment markets and other economic conditions on the companys investment portfolio and underwriting results, among others, are forward looking, and the company may also make forward-looking statements about, among other things:
· its results of operations and financial condition (including, among other things, premium volume, premium rates, net and operating income, investment income and performance, loss costs, return on equity, and expected current returns and combined ratios);
· the sufficiency of the companys asbestos and other reserves;
· the impact of emerging claims issues as well as other insurance and non-insurance litigation;
· the cost and availability of reinsurance coverage;
· catastrophe losses;
· the impact of investment, economic and underwriting market conditions; and
· strategic initiatives.
The company cautions investors that such statements are subject to risks and uncertainties, many of which are difficult to predict and generally beyond the companys control, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.
Some of the factors that could cause actual results to differ include, but are not limited to, the following:
· catastrophe losses could materially and adversely affect the companys results of operations, its financial position and/or liquidity, and could adversely impact the companys ratings, the companys ability to raise capital and the availability and cost of reinsurance;
· during or following a period of financial market disruption or economic downturn, the companys business could be materially and adversely affected;
· if actual claims exceed the companys claims and claim adjustment expense reserves, or if changes in the estimated level of claims and claim adjustment expense reserves are necessary, the companys financial results could be materially and adversely affected;
· the companys investment portfolio may suffer reduced returns or material realized or unrealized losses;
· the companys business could be harmed because of its potential exposure to asbestos and environmental claims and related litigation;
· 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 companys business are uncertain;
· the intense competition that the company faces could harm its ability to maintain or increase its business volumes and profitability;
· the company may not be able to collect all amounts due to it from reinsurers, and reinsurance coverage may not be available to the company in the future at commercially reasonable rates or at all;
· the company is exposed to credit risk in certain of its business operations;
· within the United States, the companys businesses are heavily regulated by the states in which it conducts business, including licensing and supervision, and changes in regulation may reduce the companys profitability and limit its growth;
· changes in federal regulation could impose significant burdens on the company and otherwise adversely impact its results;
· a downgrade in the companys claims-paying and financial strength ratings could adversely impact the companys business volumes, adversely impact the companys ability to access the capital markets and increase the companys borrowing costs;
· the inability of the companys insurance subsidiaries to pay dividends to the companys holding company in sufficient amounts would harm the companys ability to meet its obligations, pay future shareholder dividends or make future share repurchases;
· disruptions to the companys relationships with its independent agents and brokers could adversely affect the company;
· the companys efforts to develop new products or expand in targeted markets may not be successful and may create enhanced risks;
· changes in U.S. tax laws or in the tax laws of other jurisdictions in which the company operates could adversely impact the company;
· the company may be adversely affected if its pricing and capital models provide materially different indications than actual results;
· the companys business success and profitability depend, in part, on effective information technology systems and on continuing to develop and implement improvements in technology;
· if the company experiences difficulties with technology, data security and/or outsourcing relationships, the companys ability to conduct its business could be negatively impacted;
· the company is subject to a number of risks associated with its business outside the United States;
· new regulations outside of the U.S., including in the European Union, could adversely impact the companys results of operations and limit its growth;
· acquisitions and integration of acquired businesses may result in operating difficulties and other unintended consequences;
· changes to existing accounting standards may adversely impact the companys reported results;
· the company could be adversely affected if its controls to ensure compliance with guidelines, policies and legal and regulatory standards are not effective;
· the companys businesses may be adversely affected if it is unable to hire and retain qualified employees;
· loss of or significant restriction on the use of credit scoring in the pricing and underwriting of Personal Insurance products could reduce the companys future profitability; and
· the companys repurchase plans depend on a variety of factors, including the companys financial position, earnings, share price, catastrophe losses, maintaining capital levels commensurate with the companys desired ratings from independent rating agencies, funding of the companys qualified pension plan, capital requirements of the companys operating subsidiaries, legal requirements, regulatory constraints, other investment opportunities (including mergers and acquisitions), market conditions and other factors.
Our forward-looking statements speak only as of the date of this press release or as of the date they are made, and we undertake no obligation to update forward-looking statements. For a more detailed discussion of these factors, see the information under the captions Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations in our most recent annual report on Form 10-K and our quarterly report on Form 10-Q filed with the Securities and Exchange Commission.
*****
GLOSSARY OF FINANCIAL MEASURES AND RECONCILIATIONS OF NON-GAAP MEASURES TO GAAP MEASURES
The following measures are used by the companys management to evaluate financial performance against historical results and establish targets on a consolidated basis. In some cases, these measures are considered non-GAAP financial measures under applicable SEC rules because they are not displayed as separate line items in the consolidated financial statements or are not required to be disclosed in the notes to financial statements or, in some cases, include or exclude certain items not ordinarily included or excluded in the most comparable GAAP financial measure. Reconciliations of non-GAAP measures to their most directly comparable GAAP measures also follow.
In the opinion of the companys management, a discussion of these measures provides investors, financial analysts, rating agencies and other financial statement users with a better understanding of the significant factors that comprise the companys periodic results of operations and how management evaluates the companys financial performance. Internally, the companys management uses these measures to evaluate performance against historical results, to establish financial targets on a consolidated basis and for other reasons, which are discussed below.
Some of these measures exclude net realized investment gains (losses), net of tax, and/or net unrealized investment gains (losses), net of tax, which can be significantly impacted by both discretionary and other economic factors and are not necessarily indicative of operating trends.
Other companies may calculate these measures differently, and, therefore, their measures may not be comparable to those used by the companys management.
RECONCILIATION OF OPERATING INCOME AND CERTAIN OTHER NON-GAAP MEASURES TO NET INCOME
Operating income is net income excluding the after-tax impact of net realized investment gains (losses) and discontinued operations. Management uses operating income to analyze each segments performance and as a tool in making business decisions. Financial statement users also consider operating income when analyzing the results and trends of insurance companies. Operating earnings per share is operating income on a per common share basis.
Reconciliation of Operating Income less Preferred Dividends to Net Income
|
|
Three Months Ended |
| ||||
|
|
March 31, |
| ||||
($ in millions, after-tax) |
|
2013 |
|
2012 |
| ||
|
|
|
|
|
| ||
Operating income |
|
$ |
887 |
|
$ |
801 |
|
Net realized investment gains |
|
9 |
|
5 |
| ||
Net income |
|
$ |
896 |
|
$ |
806 |
|
|
|
Twelve Months Ended December 31, |
| ||||||||||||||||||||||
($ in millions, after-tax) |
|
2012 |
|
2011 |
|
2010 |
|
2009 |
|
2008 |
|
2007 |
|
2006 |
|
2005 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Operating income, less preferred dividends |
|
$ |
2,441 |
|
$ |
1,389 |
|
$ |
3,040 |
|
$ |
3,597 |
|
$ |
3,191 |
|
$ |
4,496 |
|
$ |
4,195 |
|
$ |
2,020 |
|
Preferred dividends |
|
|
|
1 |
|
3 |
|
3 |
|
4 |
|
4 |
|
5 |
|
6 |
| ||||||||
Operating income |
|
2,441 |
|
1,390 |
|
3,043 |
|
3,600 |
|
3,195 |
|
4,500 |
|
4,200 |
|
2,026 |
| ||||||||
Net realized investment gains (losses) |
|
32 |
|
36 |
|
173 |
|
22 |
|
(271 |
) |
101 |
|
8 |
|
35 |
| ||||||||
Income from continuing operations |
|
2,473 |
|
1,426 |
|
3,216 |
|
3,622 |
|
2,924 |
|
4,601 |
|
4,208 |
|
2,061 |
| ||||||||
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(439 |
) | ||||||||
Net income |
|
$ |
2,473 |
|
$ |
1,426 |
|
$ |
3,216 |
|
$ |
3,622 |
|
$ |
2,924 |
|
$ |
4,601 |
|
$ |
4,208 |
|
$ |
1,622 |
|
Reconciliation of Operating Earnings per Share to Net Income per Share on a Basic and Diluted Basis
|
|
Three Months Ended |
| ||||
|
|
March 31, |
| ||||
|
|
2013 |
|
2012 |
| ||
|
|
|
|
|
| ||
Basic earnings per share |
|
|
|
|
| ||
Operating income |
|
$ |
2.33 |
|
$ |
2.03 |
|
Net realized investment gains |
|
0.03 |
|
0.01 |
| ||
Net income |
|
$ |
2.36 |
|
$ |
2.04 |
|
|
|
|
|
|
| ||
Diluted earnings per share |
|
|
|
|
| ||
Operating income |
|
$ |
2.31 |
|
$ |
2.01 |
|
Net realized investment gains |
|
0.02 |
|
0.01 |
| ||
Net income |
|
$ |
2.33 |
|
$ |
2.02 |
|
Reconciliation of Operating Income by Segment to Total Operating Income
|
|
Three Months Ended |
| ||||
|
|
March 31, |
| ||||
($ in millions, after-tax) |
|
2013 |
|
2012 |
| ||
|
|
|
|
|
| ||
Business Insurance |
|
$ |
590 |
|
$ |
612 |
|
Financial, Professional & International Insurance |
|
163 |
|
149 |
| ||
Personal Insurance |
|
197 |
|
108 |
| ||
Total segment operating income |
|
950 |
|
869 |
| ||
Interest Expense and Other |
|
(63 |
) |
(68 |
) | ||
Total operating income |
|
$ |
887 |
|
$ |
801 |
|
RECONCILIATION OF ADJUSTED SHAREHOLDERS EQUITY TO SHAREHOLDERS EQUITY AND OPERATING RETURN ON EQUITY TO RETURN ON EQUITY
Average shareholders equity is (a) the sum of total shareholders equity excluding preferred stock at the beginning and end of each of the quarters for the period presented divided by (b) the number of quarters in the period presented times two. Adjusted shareholders equity is shareholders equity excluding net unrealized investment gains (losses), net of tax, net realized investment gains (losses), net of tax, for the period presented, preferred stock and discontinued operations. Adjusted average shareholders equity is average shareholders equity excluding net unrealized investment gains (losses), net of tax, for all quarters included in the calculation and, for each quarterly period included in the calculation, that quarters net realized investment gains (losses), net of tax.
Reconciliation of Adjusted Shareholders Equity to Shareholders Equity
|
|
As of March 31, |
| ||||
($ in millions) |
|
2013 |
|
2012 |
| ||
|
|
|
|
|
| ||
Adjusted shareholders equity |
|
$ |
22,723 |
|
$ |
22,029 |
|
Net unrealized investment gains, net of tax |
|
2,864 |
|
2,838 |
| ||
Net realized investment gains, net of tax |
|
9 |
|
5 |
| ||
Shareholders equity |
|
$ |
25,596 |
|
$ |
24,872 |
|
|
|
As of December 31, |
| |||||||||||||||||||||||||
($ in millions) |
|
2012 |
|
2011 |
|
2010 |
|
2009 |
|
2008 |
|
2007 |
|
2006 |
|
2005 |
|
2004 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Adjusted shareholders equity |
|
$ |
22,270 |
|
$ |
21,570 |
|
$ |
23,375 |
|
$ |
25,458 |
|
$ |
25,647 |
|
$ |
25,783 |
|
$ |
24,545 |
|
$ |
22,227 |
|
$ |
20,087 |
|
Net unrealized investment gains (losses), net of tax |
|
3,103 |
|
2,871 |
|
1,859 |
|
1,856 |
|
(146 |
) |
620 |
|
453 |
|
327 |
|
866 |
| |||||||||
Net realized investment gains (losses), net of tax |
|
32 |
|
36 |
|
173 |
|
22 |
|
(271 |
) |
101 |
|
8 |
|
35 |
|
(28 |
) | |||||||||
Preferred stock |
|
|
|
|
|
68 |
|
79 |
|
89 |
|
112 |
|
129 |
|
153 |
|
188 |
| |||||||||
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(439 |
) |
88 |
| |||||||||
Shareholders equity |
|
$ |
25,405 |
|
$ |
24,477 |
|
$ |
25,475 |
|
$ |
27,415 |
|
$ |
25,319 |
|
$ |
26,616 |
|
$ |
25,135 |
|
$ |
22,303 |
|
$ |
21,201 |
|
Return on equity is the ratio of annualized net income less preferred dividends to average shareholders equity for the periods presented. Operating return on equity is the ratio of annualized operating income less preferred dividends to adjusted average shareholders equity for the periods presented. In the opinion of the companys management, these are important indicators of how well management creates value for its shareholders through its operating activities and its capital management.
Calculation of Operating Return on Equity and Return on Equity
|
|
Three Months Ended |
| ||||
|
|
March 31, |
| ||||
($ in millions, after-tax) |
|
2013 |
|
2012 |
| ||
|
|
|
|
|
| ||
Annualized operating income |
|
$ |
3,550 |
|
$ |
3,202 |
|
Adjusted average shareholders equity |
|
22,512 |
|
21,817 |
| ||
Operating return on equity |
|
15.8 |
% |
14.7 |
% | ||
|
|
|
|
|
| ||
Annualized net income |
|
$ |
3,586 |
|
$ |
3,225 |
|
Average shareholders equity |
|
25,500 |
|
24,675 |
| ||
Return on equity |
|
14.1 |
% |
13.1 |
% |
Average annual operating return on equity over a period is the ratio of:
a) the sum of operating income less preferred dividends for the periods presented to
b) the sum of: 1) the sum of the adjusted average shareholders equity for all full years in the period presented, and 2) for partial years in the period presented, the number of quarters in that partial year divided by four, multiplied by the adjusted average shareholders equity of the partial year.
Calculation of Average Annual Operating Return on Equity from January 1, 2005 through March 31, 2013
|
|
Three Months Ended |
|
|
| ||||||||||||||||||||||||||
|
|
March 31, |
|
Twelve Months Ended December 31, |
| ||||||||||||||||||||||||||
($ in millions) |
|
2013 |
|
2012 |
|
2012 |
|
2011 |
|
2010 |
|
2009 |
|
2008 |
|
2007 |
|
2006 |
|
2005 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Operating income, less preferred dividends |
|
$ |
887 |
|
$ |
801 |
|
$ |
2,441 |
|
$ |
1,389 |
|
$ |
3,040 |
|
$ |
3,597 |
|
$ |
3,191 |
|
$ |
4,496 |
|
$ |
4,195 |
|
$ |
2,020 |
|
Annualized operating income |
|
3,550 |
|
3,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Adjusted average shareholders equity |
|
22,512 |
|
21,817 |
|
22,158 |
|
22,806 |
|
24,285 |
|
25,777 |
|
25,668 |
|
25,350 |
|
23,381 |
|
21,118 |
| ||||||||||
Operating return on equity |
|
15.8 |
% |
14.7 |
% |
11.0 |
% |
6.1 |
% |
12.5 |
% |
14.0 |
% |
12.4 |
% |
17.7 |
% |
17.9 |
% |
9.6 |
% | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Average annual operating return on equity for the period January 1, 2005 through March 31, 2013 |
|
12.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
RECONCILIATION OF PRE-TAX UNDERWRITING GAIN EXCLUDING CERTAIN ITEMS TO NET INCOME
Underwriting gain is net earned premiums and fee income less claims and claim adjustment expenses and insurance-related expenses. In the opinion of the companys management, it is important to measure the profitability of each segment excluding the results of investing activities, which are managed separately from the insurance business. This measure is used to assess each segments business performance and as a tool in making business decisions. Pre-tax underwriting gain, excluding the impact of catastrophes and net favorable prior year loss reserve development, is the underwriting gain adjusted to exclude claims and claim adjustment expenses, reinstatement premiums and assessments related to catastrophes and loss reserve development related to time periods prior to the current year. In the opinion of the companys management, this measure is meaningful to users of the financial statements to understand the companys periodic earnings and the variability of earnings caused by the unpredictable nature (i.e., the timing and amount) of catastrophes and loss reserve development. This measure is also referred to as underlying underwriting margin or underlying underwriting gain.
