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): October 21, 2014
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 |
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 October 21, 2014, The Travelers Companies, Inc. (the Company) issued a press release announcing the results of the Companys operations for the quarter ended September 30, 2014, and the availability of the Companys third 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 October 21, 2014, reporting results of operations (This exhibit is furnished and not filed.) |
99.2 |
|
Third Quarter 2014 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: October 21, 2014 |
THE TRAVELERS COMPANIES, INC. | ||
|
| ||
|
By: |
/s/ Matthew S. Furman | |
|
|
Name: |
Matthew S. Furman |
|
|
Title: |
Senior Vice President |
Exhibit 99.1
|
|
NYSE: TRV
Travelers Reports Third Quarter Net Income per Diluted Share of $2.69, Up 17% from Prior Year Quarter
Operating Income per Diluted Share of $2.61, Up 11% from Prior Year Quarter
Return on Equity and Operating Return on Equity of 14.5% and 15.2%, Respectively
· Net income and operating income of $919 million and $893 million, increased 6% and 1%, respectively, from prior year quarter.
· Total revenues of $6.886 billion increased 7% and net written premiums of $6.033 billion increased 6% from the prior year quarter primarily due to the acquisition of Dominion of Canada in November 2013.
· Total capital returned to shareholders of $937 million in the quarter, including $751 million in share repurchases. Year-to-date total capital returned to shareholders of $2.885 billion.
· Increases in book value per share of 9% to $76.42 and adjusted book value per share of 6% to $70.64 from year-end 2013.
· Board of Directors approves quarterly dividend per share of $0.55.
New York, October 21, 2014 The Travelers Companies, Inc. today reported net income of $919 million, or $2.69 per diluted share, for the quarter ended September 30, 2014, compared to net income of $864 million, or $2.30 per diluted share, in the prior year quarter. Operating income in the current quarter was $893 million, or $2.61 per diluted share, compared to $883 million, or $2.35 per diluted share, in the prior year quarter. The increase in net and operating income compared to the prior year quarter primarily resulted from higher net investment income and lower catastrophe losses, partially offset by lower net favorable prior year reserve development and a slightly lower underlying underwriting gain (i.e., excluding net favorable prior year reserve development and catastrophe losses), which was impacted by higher non-catastrophe weather-related losses. Net income also benefited from higher net realized investment gains while per diluted share amounts also benefited from the impact of share repurchases.
Consolidated Highlights
($ in millions, except for per share amounts, and after-tax, |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||||||
except for premiums & revenues) |
|
2014 |
|
2013 |
|
Change |
|
2014 |
|
2013 |
|
Change |
| ||||
Net written premiums |
|
$ |
6,033 |
|
$ |
5,713 |
|
6 |
% |
$ |
18,068 |
|
$ |
17,134 |
|
5 |
% |
Total revenues |
|
$ |
6,886 |
|
$ |
6,452 |
|
7 |
|
$ |
20,379 |
|
$ |
19,454 |
|
5 |
|
Operating income |
|
$ |
893 |
|
$ |
883 |
|
1 |
|
$ |
2,618 |
|
$ |
2,586 |
|
1 |
|
per diluted share |
|
$ |
2.61 |
|
$ |
2.35 |
|
11 |
|
$ |
7.50 |
|
$ |
6.79 |
|
10 |
|
Net income |
|
$ |
919 |
|
$ |
864 |
|
6 |
|
$ |
2,654 |
|
$ |
2,685 |
|
(1 |
) |
per diluted share |
|
$ |
2.69 |
|
$ |
2.30 |
|
17 |
|
$ |
7.60 |
|
$ |
7.05 |
|
8 |
|
Diluted weighted average shares outstanding |
|
338.9 |
|
372.9 |
|
(9 |
) |
346.5 |
|
378.1 |
|
(8 |
) | ||||
Combined ratio |
|
90.0 |
% |
88.9 |
% |
1.1 |
pts |
90.3 |
% |
90.6 |
% |
(0.3 |
)pts | ||||
Underlying combined ratio |
|
90.5 |
% |
90.0 |
% |
0.5 |
pts |
89.9 |
% |
90.8 |
% |
(0.9 |
)pts | ||||
Operating return on equity |
|
15.2 |
% |
15.2 |
% |
|
pts |
14.8 |
% |
15.1 |
% |
(0.3 |
)pts | ||||
Return on equity |
|
14.5 |
% |
13.9 |
% |
0.6 |
pts |
14.0 |
% |
14.2 |
% |
(0.2 |
)pts |
|
|
|
|
|
|
|
|
Change from |
| |||||
|
|
September 30, |
|
December 31, |
|
September 30, |
|
December 31, |
|
September 30, |
| |||
|
|
2014 |
|
2013 |
|
2013 |
|
2013 |
|
2013 |
| |||
Book value per share |
|
$ |
76.42 |
|
$ |
70.15 |
|
$ |
68.15 |
|
9 |
% |
12 |
% |
Adjusted book value per share |
|
70.64 |
|
66.41 |
|
63.87 |
|
6 |
|
11 |
| |||
See Glossary of Financial Measures for definitions and the statistical supplement for additional financial data.