A catastrophe is a severe loss, resulting from natural and man-made events, including risks such as fire, earthquake, windstorm, explosion, terrorism and other similar events. Each catastrophe has unique characteristics, and catastrophes are not predictable as to timing or amount. Their effects are included in net and operating income and claims and claim adjustment expense reserves upon occurrence. A catastrophe may result in the payment of reinsurance reinstatement premiums and assessments from various pools. In the opinion of the companys management, a discussion of the impact of catastrophes is meaningful to users of the financial statements to understand the companys periodic earnings and the variability in periodic earnings caused by the unpredictable nature of catastrophes.
Net favorable (unfavorable) prior year loss reserve development is the increase or decrease in incurred claims and claim adjustment expenses as a result of the re-estimation of claims and claim adjustment expense reserves at successive valuation dates for a given group of claims, which may be related to one or more prior years. In the opinion of the companys management, a discussion of loss reserve development is meaningful to users of the financial statements as it allows them to assess the impact between prior and current year development on incurred claims and claim adjustment expenses, net and operating income, and changes in claims and claim adjustment expense reserve levels from period to period.
Reconciliation of Pre-tax Underwriting Gain (Excluding the Impact of Catastrophes and Net Favorable Prior Year Loss Reserve Development) to Net Income
|
|
Three Months Ended |
| ||||
|
|
March 31, |
| ||||
($ in millions, after-tax except as noted) |
|
2013 |
|
2012 |
| ||
|
|
|
|
|
| ||
Pre-tax underwriting gain excluding the impact of catastrophes and net favorable prior year loss reserve development |
|
$ |
470 |
|
$ |
257 |
|
Pre-tax impact of catastrophes |
|
(99 |
) |
(168 |
) | ||
Pre-tax impact of net favorable prior year loss reserve development |
|
231 |
|
304 |
| ||
Pre-tax underwriting gain |
|
602 |
|
393 |
| ||
Income tax expense on underwriting results |
|
217 |
|
145 |
| ||
Underwriting gain |
|
385 |
|
248 |
| ||
Net investment income |
|
542 |
|
593 |
| ||
Other, including interest expense |
|
(40 |
) |
(40 |
) | ||
Operating income |
|
887 |
|
801 |
| ||
Net realized investment gains |
|
9 |
|
5 |
| ||
Net income |
|
$ |
896 |
|
$ |
806 |
|
ADJUSTMENT TO THE GAAP COMBINED RATIO FOR THE INCREMENTAL IMPACT OF THE DIRECT TO CONSUMER INITIATIVE
GAAP combined ratio is the sum of the loss and loss adjustment expense ratio (loss and LAE ratio) and the underwriting expense ratio. For GAAP, the loss and LAE ratio is the ratio of incurred losses and loss adjustment expenses reduced by an allocation of fee income to net earned premiums. The underwriting expense ratio is the ratio of underwriting expenses incurred reduced by an allocation of fee income, and billing and policy fees and other to net earned premiums. A GAAP combined ratio under 100% generally indicates an underwriting profit. A GAAP combined ratio over 100% generally indicates an underwriting loss. The GAAP combined ratio is an operating statistic that includes GAAP measures in the numerator and the denominator.
Calculation of the GAAP Combined Ratio
|
|
Three Months Ended |
| ||||
|
|
March 31, |
| ||||
($ in millions, pre-tax) |
|
2013 |
|
2012 |
| ||
|
|
|
|
|
| ||
Loss and loss adjustment expense ratio |
|
|
|
|
| ||
Claims and claim adjustment expenses |
|
$ |
3,153 |
|
$ |
3,364 |
|
Less: |
|
|
|
|
| ||
Policyholder dividends |
|
10 |
|
12 |
| ||
Allocated fee income |
|
42 |
|
35 |
| ||
Loss ratio numerator |
|
$ |
3,101 |
|
$ |
3,317 |
|
|
|
|
|
|
| ||
Underwriting expense ratio |
|
|
|
|
| ||
Amortization of deferred acquisition costs |
|
$ |
948 |
|
$ |
971 |
|
General and administrative expenses (G&A) |
|
915 |
|
884 |
| ||
Less: |
|
|
|
|
| ||
G&A included in Interest Expense and Other |
|
4 |
|
7 |
| ||
Allocated fee income |
|
55 |
|
47 |
| ||
Billing and policy fees and other |
|
24 |
|
27 |
| ||
Expense ratio numerator |
|
$ |
1,780 |
|
$ |
1,774 |
|
|
|
|
|
|
| ||
Earned premium |
|
$ |
5,517 |
|
$ |
5,523 |
|
|
|
|
|
|
| ||
GAAP combined ratio (1) |
|
|
|
|
| ||
Loss and loss adjustment expense ratio |
|
56.2 |
% |
60.1 |
% | ||
Underwriting expense ratio |
|
32.3 |
% |
32.1 |
% | ||
Combined ratio |
|
88.5 |
% |
92.2 |
% |
(1) For purposes of computing GAAP ratios, billing and policy fees and other (which are a component of other revenues) are allocated as a reduction of underwriting expenses. In addition, fee income is allocated as a reduction of losses and loss adjustment expenses and underwriting expenses.
GAAP combined ratio excluding the incremental impact of the direct to consumer initiative is the GAAP combined ratio adjusted to exclude the direct, variable impact of the companys direct-to-consumer initiative in Personal Insurance. In the opinion of the companys management, this is useful in an analysis of the profitability of the companys ongoing agency business.
Reconciliation of the Consolidated and Personal Insurance GAAP Combined Ratios (Excluding the Incremental Impact of the Direct to Consumer Initiative) to the Consolidated and Personal Insurance GAAP Combined Ratios
|
|
Three Months Ended |
| ||
|
|
March 31, |
| ||
|
|
2013 |
|
2012 |
|
|
|
|
|
|
|
Personal Insurance |
|
|
|
|
|
GAAP combined ratio excluding incremental impact of direct to consumer initiative |
|
87.5 |
% |
95.7 |
% |
Incremental impact of direct to consumer initiative |
|
1.9 |
% |
2.1 |
% |
GAAP combined ratio |
|
89.4 |
% |
97.8 |
% |
|
|
|
|
|
|
Consolidated |
|
|
|
|
|
GAAP combined ratio excluding incremental impact of direct to consumer initiative |
|
87.8 |
% |
91.4 |
% |
Incremental impact of direct to consumer initiative |
|
0.7 |
% |
0.8 |
% |
GAAP combined ratio |
|
88.5 |
% |
92.2 |
% |
ADJUSTMENT TO NET WRITTEN PREMIUMS FOR THE IMPACT OF CHANGES IN FOREIGN EXCHANGE RATES
Adjusting for the impact of changes in foreign exchange rates allows the effect of foreign exchange rate differences to be isolated in the analysis of changes in various financial statement line items that are translated from a local currency to the companys reporting currency, U.S. dollars. The impact is determined by assuming constant foreign exchange rates between periods as illustrated in the reconciliation below. In the opinion of the companys management, this is useful in an analysis of the results of the International market and the Financial, Professional & International (FP&II) segment.
Reconciliation of the Impact of Changes in Foreign Exchange Rates on International Net Written Premiums to International Net Written Premiums
|
|
Three Months Ended |
| ||||||
|
|
March 31, |
| ||||||
($ in millions) |
|
2013 |
|
2012 |
|
Change |
| ||
|
|
|
|
|
|
|
| ||
Net written premiums - holding foreign exchange rates constant |
|
$ |
253 |
|
$ |
247 |
|
2 |
% |
|
|
|
|
|
|
|
| ||
Impact of changes in foreign exchange rates |
|
(1 |
) |
|
|
|
| ||
Net written premiums |
|
$ |
252 |
|
$ |
247 |
|
2 |
% |
Reconciliation of the Impact of Changes in Foreign Exchange Rates on FP&II Net Written Premiums to FP&II Net Written Premiums
|
|
Three Months Ended |
| ||||||
|
|
March 31, |
| ||||||
($ in millions) |
|
2013 |
|
2012 |
|
Change |
| ||
|
|
|
|
|
|
|
| ||
Net written premiums - holding foreign exchange rates constant |
|
$ |
648 |
|
$ |
604 |
|
7 |
% |
Impact of changes in foreign exchange rates |
|
(1 |
) |
|
|
|
| ||
Net written premiums |
|
$ |
647 |
|
$ |
604 |
|
7 |
% |
RECONCILIATION OF CERTAIN NON-GAAP MEASURES TO BOOK VALUE PER SHARE AND SHAREHOLDERS EQUITY
Book value per share is total common shareholders equity divided by the number of common shares outstanding. Adjusted book value per share is total common shareholders equity excluding the after-tax impact of net unrealized investment gains and losses, divided by the number of common shares outstanding. In the opinion of the companys management, adjusted book value is useful in an analysis of a property casualty companys book value as it removes the effect of changing prices on invested assets (i.e., net unrealized investment gains (losses), net of tax), which do not have an equivalent impact on unpaid claims and claim adjustment expense reserves. Tangible book value per share is adjusted book value per share excluding the after-tax value of goodwill and other intangible assets divided by the number of common shares outstanding. In the opinion of the companys management, tangible book value per share is useful in an analysis of a property casualty companys book value on a nominal basis as it removes certain effects of purchase accounting (i.e., goodwill and other intangible assets), in addition to the effect of changing prices on invested assets.
Reconciliation of Tangible and Adjusted Shareholders Equity to Shareholders Equity
|
|
As of |
| |||||||
|
|
March 31, |
|
December 31, |
|
March 31, |
| |||
($ in millions, except per share amounts) |
|
2013 |
|
2012 |
|
2012 |
| |||
|
|
|
|
|
|
|
| |||
Tangible shareholders equity |
|
$ |
19,046 |
|
$ |
18,604 |
|
$ |
18,299 |
|
Goodwill |
|
3,365 |
|
3,365 |
|
3,365 |
| |||
Other intangible assets |
|
370 |
|
381 |
|
417 |
| |||
Less: Impact of deferred tax on other intangible assets |
|
(49 |
) |
(48 |
) |
(47 |
) | |||
Adjusted shareholders equity |
|
22,732 |
|
22,302 |
|
22,034 |
| |||
Net unrealized investment gains, net of tax |
|
2,864 |
|
3,103 |
|
2,838 |
| |||
Shareholders equity |
|
$ |
25,596 |
|
$ |
25,405 |
|
$ |
24,872 |
|
|
|
|
|
|
|
|
| |||
Common shares outstanding |
|
376.4 |
|
377.4 |
|
389.8 |
| |||
|
|
|
|
|
|
|
| |||
Tangible book value per share |
|
$ |
50.60 |
|
$ |
49.29 |
|
$ |
46.95 |
|
Adjusted book value per share |
|
60.39 |
|
59.09 |
|
56.53 |
| |||
Book value per share |
|
68.00 |
|
67.31 |
|
63.81 |
|
RECONCILIATION OF CERTAIN NON-GAAP MEASURES TO TOTAL CAPITALIZATION
Total capitalization is the sum of total shareholders equity and debt. Debt-to-capital ratio excluding net unrealized gain on investments is the ratio of debt to total capitalization excluding the after-tax impact of net unrealized investment gains and losses. In the opinion of the companys management, the debt to capital ratio is useful in an analysis of the companys financial leverage.
Reconciliation of Total Debt and Equity Excluding Net Unrealized Investment Gain to Total Capitalization
|
|
As of |
| |||||||
|
|
March 31, |
|
December 31, |
|
March 31, |
| |||
($ in millions) |
|
2013 |
|
2012 |
|
2012 |
| |||
|
|
|
|
|
|
|
| |||
Debt |
|
$ |
5,851 |
|
$ |
6,350 |
|
$ |
6,606 |
|
Shareholders equity |
|
25,596 |
|
25,405 |
|
24,872 |
| |||
Total capitalization |
|
31,447 |
|
31,755 |
|
31,478 |
| |||
Net unrealized investment gains, net of tax |
|
2,864 |
|
3,103 |
|
2,838 |
| |||
Total capitalization excluding net unrealized gain on investments, net of tax |
|
$ |
28,583 |
|
$ |
28,652 |
|
$ |
28,640 |
|
|
|
|
|
|
|
|
| |||
Debt-to-capital ratio |
|
18.6 |
% |
20.0 |
% |
21.0 |
% | |||
Debt-to-capital ratio excluding net unrealized investment gains, net of tax |
|
20.5 |
% |
22.2 |
% |
23.1 |
% |
OTHER DEFINITIONS
Gross written premiums reflect the direct and assumed contractually determined amounts charged to policyholders for the effective period of the contract based on the terms and conditions of the insurance contract. Net written premiums reflect gross written premiums less premiums ceded to reinsurers. These are GAAP measures.
For the Business Insurance and Financial, Professional and International Insurance segments, retention is the amount of premium available for renewal that was retained, excluding rate and exposure changes. For the Personal Insurance segment, retention is the ratio of the expected number of renewal policies that will be retained throughout the annual policy period to the number of available renewal base policies. For all of the segments, renewal rate change represents the estimated change in average premium on policies that renew, excluding exposure changes. Exposure is the measure of risk used in the pricing of an insurance product. The change in exposure is the amount of change in premium on policies that renew attributable to the change in portfolio risk. Renewal premium change represents the estimated change in average premium on policies that renew, including rate and exposure changes. New business volume is the
amount of written premium related to new policyholders and additional products sold to existing policyholders. These are operating statistics, which are subject to change based upon a number of factors, including changes in actuarial estimates. For the Business Insurance segment, retention, renewal premium change and new business volumes exclude National Accounts and Business Insurance-Other.
An insurance companys statutory surplus represents the excess of its assets over its liabilities in accordance with the statutory accounting practices required by state laws and regulations.
Holding company liquidity is the total funds available at the holding company level to fund general corporate purposes, primarily the payment of shareholder dividends and debt service. These funds consist of total cash, short-term invested assets and other readily marketable securities held by the holding company.
For a glossary of other financial terms used in this press release, we refer you to the companys most recent annual report on Form 10-K filed with the Securities and Exchange Commission.
###
Contacts
Media: |
|
Institutional Investors: |
|
Individual Investors: |
Patrick Linehan |
|
Gabriella Nawi |
|
Marc Parr |
917.778.6267 |
|
917.778.6844, or |
|
860.277.0779 |
|
|
Andrew Hersom |
|
|
|
|
860.277.0902 |
|
|
Exhibit 99.2
The Travelers Companies, Inc. |
|
|
|
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 |
Operating Income |
|
5 |
Selected Statistics - Property and Casualty Operations |
|
6 |
Written and Earned Premiums - Property and Casualty Operations |
|
7 |
|
|
|
Business Insurance |
|
|
Operating Income |
|
8 |
Operating Income by Major Component and Combined Ratio |
|
9 |
Selected Statistics |
|
10 |
Net Written Premiums |
|
11 |
|
|
|
Financial, Professional & International Insurance |
|
|
Operating Income |
|
12 |
Operating Income by Major Component and Combined Ratio |
|
13 |
Selected Statistics |
|
14 |
Net Written Premiums |
|
15 |
|
|
|
Personal Insurance |
|
|
Operating Income (Loss) |
|
16 |
Operating Income (Loss) by Major Component and Combined Ratio |
|
17 |
Selected Statistics |
|
18 |
Selected Statistics - Agency Automobile |
|
19 |
Selected Statistics - Agency Homeowners and Other |
|
20 |
Selected Statistics - Direct to Consumer |
|
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 |
|
27 |
Reinsurance Recoverables |
|
28 |
Net Reserves for Losses and Loss Adjustment Expense |
|
29 |
Asbestos and Environmental Reserves |
|
30 |
Capitalization |
|
31 |
Statutory 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 |
The information included in the Financial Supplement is unaudited. This document should be read in conjunction with the Companys Form 10-Q which will be filed with the Securities and Exchange Commission.
Index
The Travelers Companies, Inc. Financial Highlights ($ and shares in millions, except per share data) |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income |
|
$ |
806 |
|
$ |
499 |
|
$ |
864 |
|
$ |
304 |
|
$ |
896 |
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
| |||||
Basic |
|
$ |
2.04 |
|
$ |
1.27 |
|
$ |
2.23 |
|
$ |
0.79 |
|
$ |
2.36 |
|
Diluted |
|
$ |
2.02 |
|
$ |
1.26 |
|
$ |
2.21 |
|
$ |
0.78 |
|
$ |
2.33 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating income |
|
$ |
801 |
|
$ |
495 |
|
$ |
867 |
|
$ |
278 |
|
$ |
887 |
|
Operating income per share: |
|
|
|
|
|
|
|
|
|
|
| |||||
Basic |
|
$ |
2.03 |
|
$ |
1.27 |
|
$ |
2.24 |
|
$ |
0.72 |
|
$ |
2.33 |
|
Diluted |
|
$ |
2.01 |
|
$ |
1.26 |
|
$ |
2.22 |
|
$ |
0.72 |
|
$ |
2.31 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Return on equity |
|
13.1 |
% |
8.0 |
% |
13.6 |
% |
4.7 |
% |
14.1 |
% | |||||
Operating return on equity |
|
14.7 |
% |
9.0 |
% |
15.5 |
% |
5.0 |
% |
15.8 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total assets, at period end |
|
$ |
104,838 |
|
$ |
104,330 |
|
$ |
105,445 |
|
$ |
104,938 |
|
$ |
103,897 |
|
Total equity, at period end |
|
$ |
24,872 |
|
$ |
25,049 |
|
$ |
25,905 |
|
$ |
25,405 |
|
$ |
25,596 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Book value per share, at period end |
|
$ |
63.81 |
|
$ |
64.90 |
|
$ |
67.81 |
|
$ |
67.31 |
|
$ |
68.00 |
|
Less: Net unrealized investment gains, net of tax |
|
7.28 |
|
7.72 |
|
8.68 |
|
8.22 |
|
7.61 |
| |||||
Adjusted book value per share, at period end |
|
$ |
56.53 |
|
$ |
57.18 |
|
$ |
59.13 |
|
$ |
59.09 |
|
$ |
60.39 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Weighted average number of common shares outstanding (basic) |
|
392.0 |
|
388.0 |
|
384.0 |
|
381.0 |
|
377.7 |
| |||||
Weighted average number of common shares outstanding and common stock equivalents (diluted) |
|
395.8 |
|
391.6 |
|
387.9 |
|
385.3 |
|
381.9 |
| |||||
Common shares outstanding at period end |
|
389.8 |
|
386.0 |
|
382.0 |
|
377.4 |
|
376.4 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Common stock dividends declared |
|
$ |
162 |
|
$ |
181 |
|
$ |
179 |
|
$ |
178 |
|
$ |
176 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Common stock repurchased: |
|
|
|
|
|
|
|
|
|
|
| |||||
Under Board of Directors authorization |
|
|
|
|
|
|
|
|
|
|
| |||||
Shares |
|
6.0 |
|
5.6 |
|
5.4 |
|
5.4 |
|
3.7 |
| |||||
Cost |
|
$ |
350 |
|
$ |
350 |
|
$ |
350 |
|
$ |
400 |
|
$ |
300 |
|
Other |
|
|
|
|
|
|
|
|
|
|
| |||||
Shares |
|
0.8 |
|
|
|
|
|
0.1 |
|
0.7 |
| |||||
Cost |
|
$ |
52 |
|
$ |
1 |
|
$ |
|
|
$ |
2 |
|
$ |
58 |
|
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Reconciliation to Net Income and Earnings Per Share ($ and shares in millions, except earnings per share) |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
Net income |
|
|
|
|
|
|
|
|
|
|
| |||||
Operating income |
|
$ |
801 |
|
$ |
495 |
|
$ |
867 |
|
$ |
278 |
|
$ |
887 |
|
Net realized investment gains (losses) |
|
5 |
|
4 |
|
(3 |
) |
26 |
|
9 |
| |||||
Net income |
|
$ |
806 |
|
$ |
499 |
|
$ |
864 |
|
$ |
304 |
|
$ |
896 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Basic earnings per share |
|
|
|
|
|
|
|
|
|
|
| |||||
Operating income |
|
$ |
2.03 |
|
$ |
1.27 |
|
$ |
2.24 |
|
$ |
0.72 |
|
$ |
2.33 |
|
Net realized investment gains (losses) |
|
0.01 |
|
|
|
(0.01 |
) |
0.07 |
|
0.03 |
| |||||
Net income |
|
$ |
2.04 |
|
$ |
1.27 |
|
$ |
2.23 |
|
$ |
0.79 |
|
$ |
2.36 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
| |||||
Operating income |
|
$ |
2.01 |
|
$ |
1.26 |
|
$ |
2.22 |
|
$ |
0.72 |
|
$ |
2.31 |
|
Net realized investment gains (losses) |
|
0.01 |
|
|
|
(0.01 |
) |
0.06 |
|
0.02 |
| |||||
Net income |
|
$ |
2.02 |
|
$ |
1.26 |
|
$ |
2.21 |
|
$ |
0.78 |
|
$ |
2.33 |
|
Adjustments to net income and weighted average shares for net income EPS calculations: (1)
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
Basic and Diluted |
|
|
|
|
|
|
|
|
|
|
| |||||
Net income, as reported |
|
$ |
806 |
|
$ |
499 |
|
$ |
864 |
|
$ |
304 |
|
$ |
896 |
|
Participating share-based awards - allocated income |
|
(6 |
) |
(4 |
) |
(6 |
) |
(2 |
) |
(6 |
) | |||||
Net income available to common shareholders - basic and diluted |
|
$ |
800 |
|
$ |
495 |
|
$ |
858 |
|
$ |
302 |
|
$ |
890 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Common Shares |
|
|
|
|
|
|
|
|
|
|
| |||||
Basic |
|
|
|
|
|
|
|
|
|
|
| |||||
Weighted average shares outstanding |
|
392.0 |
|
388.0 |
|
384.0 |
|
381.0 |
|
377.7 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Diluted |
|
|
|
|
|
|
|
|
|
|
| |||||
Weighted average shares outstanding |
|
392.0 |
|
388.0 |
|
384.0 |
|
381.0 |
|
377.7 |
| |||||
Weighted average effects of dilutive securities - stock options and performance shares |
|
3.8 |
|
3.6 |
|
3.9 |
|
4.3 |
|
4.2 |
| |||||
Diluted weighted average shares outstanding |
|
395.8 |
|
391.6 |
|
387.9 |
|
385.3 |
|
381.9 |
|
(1) Adjustments to net income and weighted average shares for net income EPS calculations can also be used for the operating income EPS calculations.
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. |
|
Statement of Income - Consolidated | |
($ in millions) |
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Revenues |
|
|
|
|
|
|
|
|
|
|
| |||||
Premiums |
|
$ |
5,523 |
|
$ |
5,529 |
|
$ |
5,666 |
|
$ |
5,639 |
|
$ |
5,517 |
|
Net investment income |
|
740 |
|
738 |
|
722 |
|
689 |
|
670 |
| |||||
Fee income |
|
82 |
|
59 |
|
92 |
|
90 |
|
97 |
| |||||
Net realized investment gains (losses) |
|
10 |
|
4 |
|
(2 |
) |
39 |
|
10 |
| |||||
Other revenues |
|
37 |
|
29 |
|
34 |
|
20 |
|
34 |
| |||||
Total revenues |
|
6,392 |
|
6,359 |
|
6,512 |
|
6,477 |
|
6,328 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Claims and expenses |
|
|
|
|
|
|
|
|
|
|
| |||||
Claims and claim adjustment expenses |
|
3,364 |
|
3,786 |
|
3,359 |
|
4,167 |
|
3,153 |
| |||||
Amortization of deferred acquisition costs |
|
971 |
|
976 |
|
986 |
|
977 |
|
948 |
| |||||
General and administrative expenses |
|
884 |
|
893 |
|
904 |
|
929 |
|
915 |
| |||||
Interest expense |
|
96 |
|
96 |
|
93 |
|
93 |
|
92 |
| |||||
Total claims and expenses |
|
5,315 |
|
5,751 |
|
5,342 |
|
6,166 |
|
5,108 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Income before income taxes |
|
1,077 |
|
608 |
|
1,170 |
|
311 |
|
1,220 |
| |||||
Income tax expense |
|
271 |
|
109 |
|
306 |
|
7 |
|
324 |
| |||||
Net income |
|
$ |
806 |
|
$ |
499 |
|
$ |
864 |
|
$ |
304 |
|
$ |
896 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other-than-temporary impairments (OTTI): |
|
|
|
|
|
|
|
|
|
|
| |||||
Total OTTI gains (losses) |
|
$ |
|
|
$ |
11 |
|
$ |
17 |
|
$ |
(1 |
) |
$ |
|
|
OTTI losses recognized in net realized investment gains (losses) |
|
$ |
(4 |
) |
$ |
(4 |
) |
$ |
(3 |
) |
$ |
(4 |
) |
$ |
(5 |
) |
OTTI gains recognized in other comprehensive income |
|
$ |
4 |
|
$ |
15 |
|
$ |
20 |
|
$ |
3 |
|
$ |
5 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other statistics |
|
|
|
|
|
|
|
|
|
|
| |||||
Effective tax rate on net investment income |
|
19.9 |
% |
20.2 |
% |
20.0 |
% |
19.2 |
% |
19.2 |
% | |||||
Net investment income (after-tax) |
|
$ |
593 |
|
$ |
589 |
|
$ |
578 |
|
$ |
556 |
|
$ |
542 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Catastrophes, net of reinsurance: |
|
|
|
|
|
|
|
|
|
|
| |||||
Pre-tax |
|
$ |
168 |
|
$ |
549 |
|
$ |
91 |
|
$ |
1,054 |
|
$ |
99 |
|
After-tax |
|
$ |
109 |
|
$ |
357 |
|
$ |
59 |
|
$ |
689 |
|
$ |
65 |
|
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. |
|
Net Income by Major Component and Combined Ratio - Consolidated | |
($ in millions, net of tax) |
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Underwriting gain (loss) |
|
$ |
248 |
|
$ |
(47 |
) |
$ |
327 |
|
$ |
(232 |
) |
$ |
385 |
|
Net investment income |
|
593 |
|
589 |
|
578 |
|
556 |
|
542 |
| |||||
Other, including interest expense |
|
(40 |
) |
(47 |
) |
(38 |
) |
(46 |
) |
(40 |
) | |||||
Operating income |
|
801 |
|
495 |
|
867 |
|
278 |
|
887 |
| |||||
Net realized investment gains (losses) |
|
5 |
|
4 |
|
(3 |
) |
26 |
|
9 |
| |||||
Net income |
|
$ |
806 |
|
$ |
499 |
|
$ |
864 |
|
$ |
304 |
|
$ |
896 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
GAAP combined ratio (1) (2) |
|
|
|
|
|
|
|
|
|
|
| |||||
Loss and loss adjustment expense ratio |
|
60.1 |
% |
68.1 |
% |
58.4 |
% |
73.0 |
% |
56.2 |
% | |||||
Underwriting expense ratio |
|
32.1 |
% |
32.4 |
% |
31.9 |
% |
32.4 |
% |
32.3 |
% | |||||
Combined ratio |
|
92.2 |
% |
100.5 |
% |
90.3 |
% |
105.4 |
% |
88.5 |
% | |||||
GAAP combined ratio excluding incremental impact of direct to consumer initiative |
|
91.4 |
% |
99.8 |
% |
89.3 |
% |
104.6 |
% |
87.8 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Impact of catastrophes on combined ratio |
|
3.1 |
% |
10.0 |
% |
1.6 |
% |
18.7 |
% |
1.8 |
% | |||||
Impact of prior year reserve development on combined ratio |
|
-5.5 |
% |
-4.0 |
% |
-3.4 |
% |
-4.0 |
% |
-4.1 |
% |
(1) Before policyholder dividends.
(2) Billing and policy fees and other, which are a component of other revenues, are allocated as a reduction of underwriting expenses. In addition, fee income is allocated as a reduction of losses and loss adjustment expenses and underwriting expenses as follows:
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
Billing and policy fees and other |
|
$ |
27 |
|
$ |
25 |
|
$ |
24 |
|
$ |
22 |
|
$ |
24 |
|
Fee income: |
|
|
|
|
|
|
|
|
|
|
| |||||
Loss and loss adjustment expenses |
|
$ |
35 |
|
$ |
11 |
|
$ |
40 |
|
$ |
38 |
|
$ |
42 |
|
Underwriting expenses |
|
47 |
|
48 |
|
52 |
|
52 |
|
55 |
| |||||
Total fee income |
|
$ |
82 |
|
$ |
59 |
|
$ |
92 |
|
$ |
90 |
|
$ |
97 |
|
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. |
|
Operating Income - Consolidated | |
($ in millions) |
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Revenues |
|
|
|
|
|
|
|
|
|
|
| |||||
Premiums |
|
$ |
5,523 |
|
$ |
5,529 |
|
$ |
5,666 |
|
$ |
5,639 |
|
$ |
5,517 |
|
Net investment income |
|
740 |
|
738 |
|
722 |
|
689 |
|
670 |
| |||||
Fee income |
|
82 |
|
59 |
|
92 |
|
90 |
|
97 |
| |||||
Other revenues |
|
37 |
|
29 |
|
34 |
|
20 |
|
34 |
| |||||
Total revenues |
|
6,382 |
|
6,355 |
|
6,514 |
|
6,438 |
|
6,318 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Claims and expenses |
|
|
|
|
|
|
|
|
|
|
| |||||
Claims and claim adjustment expenses |
|
3,364 |
|
3,786 |
|
3,359 |
|
4,167 |
|
3,153 |
| |||||
Amortization of deferred acquisition costs |
|
971 |
|
976 |
|
986 |
|
977 |
|
948 |
| |||||
General and administrative expenses |
|
884 |
|
893 |
|
904 |
|
929 |
|
915 |
| |||||
Interest expense |
|
96 |
|
96 |
|
93 |
|
93 |
|
92 |
| |||||
Total claims and expenses |
|
5,315 |
|
5,751 |
|
5,342 |
|
6,166 |
|
5,108 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating income before income taxes |
|
1,067 |
|
604 |
|
1,172 |
|
272 |
|
1,210 |
| |||||
Income tax expense (benefit) |
|
266 |
|
109 |
|
305 |
|
(6 |
) |
323 |
| |||||
Operating income |
|
$ |
801 |
|
$ |
495 |
|
$ |
867 |
|
$ |
278 |
|
$ |
887 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other statistics |
|
|
|
|
|
|
|
|
|
|
| |||||
Effective tax rate on net investment income |
|
19.9 |
% |
20.2 |
% |
20.0 |
% |
19.2 |
% |
19.2 |
% | |||||
Net investment income (after-tax) |
|
$ |
593 |
|
$ |
589 |
|
$ |
578 |
|
$ |
556 |
|
$ |
542 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Catastrophes, net of reinsurance: |
|
|
|
|
|
|
|
|
|
|
| |||||
Pre-tax |
|
$ |
168 |
|
$ |
549 |
|
$ |
91 |
|
$ |
1,054 |
|
$ |
99 |
|
After-tax |
|
$ |
109 |
|
$ |
357 |
|
$ |
59 |
|
$ |
689 |
|
$ |
65 |
|
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. |
|
Selected Statistics - Property and Casualty Operations | |
($ in millions) |
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
Statutory underwriting |
|
|
|
|
|
|
|
|
|
|
| |||||
Gross written premiums |
|
$ |
6,073 |
|
$ |
6,240 |
|
$ |
6,271 |
|
$ |
5,725 |
|
$ |
6,188 |
|
Net written premiums |
|
$ |
5,497 |
|
$ |
5,868 |
|
$ |
5,697 |
|
$ |
5,385 |
|
$ |
5,597 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net earned premiums |
|
$ |
5,523 |
|
$ |
5,529 |
|
$ |
5,666 |
|
$ |
5,639 |
|
$ |
5,517 |
|
Losses and loss adjustment expenses |
|
3,318 |
|
3,791 |
|
3,310 |
|
4,119 |
|
3,070 |
| |||||
Underwriting expenses |
|
1,797 |
|
1,838 |
|
1,840 |
|
1,780 |
|
1,799 |
| |||||
Statutory underwriting gain (loss) |
|
408 |
|
(100 |
) |
516 |
|
(260 |
) |
648 |
| |||||
Policyholder dividends |
|
12 |
|
11 |
|
11 |
|
12 |
|
10 |
| |||||
Statutory underwriting gain (loss) after policyholder dividends |
|
$ |
396 |
|
$ |
(111 |
) |
$ |
505 |
|
$ |
(272 |
) |
$ |
638 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other statutory statistics |
|
|
|
|
|
|
|
|
|
|
| |||||
Reserves for losses and loss adjustment expenses |
|
$ |
40,791 |
|
$ |
40,925 |
|
$ |
40,528 |
|
$ |
40,656 |
|
$ |
40,215 |
|
Increase (decrease) in reserves |
|
$ |
(108 |
) |
$ |
134 |
|
$ |
(397 |
) |
$ |
128 |
|
$ |
(441 |
) |
Statutory basis surplus |
|
$ |
19,867 |
|
$ |
19,841 |
|
$ |
20,291 |
|
$ |
20,048 |
|
$ |
20,692 |
|
Net written premiums/surplus (1) |
|
1.12:1 |
|
1.12:1 |
|
1.10:1 |
|
1.12:1 |
|
1.09:1 |
|
(1) Based on 12 months of rolling net written premiums.
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. |
|
Written and Earned Premiums - Property and Casualty Operations | |
($ in millions) |
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
Written premiums |
|
|
|
|
|
|
|
|
|
|
| |||||
Gross |
|
$ |
6,073 |
|
$ |
6,240 |
|
$ |
6,271 |
|
$ |
5,725 |
|
$ |
6,188 |
|
Ceded |
|
(576 |
) |
(372 |
) |
(574 |
) |
(340 |
) |
(591 |
) | |||||
Net |
|
$ |
5,497 |
|
$ |
5,868 |
|
$ |
5,697 |
|
$ |
5,385 |
|
$ |
5,597 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Earned premiums |
|
|
|
|
|
|
|
|
|
|
| |||||
Gross |
|
$ |
5,973 |
|
$ |
5,985 |
|
$ |
6,132 |
|
$ |
6,110 |
|
$ |
5,985 |
|
Ceded |
|
(450 |
) |
(456 |
) |
(466 |
) |
(471 |
) |
(468 |
) | |||||
Net |
|
$ |
5,523 |
|
$ |
5,529 |
|
$ |
5,666 |
|
$ |
5,639 |
|
$ |
5,517 |
|
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. |
|
Operating Income - Business Insurance | |
($ in millions) |
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Revenues |
|
|
|
|
|
|
|
|
|
|
| |||||
Premiums |
|
$ |
2,876 |
|
$ |
2,860 |
|
$ |
2,982 |
|
$ |
2,973 |
|
$ |
2,942 |
|
Net investment income |
|
532 |
|
536 |
|
524 |
|
498 |
|
487 |
| |||||
Fee income |
|
82 |
|
58 |
|
92 |
|
90 |
|
97 |
| |||||
Other revenues |
|
14 |
|
8 |
|
9 |
|
9 |
|
13 |
| |||||
Total revenues |
|
3,504 |
|
3,462 |
|
3,607 |
|
3,570 |
|
3,539 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Claims and expenses |
|
|
|
|
|
|
|
|
|
|
| |||||
Claims and claim adjustment expenses |
|
1,709 |
|
2,049 |
|
1,906 |
|
2,193 |
|
1,749 |
| |||||
Amortization of deferred acquisition costs |
|
467 |
|
465 |
|
477 |
|
475 |
|
475 |
| |||||
General and administrative expenses |
|
498 |
|
504 |
|
504 |
|
514 |
|
517 |
| |||||
Total claims and expenses |
|
2,674 |
|
3,018 |
|
2,887 |
|
3,182 |
|
2,741 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating income before federal income taxes |
|
830 |
|
444 |
|
720 |
|
388 |
|
798 |
| |||||
Income tax expense |
|
218 |
|
82 |
|
177 |
|
62 |
|
208 |
| |||||
Operating income |
|
$ |
612 |
|
$ |
362 |
|
$ |
543 |
|
$ |
326 |
|
$ |
590 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other statistics |
|
|
|
|
|
|
|
|
|
|
| |||||
Effective tax rate on net investment income |
|
20.0 |
% |
20.3 |
% |
20.1 |
% |
19.1 |
% |
19.2 |
% | |||||
Net investment income (after-tax) |
|
$ |
425 |
|
$ |
428 |
|
$ |
419 |
|
$ |
402 |
|
$ |
394 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Catastrophes, net of reinsurance: |
|
|
|
|
|
|
|
|
|
|
| |||||
Pre-tax |
|
$ |
53 |
|
$ |
252 |
|
$ |
50 |
|
$ |
439 |
|
$ |
35 |
|
After-tax |
|
$ |
34 |
|
$ |
164 |
|
$ |
33 |
|
$ |
285 |
|
$ |
23 |
|
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. |
|
Operating Income by Major Component and Combined Ratio - Business Insurance | |
($ in millions, net of tax) |
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Underwriting gain (loss) |
|
$ |
177 |
|
$ |
(71 |
) |
$ |
117 |
|
$ |
(82 |
) |
$ |
188 |
|
Net investment income |
|
425 |
|
428 |
|
419 |
|
402 |
|
394 |
| |||||
Other |
|
10 |
|
5 |
|
7 |
|
6 |
|
8 |
| |||||
Operating income |
|
$ |
612 |
|
$ |
362 |
|
$ |
543 |
|
$ |
326 |
|
$ |
590 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
GAAP combined ratio (1) (2) |
|
|
|
|
|
|
|
|
|
|
| |||||
Loss and loss adjustment expense ratio |
|
57.8 |
% |
71.0 |
% |
62.3 |
% |
72.2 |
% |
57.7 |
% | |||||
Underwriting expense ratio |
|
31.8 |
% |
32.0 |
% |
31.0 |
% |
31.3 |
% |
31.7 |
% | |||||
Combined ratio |
|
89.6 |
% |
103.0 |
% |
93.3 |
% |
103.5 |
% |
89.4 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Impact of catastrophes on combined ratio |
|
1.8 |
% |
8.8 |
% |
1.7 |
% |
14.7 |
% |
1.2 |
% | |||||
Impact of prior year reserve development on combined ratio |
|
-8.6 |
% |
-2.0 |
% |
-1.4 |
% |
-4.0 |
% |
-3.9 |
% |
(1) Before policyholder dividends.
(2) Billing and policy fees and other, which are a component of other revenues, are allocated as a reduction of underwriting expenses. In addition, fee income is allocated as a reduction of losses and loss adjustment expenses and underwriting expenses as follows:
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
Billing and policy fees and other |
|
$ |
5 |
|
$ |
5 |
|
$ |
5 |
|
$ |
4 |
|
$ |
4 |
|
Fee income: |
|
|
|
|
|
|
|
|
|
|
| |||||
Loss and loss adjustment expenses |
|
$ |
35 |
|
$ |
10 |
|
$ |
40 |
|
$ |
38 |
|
$ |
42 |
|
Underwriting expenses |
|
47 |
|
48 |
|
52 |
|
52 |
|
55 |
| |||||
Total fee income |
|
$ |
82 |
|
$ |
58 |
|
$ |
92 |
|
$ |
90 |
|
$ |
97 |
|
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. |
|
Selected Statistics - Business Insurance | |
($ in millions) |
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Statutory underwriting |
|
|
|
|
|
|
|
|
|
|
| |||||
Gross written premiums |
|
$ |
3,429 |
|
$ |
3,280 |
|
$ |
3,382 |
|
$ |
3,020 |
|
$ |
3,626 |
|
Net written premiums |
|
$ |
3,100 |
|
$ |
3,026 |
|
$ |
2,962 |
|
$ |
2,784 |
|
$ |
3,260 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net earned premiums |
|
$ |
2,876 |
|
$ |
2,860 |
|
$ |
2,982 |
|
$ |
2,973 |
|
$ |
2,942 |
|
Losses and loss adjustment expenses |
|
1,663 |
|
2,057 |
|
1,860 |
|
2,147 |
|
1,668 |
| |||||
Underwriting expenses |
|
940 |
|
928 |
|
937 |
|
894 |
|
969 |
| |||||
Statutory underwriting gain (loss) |
|
273 |
|
(125 |
) |
185 |
|
(68 |
) |
305 |
| |||||
Policyholder dividends |
|
10 |
|
8 |
|
9 |
|
10 |
|
8 |
| |||||
Statutory underwriting gain (loss) after policyholder dividends |
|
$ |
263 |
|
$ |
(133 |
) |
$ |
176 |
|
$ |
(78 |
) |
$ |
297 |
|
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net written premiums by market |
|
|
|
|
|
|
|
|
|
|
| |||||
Select Accounts |
|
$ |
718 |
|
$ |
721 |
|
$ |
679 |
|
$ |
657 |
|
$ |
724 |
|
Commercial Accounts |
|
861 |
|
717 |
|
805 |
|
718 |
|
908 |
| |||||
National Accounts |
|
235 |
|
226 |
|
202 |
|
244 |
|
277 |
| |||||
Industry-Focused Underwriting |
|
648 |
|
636 |
|
671 |
|
599 |
|
699 |
| |||||
Target Risk Underwriting |
|
429 |
|
486 |
|
382 |
|
369 |
|
448 |
| |||||
Specialized Distribution |
|
208 |
|
242 |
|
222 |
|
198 |
|
204 |
| |||||
Total core |
|
3,099 |
|
3,028 |
|
2,961 |
|
2,785 |
|
3,260 |
| |||||
Business Insurance other |
|
1 |
|
(2 |
) |
1 |
|
(1 |
) |
|
| |||||
Total |
|
$ |
3,100 |
|
$ |
3,026 |
|
$ |
2,962 |
|
$ |
2,784 |
|
$ |
3,260 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net written premiums by product line |
|
|
|
|
|
|
|
|
|
|
| |||||
Commercial multi-peril |
|
$ |
819 |
|
$ |
777 |
|
$ |
769 |
|
$ |
735 |
|
$ |
828 |
|
Workers compensation |
|
944 |
|
800 |
|
849 |
|
807 |
|
1,056 |
| |||||
Commercial automobile |
|
489 |
|
499 |
|
498 |
|
438 |
|
484 |
| |||||
Commercial property |
|
416 |
|
481 |
|
373 |
|
377 |
|
427 |
| |||||
General liability |
|
426 |
|
464 |
|
452 |
|
423 |
|
458 |
| |||||
Other |
|
6 |
|
5 |
|
21 |
|
4 |
|
7 |
| |||||
Total |
|
$ |
3,100 |
|
$ |
3,026 |
|
$ |
2,962 |
|
$ |
2,784 |
|
$ |
3,260 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
National Accounts |
|
|
|
|
|
|
|
|
|
|
| |||||
Additions to claim volume under administration (1) |
|
$ |
639 |
|
$ |
472 |
|
$ |
480 |
|
$ |
549 |
|
$ |
701 |
|
Written fees |
|
$ |
88 |
|
$ |
77 |
|
$ |
77 |
|
$ |
74 |
|
$ |
104 |
|
(1) Includes new and renewal business.
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Operating Income - Financial, Professional & International Insurance ($ in millions) |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Revenues |
|
|
|
|
|
|
|
|
|
|
| |||||
Premiums |
|
$ |
737 |
|
$ |
766 |
|
$ |
772 |
|
$ |
770 |
|
$ |
735 |
|
Net investment income |
|
104 |
|
99 |
|
97 |
|
95 |
|
92 |
| |||||
Fee income |
|
|
|
1 |
|
|
|
|
|
|
| |||||
Other revenues |
|
8 |
|
5 |
|
8 |
|
5 |
|
5 |
| |||||
Total revenues |
|
849 |
|
871 |
|
877 |
|
870 |
|
832 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Claims and expenses |
|
|
|
|
|
|
|
|
|
|
| |||||
Claims and claim adjustment expenses |
|
341 |
|
302 |
|
309 |
|
362 |
|
302 |
| |||||
Amortization of deferred acquisition costs |
|
143 |
|
149 |
|
149 |
|
148 |
|
143 |
| |||||
General and administrative expenses |
|
165 |
|
165 |
|
165 |
|
172 |
|
162 |
| |||||
Total claims and expenses |
|
649 |
|
616 |
|
623 |
|
682 |
|
607 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating income before federal income taxes |
|
200 |
|
255 |
|
254 |
|
188 |
|
225 |
| |||||
Income tax expense |
|
51 |
|
73 |
|
74 |
|
57 |
|
62 |
| |||||
Operating income |
|
$ |
149 |
|
$ |
182 |
|
$ |
180 |
|
$ |
131 |
|
$ |
163 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other statistics |
|
|
|
|
|
|
|
|
|
|
| |||||
Effective tax rate on net investment income |
|
18.9 |
% |
19.7 |
% |
19.3 |
% |
19.1 |
% |
18.6 |
% | |||||
Net investment income (after-tax) |
|
$ |
85 |
|
$ |
79 |
|
$ |
78 |
|
$ |
77 |
|
$ |
75 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Catastrophes, net of reinsurance: |
|
|
|
|
|
|
|
|
|
|
| |||||
Pre-tax |
|
$ |
|
|
$ |
4 |
|
$ |
1 |
|
$ |
45 |
|
$ |
|
|
After-tax |
|
$ |
|
|
$ |
3 |
|
$ |
|
|
$ |
34 |
|
$ |
|
|
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Operating Income by Major Component and Combined Ratio - Financial, Professional & International Insurance ($ in millions, net of tax) |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Underwriting gain |
|
$ |
59 |
|
$ |
99 |
|
$ |
97 |
|
$ |
50 |
|
$ |
85 |
|
Net investment income |
|
85 |
|
79 |
|
78 |
|
77 |
|
75 |
| |||||
Other |
|
5 |
|
4 |
|
5 |
|
4 |
|
3 |
| |||||
Operating income |
|
$ |
149 |
|
$ |
182 |
|
$ |
180 |
|
$ |
131 |
|
$ |
163 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
GAAP combined ratio (1) (2) |
|
|
|
|
|
|
|
|
|
|
| |||||
Loss and loss adjustment expense ratio |
|
46.0 |
% |
39.1 |
% |
39.7 |
% |
46.6 |
% |
40.8 |
% | |||||
Underwriting expense ratio |
|
41.8 |
% |
40.9 |
% |
40.5 |
% |
41.7 |
% |
41.5 |
% | |||||
Combined ratio |
|
87.8 |
% |
80.0 |
% |
80.2 |
% |
88.3 |
% |
82.3 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Impact of catastrophes on combined ratio |
|
0.0 |
% |
0.4 |
% |
0.1 |
% |
5.9 |
% |
0.0 |
% | |||||
Impact of prior year reserve development on combined ratio |
|
-6.1 |
% |
-12.5 |
% |
-11.3 |
% |
-9.1 |
% |
-7.8 |
% |
(1) Before policyholder dividends.
(2) Fee income is allocated as a reduction of losses and loss adjustment expenses and underwriting expenses as follows:
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
Fee income: |
|
|
|
|
|
|
|
|
|
|
| |||||
Loss and loss adjustment expenses |
|
$ |
|
|
$ |
1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
Underwriting expenses |
|
|
|
|
|
|
|
|
|
|
| |||||
Total fee income |
|
$ |
|
|
$ |
1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Selected Statistics - Financial, Professional & International Insurance ($ in millions) |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Statutory underwriting |
|
|
|
|
|
|
|
|
|
|
| |||||
Gross written premiums |
|
$ |
791 |
|
$ |
882 |
|
$ |
763 |
|
$ |
839 |
|
$ |
799 |
|
Net written premiums |
|
$ |
604 |
|
$ |
840 |
|
$ |
729 |
|
$ |
808 |
|
$ |
647 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net earned premiums |
|
$ |
737 |
|
$ |
766 |
|
$ |
772 |
|
$ |
770 |
|
$ |
735 |
|
Losses and loss adjustment expenses |
|
341 |
|
299 |
|
307 |
|
359 |
|
300 |
| |||||
Underwriting expenses |
|
316 |
|
319 |
|
295 |
|
314 |
|
317 |
| |||||
Statutory underwriting gain |
|
80 |
|
148 |
|
170 |
|
97 |
|
118 |
| |||||
Policyholder dividends |
|
2 |
|
3 |
|
2 |
|
2 |
|
2 |
| |||||
Statutory underwriting gain after policyholder dividends |
|
$ |
78 |
|
$ |
145 |
|
$ |
168 |
|
$ |
95 |
|
$ |
116 |
|
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Net Written Premiums - Financial, Professional & International Insurance ($ in millions) |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net written premiums by market |
|
|
|
|
|
|
|
|
|
|
| |||||
Bond & Financial Products |
|
$ |
357 |
|
$ |
524 |
|
$ |
529 |
|
$ |
514 |
|
$ |
395 |
|
International |
|
247 |
|
316 |
|
200 |
|
294 |
|
252 |
| |||||
Total |
|
$ |
604 |
|
$ |
840 |
|
$ |
729 |
|
$ |
808 |
|
$ |
647 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net written premiums by product line |
|
|
|
|
|
|
|
|
|
|
| |||||
General liability |
|
$ |
143 |
|
$ |
236 |
|
$ |
233 |
|
$ |
247 |
|
$ |
168 |
|
Fidelity & surety |
|
172 |
|
248 |
|
246 |
|
229 |
|
178 |
| |||||
International |
|
247 |
|
316 |
|
200 |
|
294 |
|
252 |
| |||||
Other |
|
42 |
|
40 |
|
50 |
|
38 |
|
49 |
| |||||
Total |
|
$ |
604 |
|
$ |
840 |
|
$ |
729 |
|
$ |
808 |
|
$ |
647 |
|
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Operating Income (Loss) - Personal Insurance ($ in millions) |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Revenues |
|
|
|
|
|
|
|
|
|
|
| |||||
Premiums |
|
$ |
1,910 |
|
$ |
1,903 |
|
$ |
1,912 |
|
$ |
1,896 |
|
$ |
1,840 |
|
Net investment income |
|
104 |
|
103 |
|
101 |
|
96 |
|
91 |
| |||||
Other revenues |
|
19 |
|
16 |
|
17 |
|
14 |
|
18 |
| |||||
Total revenues |
|
2,033 |
|
2,022 |
|
2,030 |
|
2,006 |
|
1,949 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Claims and expenses |
|
|
|
|
|
|
|
|
|
|
| |||||
Claims and claim adjustment expenses |
|
1,314 |
|
1,435 |
|
1,144 |
|
1,612 |
|
1,102 |
| |||||
Amortization of deferred acquisition costs |
|
361 |
|
362 |
|
360 |
|
354 |
|
330 |
| |||||
General and administrative expenses |
|
214 |
|
219 |
|
230 |
|
237 |
|
232 |
| |||||
Total claims and expenses |
|
1,889 |
|
2,016 |
|
1,734 |
|
2,203 |
|
1,664 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating income (loss) before federal income taxes |
|
144 |
|
6 |
|
296 |
|
(197 |
) |
285 |
| |||||
Income tax expense (benefit) |
|
36 |
|
(11 |
) |
90 |
|
(83 |
) |
88 |
| |||||
Operating income (loss) |
|
$ |
108 |
|
$ |
17 |
|
$ |
206 |
|
$ |
(114 |
) |
$ |
197 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other statistics |
|
|
|
|
|
|
|
|
|
|
| |||||
Effective tax rate on net investment income |
|
20.1 |
% |
20.4 |
% |
20.2 |
% |
19.4 |
% |
19.5 |
% | |||||
Net investment income (after-tax) |
|
$ |
83 |
|
$ |
82 |
|
$ |
81 |
|
$ |
77 |
|
$ |
73 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Catastrophes, net of reinsurance: |
|
|
|
|
|
|
|
|
|
|
| |||||
Pre-tax |
|
$ |
115 |
|
$ |
293 |
|
$ |
40 |
|
$ |
570 |
|
$ |
64 |
|
After-tax |
|
$ |
75 |
|
$ |
190 |
|
$ |
26 |
|
$ |
370 |
|
$ |
42 |
|
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Operating Income (Loss) by Major Component and Combined Ratio - Personal Insurance ($ in millions, net of tax) |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Underwriting gain (loss) |
|
$ |
12 |
|
$ |
(75 |
) |
$ |
113 |
|
$ |
(200 |
) |
$ |
112 |
|
Net investment income |
|
83 |
|
82 |
|
81 |
|
77 |
|
73 |
| |||||
Other |
|
13 |
|
10 |
|
12 |
|
9 |
|
12 |
| |||||
Operating income (loss) |
|
$ |
108 |
|
$ |
17 |
|
$ |
206 |
|
$ |
(114 |
) |
$ |
197 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
GAAP combined ratio (1) |
|
|
|
|
|
|
|
|
|
|
| |||||
Loss and loss adjustment expense ratio |
|
68.8 |
% |
75.4 |
% |
59.8 |
% |
85.0 |
% |
59.9 |
% | |||||
Underwriting expense ratio |
|
29.0 |
% |
29.4 |
% |
29.9 |
% |
30.2 |
% |
29.5 |
% | |||||
Combined ratio |
|
97.8 |
% |
104.8 |
% |
89.7 |
% |
115.2 |
% |
89.4 |
% | |||||
GAAP combined ratio excluding incremental impact of direct to consumer initiative |
|
95.7 |
% |
102.9 |
% |
86.8 |
% |
113.1 |
% |
87.5 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Impact of catastrophes on combined ratio |
|
6.0 |
% |
15.3 |
% |
2.1 |
% |
30.1 |
% |
3.5 |
% | |||||
Impact of prior year reserve development on combined ratio |
|
-0.5 |
% |
-3.5 |
% |
-3.4 |
% |
-1.8 |
% |
-3.3 |
% |
(1) Billing and policy fees and other, which are a component of other revenues, are allocated as a reduction of underwriting expenses. Billing and policy fees and other are as follows:
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
Billing and policy fees and other |
|
$ |
22 |
|
$ |
20 |
|
$ |
19 |
|
$ |
18 |
|
$ |
20 |
|
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Selected Statistics - Personal Insurance ($ in millions) |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Statutory underwriting |
|
|
|
|
|
|
|
|
|
|
| |||||
Gross written premiums |
|
$ |
1,853 |
|
$ |
2,078 |
|
$ |
2,126 |
|
$ |
1,866 |
|
$ |
1,763 |
|
Net written premiums |
|
$ |
1,793 |
|
$ |
2,002 |
|
$ |
2,006 |
|
$ |
1,793 |
|
$ |
1,690 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net earned premiums |
|
$ |
1,910 |
|
$ |
1,903 |
|
$ |
1,912 |
|
$ |
1,896 |
|
$ |
1,840 |
|
Losses and loss adjustment expenses |
|
1,314 |
|
1,435 |
|
1,143 |
|
1,613 |
|
1,102 |
| |||||
Underwriting expenses |
|
541 |
|
591 |
|
608 |
|
572 |
|
513 |
| |||||
Statutory underwriting gain (loss) |
|
$ |
55 |
|
$ |
(123 |
) |
$ |
161 |
|
$ |
(289 |
) |
$ |
225 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Policies in force (in thousands) |
|
|
|
|
|
|
|
|
|
|
| |||||
Automobile |
|
2,554 |
|
2,505 |
|
2,436 |
|
2,361 |
|
2,286 |
| |||||
Homeowners and other |
|
5,195 |
|
5,133 |
|
5,020 |
|
4,898 |
|
4,792 |
|
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Selected Statistics - Personal Insurance (Agency Automobile) (1) ($ in millions) |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Statutory underwriting |
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Gross written premiums |
|
$ |
904 |
|
$ |
903 |
|
$ |
911 |
|
$ |
826 |
|
$ |
835 |
|
Net written premiums |
|
$ |
900 |
|
$ |
899 |
|
$ |
906 |
|
$ |
822 |
|
$ |
831 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net earned premiums |
|
$ |
902 |
|
$ |
891 |
|
$ |
888 |
|
$ |
875 |
|
$ |
844 |
|
Losses and loss adjustment expenses |
|
641 |
|
674 |
|
659 |
|
778 |
|
594 |
| |||||
Underwriting expenses |
|
235 |
|
238 |
|
233 |
|
229 |
|
218 |
| |||||
Statutory underwriting gain (loss) |
|
$ |
26 |
|
$ |
(21 |
) |
$ |
(4 |
) |
$ |
(132 |
) |
$ |
32 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other statistics |
|
|
|
|
|
|
|
|
|
|
| |||||
GAAP combined ratio (2): |
|
|
|
|
|
|
|
|
|
|
| |||||
Loss and loss adjustment expense ratio |
|
71.1 |
% |
75.6 |
% |
74.1 |
% |
89.0 |
% |
70.4 |
% | |||||
Underwriting expense ratio |
|
25.4 |
% |
25.9 |
% |
25.3 |
% |
26.5 |
% |
25.6 |
% | |||||
Combined ratio |
|
96.5 |
% |
101.5 |
% |
99.4 |
% |
115.5 |
% |
96.0 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Impact of catastrophes on combined ratio |
|
1.0 |
% |
3.8 |
% |
0.4 |
% |
7.9 |
% |
1.0 |
% | |||||
Impact of prior year reserve development on combined ratio |
|
-0.2 |
% |
0.0 |
% |
0.9 |
% |
1.9 |
% |
0.6 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Catastrophe losses, net of reinsurance: |
|
|
|
|
|
|
|
|
|
|
| |||||
Pre-tax |
|
$ |
9 |
|
$ |
34 |
|
$ |
4 |
|
$ |
69 |
|
$ |
8 |
|
After-tax |
|
$ |
6 |
|
$ |
22 |
|
$ |
3 |
|
$ |
44 |
|
$ |
6 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Policies in force (in thousands) |
|
2,473 |
|
2,423 |
|
2,353 |
|
2,278 |
|
2,204 |
| |||||
Change from prior year quarter |
|
-1.0 |
% |
-3.2 |
% |
-5.9 |
% |
-8.7 |
% |
-10.9 |
% | |||||
Change from prior quarter |
|
-0.8 |
% |
-2.0 |
% |
-2.9 |
% |
-3.2 |
% |
-3.2 |
% |
(1) Represents Automobile policies sold through agents, brokers and other intermediaries, and excludes direct to consumer.
(2) Billing and policy fees and other, which are a component of other revenues, are allocated as a reduction of underwriting expenses. Billing and policy fees and other are as follows:
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
Billing and policy fees and other |
|
$ |
12 |
|
$ |
10 |
|
$ |
11 |
|
$ |
9 |
|
$ |
10 |
|
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Selected Statistics - Personal Insurance (Agency Homeowners and Other) (1) ($ in millions) |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Statutory underwriting |
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Gross written premiums |
|
$ |
912 |
|
$ |
1,135 |
|
$ |
1,171 |
|
$ |
1,002 |
|
$ |
889 |
|
Net written premiums |
|
$ |
855 |
|
$ |
1,064 |
|
$ |
1,056 |
|
$ |
934 |
|
$ |
820 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net earned premiums |
|
$ |
973 |
|
$ |
976 |
|
$ |
986 |
|
$ |
983 |
|
$ |
957 |
|
Losses and loss adjustment expenses |
|
643 |
|
730 |
|
457 |
|
800 |
|
480 |
| |||||
Underwriting expenses |
|
262 |
|
309 |
|
315 |
|
294 |
|
255 |
| |||||
Statutory underwriting gain (loss) |
|
$ |
68 |
|
$ |
(63 |
) |
$ |
214 |
|
$ |
(111 |
) |
$ |
222 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other statistics |
|
|
|
|
|
|
|
|
|
|
| |||||
GAAP combined ratio (2): |
|
|
|
|
|
|
|
|
|
|
| |||||
Loss and loss adjustment expense ratio |
|
66.0 |
% |
74.8 |
% |
46.4 |
% |
81.4 |
% |
50.2 |
% | |||||
Underwriting expense ratio |
|
29.0 |
% |
29.4 |
% |
29.0 |
% |
29.5 |
% |
29.8 |
% | |||||
Combined ratio |
|
95.0 |
% |
104.2 |
% |
75.4 |
% |
110.9 |
% |
80.0 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Impact of catastrophes on combined ratio |
|
10.7 |
% |
26.1 |
% |
3.6 |
% |
50.3 |
% |
5.6 |
% | |||||
Impact of prior year reserve development on combined ratio |
|
-1.1 |
% |
-6.9 |
% |
-7.3 |
% |
-4.9 |
% |
-6.7 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Catastrophe losses, net of reinsurance: |
|
|
|
|
|
|
|
|
|
|
| |||||
Pre-tax |
|
$ |
104 |
|
$ |
256 |
|
$ |
35 |
|
$ |
495 |
|
$ |
54 |
|
After-tax |
|
$ |
68 |
|
$ |
166 |
|
$ |
22 |
|
$ |
322 |
|
$ |
35 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Policies in force (in thousands) |
|
5,128 |
|
5,061 |
|
4,945 |
|
4,821 |
|
4,713 |
| |||||
Change from prior year quarter |
|
-0.1 |
% |
-1.9 |
% |
-4.3 |
% |
-6.6 |
% |
-8.1 |
% | |||||
Change from prior quarter |
|
-0.7 |
% |
-1.3 |
% |
-2.3 |
% |
-2.5 |
% |
-2.2 |
% |
(1) Represents Homeowners and Other Lines sold through agents, brokers and other intermediaries, and excludes direct to consumer.
(2) Billing and policy fees and other, which are a component of other revenues, are allocated as a reduction of underwriting expenses.
Billing and policy fees and other are as follows:
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
Billing and policy fees and other |
|
$ |
10 |
|
$ |
8 |
|
$ |
9 |
|
$ |
8 |
|
$ |
9 |
|
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Selected Statistics - Direct to Consumer (1) ($ in millions) |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net written premiums |
|
|
|
|
|
|
|
|
|
|
| |||||
Automobile |
|
$ |
29 |
|
$ |
28 |
|
$ |
32 |
|
$ |
26 |
|
$ |
29 |
|
Homeowners and other |
|
9 |
|
11 |
|
12 |
|
11 |
|
10 |
| |||||
Total net written premiums |
|
$ |
38 |
|
$ |
39 |
|
$ |
44 |
|
$ |
37 |
|
$ |
39 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Revenues |
|
|
|
|
|
|
|
|
|
|
| |||||
Premiums |
|
$ |
35 |
|
$ |
36 |
|
$ |
38 |
|
$ |
38 |
|
$ |
39 |
|
Other revenues |
|
|
|
|
|
1 |
|
|
|
|
| |||||
Total revenues |
|
35 |
|
36 |
|
39 |
|
38 |
|
39 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Claims and expenses |
|
|
|
|
|
|
|
|
|
|
| |||||
Claims and claim adjustment expenses |
|
31 |
|
31 |
|
27 |
|
34 |
|
28 |
| |||||
Amortization of deferred acquisition costs |
|
1 |
|
1 |
|
1 |
|
|
|
1 |
| |||||
General and administrative expenses |
|
42 |
|
42 |
|
61 |
|
51 |
|
40 |
| |||||
Total claims and expenses |
|
74 |
|
74 |
|
89 |
|
85 |
|
69 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating loss before federal income taxes |
|
(39 |
) |
(38 |
) |
(50 |
) |
(47 |
) |
(30 |
) | |||||
Income taxes |
|
(14 |
) |
(13 |
) |
(17 |
) |
(17 |
) |
(11 |
) | |||||
Operating loss |
|
$ |
(25 |
) |
$ |
(25 |
) |
$ |
(33 |
) |
$ |
(30 |
) |
$ |
(19 |
) |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other statistics |
|
|
|
|
|
|
|
|
|
|
| |||||
Policies in force (in thousands) |
|
|
|
|
|
|
|
|
|
|
| |||||
Automobile |
|
81 |
|
82 |
|
83 |
|
83 |
|
82 |
| |||||
Homeowners and other |
|
67 |
|
72 |
|
75 |
|
77 |
|
79 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Unfavorable (favorable) prior year reserve development |
|
$ |
2 |
|
$ |
1 |
|
$ |
(2 |
) |
$ |
(2 |
) |
$ |
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Catastrophes, net of reinsurance: |
|
|
|
|
|
|
|
|
|
|
| |||||
Pre-tax |
|
$ |
2 |
|
$ |
3 |
|
$ |
1 |
|
$ |
6 |
|
$ |
2 |
|
After-tax |
|
$ |
1 |
|
$ |
2 |
|
$ |
1 |
|
$ |
4 |
|
$ |
1 |
|
(1) Represents incremental premiums, other revenues and claims and expenses of Direct to Consumer business activities included in Personal Insurance operating income (loss).
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Interest Expense and Other ($ in millions) |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Revenues |
|
|
|
|
|
|
|
|
|
|
| |||||
Other revenues |
|
$ |
(4 |
) |
$ |
|
|
$ |
|
|
$ |
(8 |
) |
$ |
(2 |
) |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Claims and expenses |
|
|
|
|
|
|
|
|
|
|
| |||||
Interest expense |
|
96 |
|
96 |
|
93 |
|
93 |
|
92 |
| |||||
General and administrative expenses |
|
7 |
|
5 |
|
5 |
|
6 |
|
4 |
| |||||
Total claims and expenses |
|
103 |
|
101 |
|
98 |
|
99 |
|
96 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating loss before federal income tax benefit |
|
(107 |
) |
(101 |
) |
(98 |
) |
(107 |
) |
(98 |
) | |||||
Income taxes |
|
(39 |
) |
(35 |
) |
(36 |
) |
(42 |
) |
(35 |
) | |||||
Operating loss |
|
$ |
(68 |
) |
$ |
(66 |
) |
$ |
(62 |
) |
$ |
(65 |
) |
$ |
(63 |
) |
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Consolidated Balance Sheet (in millions) |
|
|
|
March 31, |
|
December 31, |
| ||
|
|
2013 (1) |
|
2012 |
| ||
|
|
|
|
|
| ||
Assets |
|
|
|
|
| ||
Fixed maturities, available for sale, at fair value (amortized cost $60,578 and $60,829) |
|
$ |
64,699 |
|
$ |
65,393 |
|
Equity securities, available for sale, at fair value (cost $446 and $462) |
|
694 |
|
645 |
| ||
Real estate investments |
|
879 |
|
883 |
| ||
Short-term securities |
|
3,368 |
|
3,483 |
| ||
Other investments |
|
3,441 |
|
3,434 |
| ||
Total investments |
|
73,081 |
|
73,838 |
| ||
|
|
|
|
|
| ||
Cash |
|
243 |
|
330 |
| ||
Investment income accrued |
|
686 |
|
752 |
| ||
Premiums receivable |
|
6,021 |
|
5,872 |
| ||
Reinsurance recoverables |
|
10,249 |
|
10,712 |
| ||
Ceded unearned premiums |
|
976 |
|
856 |
| ||
Deferred acquisition costs |
|
1,795 |
|
1,792 |
| ||
Contractholder receivables |
|
4,824 |
|
4,806 |
| ||
Goodwill |
|
3,365 |
|
3,365 |
| ||
Other intangible assets |
|
370 |
|
381 |
| ||
Other assets |
|
2,287 |
|
2,234 |
| ||
Total assets |
|
$ |
103,897 |
|
$ |
104,938 |
|
|
|
|
|
|
| ||
Liabilities |
|
|
|
|
| ||
Claims and claim adjustment expense reserves |
|
$ |
50,018 |
|
$ |
50,922 |
|
Unearned premium reserves |
|
11,406 |
|
11,241 |
| ||
Contractholder payables |
|
4,824 |
|
4,806 |
| ||
Payables for reinsurance premiums |
|
459 |
|
346 |
| ||
Deferred taxes |
|
352 |
|
338 |
| ||
Debt |
|
5,851 |
|
6,350 |
| ||
Other liabilities |
|
5,391 |
|
5,530 |
| ||
Total liabilities |
|
78,301 |
|
79,533 |
| ||
|
|
|
|
|
| ||
Shareholders equity |
|
|
|
|
| ||
Common stock (1,750.0 shares authorized; 376.4 and 377.4 shares issued and outstanding) |
|
21,300 |
|
21,161 |
| ||
Retained earnings |
|
22,072 |
|
21,352 |
| ||
Accumulated other comprehensive income |
|
1,926 |
|
2,236 |
| ||
Treasury stock, at cost (376.7 and 372.3 shares) |
|
(19,702 |
) |
(19,344 |
) | ||
Total shareholders equity |
|
25,596 |
|
25,405 |
| ||
Total liabilities and shareholders equity |
|
$ |
103,897 |
|
$ |
104,938 |
|
(1) Preliminary.
The Travelers Companies, Inc. Investment Portfolio (at carrying value, $ in millions) |
|
|
|
March 31, |
|
Pre-tax Book |
|
December 31, |
|
Pre-tax Book |
| ||
|
|
2013 |
|
Yield (1) |
|
2012 |
|
Yield (1) |
| ||
Investment portfolio |
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||
Taxable fixed maturities (including redeemable preferred stock) |
|
$ |
26,923 |
|
3.85 |
% |
$ |
27,188 |
|
3.92 |
% |
Tax-exempt fixed maturities |
|
37,776 |
|
3.85 |
% |
38,205 |
|
3.87 |
% | ||
Total fixed maturities |
|
64,699 |
|
3.85 |
% |
65,393 |
|
3.89 |
% | ||
|
|
|
|
|
|
|
|
|
| ||
Non-redeemable preferred stocks |
|
133 |
|
6.29 |
% |
135 |
|
6.27 |
% | ||
Common stocks |
|
561 |
|
|
|
510 |
|
|
| ||
Total equity securities |
|
694 |
|
|
|
645 |
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||
Real estate investments |
|
879 |
|
|
|
883 |
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||
Short-term securities |
|
3,368 |
|
0.20 |
% |
3,483 |
|
0.21 |
% | ||
|
|
|
|
|
|
|
|
|
| ||
Private equities |
|
1,907 |
|
|
|
1,888 |
|
|
| ||
Hedge funds |
|
378 |
|
|
|
381 |
|
|
| ||
Real estate partnerships |
|
596 |
|
|
|
610 |
|
|
| ||
Mortgage loans |
|
2 |
|
5.41 |
% |
4 |
|
6.21 |
% | ||
Trading securities |
|
14 |
|
|
|
30 |
|
|
| ||
Other investments |
|
544 |
|
|
|
521 |
|
|
| ||
Total other investments |
|
3,441 |
|
|
|
3,434 |
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||
Total investments |
|
$ |
73,081 |
|
|
|
$ |
73,838 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Net unrealized investment gains, net of tax, included in shareholders equity |
|
$ |
2,864 |
|
|
|
$ |
3,103 |
|
|
|
(1) Yields are provided for those investments with an embedded book yield.
The Travelers Companies, Inc. Investment Portfolio - Fixed Maturities Data (at carrying value, $ in millions) |
|
|
|
March 31, |
|
December 31, |
| ||
|
|
2013 |
|
2012 |
| ||
Fixed maturities |
|
|
|
|
| ||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies |
|
$ |
2,136 |
|
$ |
2,222 |
|
Obligations of states and political subdivisions: |
|
|
|
|
| ||
Pre-refunded |
|
9,648 |
|
9,025 |
| ||
All other |
|
28,598 |
|
29,656 |
| ||
Total |
|
38,246 |
|
38,681 |
| ||
Debt securities issued by foreign governments |
|
2,189 |
|
2,257 |
| ||
Mortgage-backed securities - principally obligations of U.S. Government agencies |
|
2,776 |
|
2,997 |
| ||
Corporates (including redeemable preferreds) |
|
19,352 |
|
19,236 |
| ||
Total fixed maturities |
|
$ |
64,699 |
|
$ |
65,393 |
|
Fixed Maturities
Quality Characteristics (1)
|
|
March 31, 2013 |
| |||
|
|
Amount |
|
% of Total |
| |
Quality Ratings |
|
|
|
|
| |
Aaa |
|
$ |
27,502 |
|
42.5 |
% |
Aa |
|
20,556 |
|
31.8 |
| |
A |
|
8,514 |
|
13.2 |
| |
Baa |
|
6,024 |
|
9.3 |
| |
Total investment grade |
|
62,596 |
|
96.8 |
| |
Ba |
|
1,024 |
|
1.6 |
| |
B |
|
483 |
|
0.7 |
| |
Caa and lower |
|
596 |
|
0.9 |
| |
Total below investment grade |
|
2,103 |
|
3.2 |
| |
Total fixed maturities |
|
$ |
64,699 |
|
100.0 |
% |
Average weighted quality |
|
Aa2, AA |
|
|
| |
Average duration of fixed maturities and short-term securities, net of securities lending activities and net receivables and payables on investment sales and purchases |
|
3.2 |
|
|
|
(1) Rated using external rating agencies or by Travelers when a public rating does not exist. Below investment grade assets refer to securities rated Ba or below.
The Travelers Companies, Inc. Investment Income ($ in millions) |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Gross investment income |
|
|
|
|
|
|
|
|
|
|
| |||||
Fixed maturities |
|
$ |
620 |
|
$ |
611 |
|
$ |
604 |
|
$ |
604 |
|
$ |
586 |
|
Short-term securities |
|
2 |
|
3 |
|
3 |
|
2 |
|
2 |
| |||||
Other |
|
128 |
|
133 |
|
124 |
|
91 |
|
92 |
| |||||
|
|
750 |
|
747 |
|
731 |
|
697 |
|
680 |
| |||||
Investment expenses |
|
10 |
|
9 |
|
9 |
|
8 |
|
10 |
| |||||
Net investment income, pre-tax |
|
740 |
|
738 |
|
722 |
|
689 |
|
670 |
| |||||
Income taxes |
|
147 |
|
149 |
|
144 |
|
133 |
|
128 |
| |||||
Net investment income, after-tax |
|
$ |
593 |
|
$ |
589 |
|
$ |
578 |
|
$ |
556 |
|
$ |
542 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Effective tax rate |
|
19.9 |
% |
20.2 |
% |
20.0 |
% |
19.2 |
% |
19.2 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Average invested assets (1) |
|
$ |
69,494 |
|
$ |
69,623 |
|
$ |
69,813 |
|
$ |
70,419 |
|
$ |
69,996 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Average yield pre-tax (1) |
|
4.3 |
% |
4.2 |
% |
4.1 |
% |
3.9 |
% |
3.8 |
% | |||||
Average yield after-tax |
|
3.4 |
% |
3.4 |
% |
3.3 |
% |
3.2 |
% |
3.1 |
% |
(1) Excludes net unrealized investment gains, net of tax, and is adjusted for cash, receivables for investment sales, payables on investment purchases and accrued investment income.
The Travelers Companies, Inc. Net Realized and Unrealized Investment Gains ($ in millions) |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net realized investment gains (losses) |
|
|
|
|
|
|
|
|
|
|
| |||||
Fixed maturities |
|
$ |
8 |
|
$ |
17 |
|
$ |
14 |
|
$ |
14 |
|
$ |
11 |
|
Equity securities |
|
3 |
|
2 |
|
|
|
(1 |
) |
6 |
| |||||
Other (1) |
|
(1 |
) |
(15 |
) |
(16 |
) |
26 |
|
(7 |
) | |||||
Realized investment gains (losses) before tax |
|
10 |
|
4 |
|
(2 |
) |
39 |
|
10 |
| |||||
Related taxes |
|
5 |
|
|
|
1 |
|
13 |
|
1 |
| |||||
Net realized investment gains (losses) |
|
$ |
5 |
|
$ |
4 |
|
$ |
(3 |
) |
$ |
26 |
|
$ |
9 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Gross investment gains (1) |
|
$ |
121 |
|
$ |
78 |
|
$ |
78 |
|
$ |
97 |
|
$ |
108 |
|
Gross investment losses before impairments (1) |
|
(107 |
) |
(70 |
) |
(77 |
) |
(54 |
) |
(93 |
) | |||||
Net investment gains before impairments |
|
14 |
|
8 |
|
1 |
|
43 |
|
15 |
| |||||
Other-than-temporary impairment losses |
|
(4 |
) |
(4 |
) |
(3 |
) |
(4 |
) |
(5 |
) | |||||
Net realized investment gains (losses) before tax |
|
10 |
|
4 |
|
(2 |
) |
39 |
|
10 |
| |||||
Related taxes |
|
5 |
|
|
|
1 |
|
13 |
|
1 |
| |||||
Net realized investment gains (losses) |
|
$ |
5 |
|
$ |
4 |
|
$ |
(3 |
) |
$ |
26 |
|
$ |
9 |
|
|
|
March 31, |
|
June 30, |
|
September 30, |
|
December 31, |
|
March 31, |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net unrealized investment gains, net of tax, by asset type |
|
|
|
|
|
|
|
|
|
|
| |||||
Fixed maturities |
|
$ |
4,166 |
|
$ |
4,392 |
|
$ |
4,870 |
|
$ |
4,564 |
|
$ |
4,121 |
|
Equity securities & other |
|
181 |
|
176 |
|
209 |
|
197 |
|
274 |
| |||||
Unrealized investment gains before tax |
|
4,347 |
|
4,568 |
|
5,079 |
|
4,761 |
|
4,395 |
| |||||
Related taxes |
|
1,509 |
|
1,588 |
|
1,764 |
|
1,658 |
|
1,531 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balance, end of period |
|
$ |
2,838 |
|
$ |
2,980 |
|
$ |
3,315 |
|
$ |
3,103 |
|
$ |
2,864 |
|
(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 |
|
$ |
47 |
|
$ |
25 |
|
$ |
27 |
|
$ |
26 |
|
$ |
56 |
|
Gross investment Treasury future losses |
|
$ |
41 |
|
$ |
38 |
|
$ |
35 |
|
$ |
25 |
|
$ |
75 |
|
The Company entered into these arrangements as part of its strategy to shorten the duration of its fixed maturity portfolio. In a changing interest rate environment, the change in the value of the futures contracts can be expected to partially offset changes in the value of the fixed maturity portfolio.
The Travelers Companies, Inc. Reinsurance Recoverables ($ in millions) |
|
|
|
March 31, |
|
December 31, |
| ||
|
|
2013 |
|
2012 |
| ||
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses |
|
$ |
5,070 |
|
$ |
5,256 |
|
Allowance for uncollectible reinsurance |
|
(256 |
) |
(258 |
) | ||
Net reinsurance recoverables (i) |
|
4,814 |
|
4,998 |
| ||
Mandatory pools and associations (ii) |
|
2,251 |
|
2,549 |
| ||
Structured settlements (iii) |
|
3,184 |
|
3,165 |
| ||
Total reinsurance recoverables |
|
$ |
10,249 |
|
$ |
10,712 |
|
(i) The Companys top five reinsurer groups, including retroactive reinsurance, included in net reinsurance recoverables is as follows:
|
|
A.M. Best Rating of Groups |
|
March 31, |
|
December 31, |
| ||
Reinsurer |
|
Predominant Reinsurer |
|
2013 |
|
2012 |
| ||
Munich Re Group |
|
A+ second highest of 16 ratings |
|
$ |
539 |
|
$ |
550 |
|
Swiss Re Group |
|
A+ second highest of 16 ratings |
|
519 |
|
517 |
| ||
Alleghany Group |
|
A third highest of 16 ratings |
|
301 |
|
302 |
| ||
XL Capital Group |
|
A third highest of 16 ratings |
|
262 |
|
266 |
| ||
Berkshire Hathaway Group |
|
A++ highest of 16 ratings |
|
247 |
|
258 |
| ||
The gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses represent the current and estimated future amounts due from reinsurers on known and incurred but not reported claims. The ceded reserves are estimated in a manner consistent with the underlying direct and assumed reserves. Although this total comprises recoverables due from nearly one thousand different reinsurance entities, about half is attributable to 10 reinsurer groups.
The net reinsurance recoverables reflect an allowance for uncollectible reinsurance that is based upon the Companys ongoing review of amounts outstanding, reinsurer solvency, the Companys experience, current economic conditions, and other relevant factors. Of the total net recoverables due from reinsurers at March 31, 2013, after deducting mandatory pools and associations and structured settlement balances, $3.9 billion, or 80%, were rated by A.M. Best Company. Of the total rated by A.M. Best Company, 99% were rated A- or better. The remaining 20% of net recoverables from reinsurers were comprised of the following: 7% related to the Companys participation in voluntary pools, 10% related to recoverables from captive insurance companies and 3% were balances from other companies not rated by A.M. Best Company. In addition, $1.4 billion of the net recoverables were collateralized by letters of credit, funds held or trust agreements at March 31, 2013.
(ii) The mandatory pools and associations represent various involuntary assigned risk pools that the Company is required to participate in. These pools principally involve workers compensation and automobile insurance, which provide various insurance coverages to insureds that otherwise are unable to purchase coverage in the open market. The costs of these mandatory pools in most states are usually charged back to the participating members in proportion to voluntary writings of related business in that state. In the event that a member of the pool becomes insolvent, the remaining members assume an additional pro rata share of the pools liabilities.
(iii) Included in reinsurance recoverables are certain amounts related to structured settlements, which comprise annuities purchased from various life insurance companies to settle certain personal physical injury claims, of which workers compensation claims comprise a significant portion. In cases where the Company did not receive a release from the claimant, the amount due from the life insurance company related to the structured settlement is included in the Companys consolidated balance sheet as a liability and as a reinsurance recoverable, as the Company retains the contingent liability to pay the claimant in the event that the life insurance company fails to make the required annuity payments. The Company would be required to make such payments, to the extent the purchased annuities are not covered by state guaranty associations.
The Companys top five groups by structured settlement is as follows:
|
|
A.M. Best Rating of Groups |
|
March 31, |
|
December 31, |
| ||
Group |
|
Predominant Insurer |
|
2013 |
|
2012 |
| ||
Fidelity and Guaranty Life |
|
B++ fifth highest of 16 ratings |
|
$ |
987 |
|
$ |
981 |
|
Metlife |
|
A+ second highest of 16 ratings |
|
471 |
|
474 |
| ||
Genworth Financial Group |
|
A third highest of 16 ratings |
|
436 |
|
437 |
| ||
Symetra Financial Corporation |
|
A third highest of 16 ratings |
|
255 |
|
256 |
| ||
John Hancock Group |
|
A+ second highest of 16 ratings |
|
186 |
|
190 |
| ||
The Travelers Companies, Inc. Net Reserves for Losses and Loss Adjustment Expense ($ in millions) |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
Statutory Basis Reserves for Losses and Loss Adjustment Expenses |
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Business Insurance |
|
|
|
|
|
|
|
|
|
|
| |||||
Beginning of period |
|
$ |
31,131 |
|
$ |
31,006 |
|
$ |
31,126 |
|
$ |
31,051 |
|
$ |
31,120 |
|
Incurred |
|
1,663 |
|
2,057 |
|
1,860 |
|
2,147 |
|
1,668 |
| |||||
Paid |
|
(1,792 |
) |
(1,932 |
) |
(1,937 |
) |
(2,080 |
) |
(1,860 |
) | |||||
Foreign exchange and other |
|
4 |
|
(5 |
) |
2 |
|
2 |
|
1 |
| |||||
End of period |
|
$ |
31,006 |
|
$ |
31,126 |
|
$ |
31,051 |
|
$ |
31,120 |
|
$ |
30,929 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Financial, Professional & International Insurance |
|
|
|
|
|
|
|
|
|
|
| |||||
Beginning of period |
|
$ |
6,019 |
|
$ |
6,045 |
|
$ |
5,992 |
|
$ |
5,894 |
|
$ |
5,849 |
|
Incurred |
|
341 |
|
299 |
|
307 |
|
359 |
|
300 |
| |||||
Paid |
|
(361 |
) |
(307 |
) |
(453 |
) |
(411 |
) |
(316 |
) | |||||
Foreign exchange and other |
|
46 |
|
(45 |
) |
48 |
|
7 |
|
(76 |
) | |||||
End of period |
|
$ |
6,045 |
|
$ |
5,992 |
|
$ |
5,894 |
|
$ |
5,849 |
|
$ |
5,757 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Personal Insurance |
|
|
|
|
|
|
|
|
|
|
| |||||
Beginning of period |
|
$ |
3,749 |
|
$ |
3,740 |
|
$ |
3,807 |
|
$ |
3,583 |
|
$ |
3,687 |
|
Incurred |
|
1,314 |
|
1,435 |
|
1,143 |
|
1,613 |
|
1,102 |
| |||||
Paid |
|
(1,323 |
) |
(1,368 |
) |
(1,367 |
) |
(1,509 |
) |
(1,260 |
) | |||||
End of period |
|
$ |
3,740 |
|
$ |
3,807 |
|
$ |
3,583 |
|
$ |
3,687 |
|
$ |
3,529 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total |
|
|
|
|
|
|
|
|
|
|
| |||||
Beginning of period |
|
$ |
40,899 |
|
$ |
40,791 |
|
$ |
40,925 |
|
$ |
40,528 |
|
$ |
40,656 |
|
Incurred |
|
3,318 |
|
3,791 |
|
3,310 |
|
4,119 |
|
3,070 |
| |||||
Paid |
|
(3,476 |
) |
(3,607 |
) |
(3,757 |
) |
(4,000 |
) |
(3,436 |
) | |||||
Foreign exchange and other |
|
50 |
|
(50 |
) |
50 |
|
9 |
|
(75 |
) | |||||
End of period |
|
$ |
40,791 |
|
$ |
40,925 |
|
$ |
40,528 |
|
$ |
40,656 |
|
$ |
40,215 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Prior Year Reserve Development: Unfavorable (Favorable) |
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Business Insurance |
|
|
|
|
|
|
|
|
|
|
| |||||
Asbestos |
|
$ |
|
|
$ |
|
|
$ |
167 |
|
$ |
|
|
$ |
|
|
Environmental |
|
|
|
90 |
|
|
|
|
|
|
| |||||
All other |
|
(248 |
) |
(148 |
) |
(208 |
) |
(120 |
) |
(113 |
) | |||||
Prior year development excluding accretion of discount |
|
(248 |
) |
(58 |
) |
(41 |
) |
(120 |
) |
(113 |
) | |||||
Accretion of discount |
|
12 |
|
13 |
|
12 |
|
11 |
|
12 |
| |||||
Total Business Insurance |
|
(236 |
) |
(45 |
) |
(29 |
) |
(109 |
) |
(101 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Financial, Professional & International Insurance |
|
|
|
|
|
|
|
|
|
|
| |||||
Asbestos |
|
|
|
|
|
8 |
|
|
|
|
| |||||
All other |
|
(46 |
) |
(96 |
) |
(95 |
) |
(69 |
) |
(58 |
) | |||||
Total Financial, Professional & International Insurance |
|
(46 |
) |
(96 |
) |
(87 |
) |
(69 |
) |
(58 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Personal Insurance |
|
(10 |
) |
(67 |
) |
(65 |
) |
(33 |
) |
(60 |
) | |||||
Total |
|
$ |
(292 |
) |
$ |
(208 |
) |
$ |
(181 |
) |
$ |
(211 |
) |
$ |
(219 |
) |
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Asbestos and Environmental Reserves ($ in millions) |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Asbestos reserves |
|
|
|
|
|
|
|
|
|
|
| |||||
Beginning reserves: |
|
|
|
|
|
|
|
|
|
|
| |||||
Gross |
|
$ |
2,780 |
|
$ |
2,724 |
|
$ |
2,660 |
|
$ |
2,771 |
|
$ |
2,689 |
|
Ceded |
|
(341 |
) |
(340 |
) |
(335 |
) |
(324 |
) |
(311 |
) | |||||
Net |
|
2,439 |
|
2,384 |
|
2,325 |
|
2,447 |
|
2,378 |
| |||||
Incurred losses and loss expenses: |
|
|
|
|
|
|
|
|
|
|
| |||||
Gross |
|
|
|
|
|
171 |
|
|
|
|
| |||||
Ceded |
|
|
|
|
|
4 |
|
|
|
|
| |||||
Losses paid: |
|
|
|
|
|
|
|
|
|
|
| |||||
Gross |
|
56 |
|
64 |
|
60 |
|
82 |
|
63 |
| |||||
Ceded |
|
(1 |
) |
(5 |
) |
(7 |
) |
(13 |
) |
(19 |
) | |||||
Ending reserves: |
|
|
|
|
|
|
|
|
|
|
| |||||
Gross |
|
2,724 |
|
2,660 |
|
2,771 |
|
2,689 |
|
2,626 |
| |||||
Ceded |
|
(340 |
) |
(335 |
) |
(324 |
) |
(311 |
) |
(292 |
) | |||||
Net |
|
$ |
2,384 |
|
$ |
2,325 |
|
$ |
2,447 |
|
$ |
2,378 |
|
$ |
2,334 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Environmental reserves |
|
|
|
|
|
|
|
|
|
|
| |||||
Beginning reserves: |
|
|
|
|
|
|
|
|
|
|
| |||||
Gross |
|
$ |
346 |
|
$ |
321 |
|
$ |
396 |
|
$ |
380 |
|
$ |
352 |
|
Ceded |
|
(5 |
) |
(4 |
) |
(9 |
) |
(7 |
) |
(5 |
) | |||||
Net |
|
341 |
|
317 |
|
387 |
|
373 |
|
347 |
| |||||
Incurred losses and loss expenses: |
|
|
|
|
|
|
|
|
|
|
| |||||
Gross |
|
|
|
96 |
|
3 |
|
|
|
|
| |||||
Ceded |
|
|
|
(6 |
) |
(3 |
) |
|
|
|
| |||||
Losses paid: |
|
|
|
|
|
|
|
|
|
|
| |||||
Gross |
|
25 |
|
21 |
|
19 |
|
28 |
|
12 |
| |||||
Ceded |
|
(1 |
) |
(1 |
) |
(5 |
) |
(2 |
) |
(1 |
) | |||||
Ending reserves: |
|
|
|
|
|
|
|
|
|
|
| |||||
Gross |
|
321 |
|
396 |
|
380 |
|
352 |
|
340 |
| |||||
Ceded |
|
(4 |
) |
(9 |
) |
(7 |
) |
(5 |
) |
(4 |
) | |||||
Net |
|
$ |
317 |
|
$ |
387 |
|
$ |
373 |
|
$ |
347 |
|
$ |
336 |
|
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Capitalization ($ in millions) |
|
|
|
March 31, |
|
December 31, |
| ||
Debt |
|
2013 |
|
2012 |
| ||
|
|
|
|
|
| ||
Short-term debt |
|
|
|
|
| ||
Commercial paper |
|
$ |
100 |
|
$ |
100 |
|
5.00% Senior notes due March 15, 2013 (1) |
|
|
|
500 |
| ||
Total short-term debt |
|
100 |
|
600 |
| ||
|
|
|
|
|
| ||
Long-term debt |
|
|
|
|
| ||
5.50% Senior notes due December 1, 2015 (1) |
|
400 |
|
400 |
| ||
6.25% Senior notes due June 20, 2016 (1) |
|
400 |
|
400 |
| ||
5.75% Senior notes due December 15, 2017 (1) |
|
450 |
|
450 |
| ||
5.80% Senior notes due May 15, 2018 (1) |
|
500 |
|
500 |
| ||
5.90% Senior notes due June 2, 2019 (1) |
|
500 |
|
500 |
| ||
3.90% Senior notes due November 1, 2020 (1) |
|
500 |
|
500 |
| ||
7.75% Senior notes due April 15, 2026 |
|
200 |
|
200 |
| ||
7.625% Junior subordinated debentures due December 15, 2027 |
|
125 |
|
125 |
| ||
6.375% Senior notes due March 15, 2033 (1) |
|
500 |
|
500 |
| ||
6.75% Senior notes due June 20, 2036 (1) |
|
400 |
|
400 |
| ||
6.25% Senior notes due June 15, 2037 (1) |
|
800 |
|
800 |
| ||
5.35% Senior notes due November 1, 2040 (1) |
|
750 |
|
750 |
| ||
8.50% Junior subordinated debentures due December 15, 2045 |
|
56 |
|
56 |
| ||
8.312% Junior subordinated debentures due July 1, 2046 |
|
73 |
|
73 |
| ||
6.25% Fixed-to-floating rate junior subordinated debentures due March 15, 2067 (1) |
|
107 |
|
107 |
| ||
Total long-term debt |
|
5,761 |
|
5,761 |
| ||
Unamortized fair value adjustment |
|
52 |
|
52 |
| ||
Unamortized debt issuance costs |
|
(62 |
) |
(63 |
) | ||
|
|
5,751 |
|
5,750 |
| ||
Total debt |
|
5,851 |
|
6,350 |
| ||
|
|
|
|
|
| ||
Common equity (excluding net unrealized investment gains, net of tax) |
|
22,732 |
|
22,302 |
| ||
|
|
|
|
|
| ||
Total capital (excluding net unrealized investment gains, net of tax) |
|
$ |
28,583 |
|
$ |
28,652 |
|
|
|
|
|
|
| ||
Total debt to capital (excluding net unrealized investment gains, net of tax) |
|
20.5 |
% |
22.2 |
% |
(1) Redeemable anytime with make-whole premium.
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Statutory to GAAP Shareholders Equity Reconciliation ($ in millions) |
|
|
|
March 31, |
|
December 31, |
| ||
|
|
2013 (1) |
|
2012 |
| ||
|
|
|
|
|
| ||
Statutory basis surplus |
|
$ |
20,692 |
|
$ |
20,048 |
|
|
|
|
|
|
| ||
GAAP adjustments |
|
|
|
|
| ||
|
|
|
|
|
| ||
Goodwill and intangible assets |
|
3,563 |
|
3,573 |
| ||
|
|
|
|
|
| ||
Investments |
|
4,892 |
|
5,351 |
| ||
|
|
|
|
|
| ||
Noninsurance companies |
|
(4,395 |
) |
(4,302 |
) | ||
|
|
|
|
|
| ||
Deferred acquisition costs |
|
1,795 |
|
1,792 |
| ||
|
|
|
|
|
| ||
Deferred federal income tax |
|
(2,128 |
) |
(2,220 |
) | ||
|
|
|
|
|
| ||
Current federal income tax |
|
(11 |
) |
(9 |
) | ||
|
|
|
|
|
| ||
Reinsurance recoverables |
|
201 |
|
201 |
| ||
|
|
|
|
|
| ||
Furniture, equipment & software |
|
653 |
|
664 |
| ||
|
|
|
|
|
| ||
Employee benefits |
|
(17 |
) |
(13 |
) | ||
|
|
|
|
|
| ||
Agents balances |
|
147 |
|
151 |
| ||
|
|
|
|
|
| ||
Other |
|
204 |
|
169 |
| ||
|
|
|
|
|
| ||
Total GAAP adjustments |
|
4,904 |
|
5,357 |
| ||
|
|
|
|
|
| ||
GAAP shareholders equity |
|
$ |
25,596 |
|
$ |
25,405 |
|
(1) Estimated and Preliminary
See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Statement of Cash Flows - Preliminary ($ in millions) |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
| |||||
Net income |
|
$ |
806 |
|
$ |
499 |
|
$ |
864 |
|
$ |
304 |
|
$ |
896 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
| |||||
Net realized investment (gains) losses |
|
(10 |
) |
(4 |
) |
2 |
|
(39 |
) |
(10 |
) | |||||
Depreciation and amortization |
|
216 |
|
196 |
|
206 |
|
209 |
|
219 |
| |||||
Deferred federal income tax expense |
|
119 |
|
6 |
|
96 |
|
2 |
|
131 |
| |||||
Amortization of deferred acquisition costs |
|
971 |
|
976 |
|
986 |
|
977 |
|
948 |
| |||||
Equity in income from other investments |
|
(114 |
) |
(114 |
) |
(43 |
) |
(71 |
) |
(74 |
) | |||||
Premiums receivable |
|
(151 |
) |
(317 |
) |
161 |
|
169 |
|
(155 |
) | |||||
Reinsurance recoverables |
|
495 |
|
257 |
|
174 |
|
(473 |
) |
390 |
| |||||
Deferred acquisition costs |
|
(984 |
) |
(1,016 |
) |
(1,005 |
) |
(909 |
) |
(954 |
) | |||||
Claims and claim adjustment expense reserves |
|
(504 |
) |
(95 |
) |
(597 |
) |
656 |
|
(751 |
) | |||||
Unearned premium reserves |
|
117 |
|
229 |
|
160 |
|
(383 |
) |
187 |
| |||||
Other |
|
(147 |
) |
(166 |
) |
497 |
|
22 |
|
(297 |
) | |||||
Net cash provided by operating activities |
|
814 |
|
451 |
|
1,501 |
|
464 |
|
530 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
| |||||
Proceeds from maturities of fixed maturities |
|
1,615 |
|
2,552 |
|
1,688 |
|
2,514 |
|
2,123 |
| |||||
Proceeds from sales of investments: |
|
|
|
|
|
|
|
|
|
|
| |||||
Fixed maturities |
|
223 |
|
319 |
|
182 |
|
363 |
|
234 |
| |||||
Equity securities |
|
15 |
|
7 |
|
9 |
|
6 |
|
36 |
| |||||
Real estate investments |
|
|
|
3 |
|
|
|
50 |
|
|
| |||||
Other investments |
|
203 |
|
183 |
|
130 |
|
319 |
|
174 |
| |||||
Purchases of investments: |
|
|
|
|
|
|
|
|
|
|
| |||||
Fixed maturities |
|
(2,604 |
) |
(2,596 |
) |
(2,477 |
) |
(2,770 |
) |
(2,339 |
) | |||||
Equity securities |
|
(10 |
) |
(23 |
) |
(6 |
) |
(9 |
) |
(13 |
) | |||||
Real estate investments |
|
(5 |
) |
(53 |
) |
(4 |
) |
(33 |
) |
(6 |
) | |||||
Other investments |
|
(114 |
) |
(107 |
) |
(71 |
) |
(242 |
) |
(95 |
) | |||||
Net sales (purchases) of short-term securities |
|
226 |
|
141 |
|
(408 |
) |
158 |
|
109 |
| |||||
Securities transactions in course of settlement |
|
248 |
|
(171 |
) |
(24 |
) |
(76 |
) |
180 |
| |||||
Other |
|
(92 |
) |
(41 |
) |
(96 |
) |
(94 |
) |
(100 |
) | |||||
Net cash provided by (used in) investing activities |
|
(295 |
) |
214 |
|
(1,077 |
) |
186 |
|
303 |
| |||||
The Travelers Companies, Inc. Statement of Cash Flows - Preliminary (Continued) ($ in millions) |
|
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
| |||||
|
|
2012 |
|
2012 |
|
2012 |
|
2012 |
|
2013 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
| |||||
Payment of debt |
|
|
|
(258 |
) |
|
|
|
|
(500 |
) | |||||
Dividends paid to shareholders |
|
(161 |
) |
(180 |
) |
(178 |
) |
(175 |
) |
(175 |
) | |||||
Issuance of common stock - employee share options |
|
77 |
|
93 |
|
77 |
|
48 |
|
98 |
| |||||
Treasury stock acquired - share repurchase authorization |
|
(354 |
) |
(353 |
) |
(349 |
) |
(418 |
) |
(300 |
) | |||||
Treasury stock acquired - net employee share-based compensation |
|
(52 |
) |
|
|
|
|
(1 |
) |
(58 |
) | |||||
Excess tax benefits from share-based payment arrangements |
|
12 |
|
7 |
|
13 |
|
6 |
|
21 |
| |||||
Net cash used in financing activities |
|
(478 |
) |
(691 |
) |
(437 |
) |
(540 |
) |
(914 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Effect of exchange rate changes on cash |
|
3 |
|
(2 |
) |
3 |
|
|
|
(6 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net increase (decrease) in cash |
|
44 |
|
(28 |
) |
(10 |
) |
110 |
|
(87 |
) | |||||
Cash at beginning of period |
|
214 |
|
258 |
|
230 |
|
220 |
|
330 |
| |||||
Cash at end of period |
|
$ |
258 |
|
$ |
230 |
|
$ |
220 |
|
$ |
330 |
|
$ |
243 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Income taxes paid (received) |
|
$ |
20 |
|
$ |
276 |
|
$ |
14 |
|
$ |
(122 |
) |
$ |
27 |
|
Interest paid |
|
$ |
35 |
|
$ |
156 |
|
$ |
35 |
|
$ |
149 |
|
$ |
35 |
|
The Travelers Companies, Inc. Financial Supplement - First Quarter 2013 Glossary of Financial Measures and Description of Reportable Business Segments |
|
The following measures are used by the Companys management to evaluate financial performance against historical results and establish targets on a consolidated basis. In some cases, these measures are considered non-GAAP financial measures under applicable SEC rules because they are not displayed as separate line items in the consolidated financial statements or are not required to be disclosed in the notes to financial statements or, in some cases, include or exclude certain items not ordinarily included or excluded in the most comparable GAAP financial measure.
In the opinion of the Companys management, a discussion of these measures provides investors, financial analysts, rating agencies and other financial statement users with a better understanding of the significant factors that comprise the Companys periodic results of operations and how management evaluates the Companys financial performance. Internally, the Companys management uses these measures to evaluate performance against historical results and establish financial targets on a consolidated basis.
Some of these measures exclude net realized investment gains (losses), net of tax, and/or net unrealized investment gains (losses), net of tax, which can be significantly impacted by both discretionary and other economic factors and are not necessarily indicative of operating trends.
Other companies may calculate these measures differently, and, therefore, their measures may not be comparable to those used by the Companys management.
Operating income (loss) is net income (loss) excluding the after-tax impact of net realized investment gains (losses). Management uses operating income (loss) to analyze each segments performance and as a tool in making business decisions. Financial statement users also consider operating income when analyzing the results and trends of insurance companies. Operating earnings (loss) per share is operating income (loss) on a per common share basis.
Average shareholders equity is (a) the sum of total shareholders equity at the beginning and end of each of the quarters for the period presented divided by (b) the number of quarters in the period presented times two. Adjusted shareholders equity is shareholders equity excluding net unrealized investment gains (losses), net of tax and net realized investment gains (losses), net of tax, for the period presented. Adjusted average shareholders equity is average shareholders equity excluding net unrealized investment gains (losses), net of tax, for all quarters included in the calculation and, for each quarterly period included in the calculation that quarters net realized investment gains (losses), net of tax.
Return on equity is the ratio of annualized net income (loss) to average shareholders equity for the periods presented. Operating return on equity is the ratio of annualized operating income (loss) to adjusted average shareholders equity for the periods presented. In the opinion of the Companys management, these are important indicators of how well management creates value for its shareholders through its operating activities and its capital management.
Underwriting gain (loss) is net earned premiums and fee income less claims and claim adjustment expenses and insurance-related expenses. In the opinion of the Companys management, it is important to measure the profitability of each segment excluding the results of investing activities, which are managed separately from the insurance business. This measure is used to assess each segments business performance and as a tool in making business decisions.
A catastrophe is a severe loss, resulting from natural and man-made events, including risks such as fire, earthquake, windstorm, explosion, terrorism and other similar events. Each catastrophe has unique characteristics, and catastrophes are not predictable as to timing or amount. Their effects are included in net and operating income and claims and claim adjustment expense reserves upon occurrence. A catastrophe may result in the payment of reinsurance reinstatement premiums and assessments from various pools. In the opinion of the Companys management, a discussion of the impact of catastrophes is meaningful to users of the financial statements to understand the Companys periodic earnings and the variability in periodic earnings caused by the unpredictable nature of catastrophes.
Net favorable (unfavorable) prior year loss reserve development is the increase or decrease in incurred claims and claim adjustment expenses as a result of the re-estimation of claims and claim adjustment expense reserves at successive valuation dates for a given group of claims, which may be related to one or more prior years. In the opinion of the Companys management, a discussion of loss reserve development is meaningful to users of the financial statements as it allows them to assess the impact between prior and current year development on incurred claims and claim adjustment expenses, net and operating income (loss), and changes in claims and claim adjustment expense reserve levels from period to period.
GAAP combined ratio is the sum of the loss and loss adjustment expense ratio (loss and LAE ratio) and the underwriting expense ratio. For GAAP, the loss and LAE ratio is the ratio of incurred losses and loss adjustment expenses reduced by an allocation of fee income to net earned premiums. The underwriting expense ratio is the ratio of underwriting expenses incurred reduced by an allocation of fee income, and billing and policy fees and other to net earned premiums. A GAAP combined ratio under 100% generally indicates an underwriting profit. A GAAP combined ratio over 100% generally indicates an underwriting loss. The GAAP combined ratio is an operating statistic that includes GAAP measures in the numerator and the denominator.
GAAP combined ratio excluding the incremental impact of the direct to consumer initiative is the GAAP combined ratio adjusted to exclude the direct, variable impact of the Companys direct-to-consumer initiative in Personal Insurance. In the opinion of the Companys management, this is useful in an analysis of the profitability of the Companys ongoing agency business.
Gross written premiums reflect the direct and assumed contractually determined amounts charged to policyholders for the effective period of the contract based on the terms and conditions of the insurance contract. Net written premiums reflect gross written premiums less premiums ceded to reinsurers.
Book value per share is total common shareholders equity divided by the number of common shares outstanding. Adjusted book value per share is total common shareholders equity excluding the after-tax impact of net unrealized investment gains and losses, divided by the number of common shares outstanding. In the opinion of the Companys management, adjusted book value is useful in an analysis of a property casualty companys book value as it removes the effect of changing prices on invested assets, (i.e., net unrealized investment gains (losses), net of tax) which do not have an equivalent impact on unpaid claims and claim adjustment expense reserves.
Total capital is the sum of total shareholders equity and debt. Debt-to-capital ratio excluding net unrealized gain (loss) on investments is the ratio of debt to total capital excluding the after-tax impact of net unrealized investment gains and losses. In the opinion of the Companys management, the debt to capital ratio is useful in an analysis of the Companys financial leverage.
Statutory basis surplus represents the excess of an insurance companys assets over its liabilities in accordance with statutory accounting practices.
Travelers has organized its businesses into the following reportable business segments:
Business Insurance - The Business Insurance segment offers a broad array of property and casualty insurance and insurance-related services to its clients primarily in the United States. Business Insurance is organized into the following six groups, which collectively comprise Business Insurance Core operations: Select Accounts; Commercial Accounts; National Accounts; Industry-Focused Underwriting including Construction, Technology, Public Sector Services, Oil & Gas, and Agribusiness; Target Risk Underwriting including National Property, Inland Marine, Ocean Marine, Excess Casualty, Boiler & Machinery, and Global Partner Services; and Specialized Distribution including Northland and National Programs. Business Insurance also includes the Special Liability Group (which manages the Companys asbestos and environmental liabilities) and the assumed reinsurance, and certain other runoff operations, which collectively are referred to as Business Insurance Other.
Financial, Professional & International Insurance - The Financial, Professional & International Insurance segment includes surety and financial liability coverages, which primarily use credit-based underwriting processes, as well as property and casualty products that are primarily marketed on a domestic basis in the United Kingdom, Canada and the Republic of Ireland, and on an international basis through Lloyds. The segment includes Bond & Financial Products as well as International.
Personal Insurance - The Personal Insurance segment writes a broad range of property and casualty insurance covering individuals personal risks. The primary products of automobile and homeowners insurance are complemented by a broad suite of related coverages.
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