We are very pleased with our results this quarter, commented Jay Fishman, Chairman and Chief Executive Officer. Our results were driven by strong underwriting performance across all of our business segments, as reflected in our consolidated combined ratio of 90.0%, and higher investment returns driven by private equity performance. Our return on equity and per share results continue to benefit meaningfully from our ongoing strategy of returning excess capital to shareholders. Year-to-date, total capital returned to shareholders was almost $2.9 billion, including over $2.3 billion in share repurchases and $553 million in dividends.
In addition to these strong financial results, we were also very pleased with our production metrics this quarter. Within Business and International Insurance, once again, we improved retention in our domestic businesses from already strong levels in recent quarters, while continuing to achieve meaningful rate and exposure increases. Bond & Specialty Insurance improved profitability from already high levels, and continued to achieve positive renewal premium change while maintaining strong retention. In Personal Insurance, Auto net written premiums were up 3% from the prior year quarter and policies in force were up 1% from the most recent quarter as a result of the very successful introduction of Quantum 2.0 beginning last fall.
As we continue to face persistently low interest rates and uncertain weather patterns, we remain focused on delivering superior profitability and returns on equity. Consequently, we remain committed to our highly segmented pricing and underwriting strategies, executing on an account by account or class by class basis.
Consolidated Results
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||||||||
($ in millions and pre-tax, unless noted otherwise) |
|
2014 |
|
2013 |
|
Change |
|
2014 |
|
2013 |
|
Change |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Underwriting gain: |
|
$ |
564 |
|
$ |
595 |
|
$ |
(31 |
) |
$ |
1,612 |
|
$ |
1,478 |
|
$ |
134 |
|
Underwriting gain includes: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net favorable prior year reserve development |
|
113 |
|
158 |
|
(45 |
) |
590 |
|
581 |
|
9 |
| ||||||
Catastrophes, net of reinsurance |
|
(83 |
) |
(99 |
) |
16 |
|
(668 |
) |
(538 |
) |
(130 |
) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net investment income |
|
719 |
|
657 |
|
62 |
|
2,150 |
|
2,014 |
|
136 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Other, including interest expense |
|
(65 |
) |
(53 |
) |
(12 |
) |
(190 |
) |
(73 |
) |
(117 |
) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Operating income before income taxes |
|
1,218 |
|
1,199 |
|
19 |
|
3,572 |
|
3,419 |
|
153 |
| ||||||
Income tax expense |
|
325 |
|
316 |
|
9 |
|
954 |
|
833 |
|
121 |
| ||||||
Operating income |
|
893 |
|
883 |
|
10 |
|
2,618 |
|
2,586 |
|
32 |
| ||||||
Net realized investment gains (losses) after income taxes |
|
26 |
|
(19 |
) |
45 |
|
36 |
|
99 |
|
(63 |
) | ||||||
Net Income |
|
$ |
919 |
|
$ |
864 |
|
$ |
55 |
|
$ |
2,654 |
|
$ |
2,685 |
|
$ |
(31 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Combined ratio |
|
90.0 |
% |
88.9 |
% |
1.1 |
pts |
90.3 |
% |
90.6 |
% |
(0.3 |
)pts | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Impact on combined ratio |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net favorable prior year reserve development |
|
(1.9 |
)pts |
(2.8 |
)pts |
0.9 |
pts |
(3.3 |
)pts |
(3.4 |
)pts |
0.1 |
pts | ||||||
Catastrophes, net of reinsurance |
|
1.4 |
pts |
1.7 |
pts |
(0.3 |
)pts |
3.7 |
pts |
3.2 |
pts |
0.5 |
pts | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Underlying combined ratio |
|
90.5 |
% |
90.0 |
% |
0.5 |
pts |
89.9 |
% |
90.8 |
% |
(0.9 |
)pts | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net written premiums |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Business and International Insurance |
|
$ |
3,560 |
|
$ |
3,249 |
|
10 |
% |
$ |
11,061 |
|
$ |
10,147 |
|
9 |
% | ||
Bond & Specialty Insurance |
|
556 |
|
553 |
|
1 |
|
1,578 |
|
1,479 |
|
7 |
| ||||||
Personal Insurance |
|
1,917 |
|
1,911 |
|
|
|
5,429 |
|
5,508 |
|
(1 |
) | ||||||
Total |
|
$ |
6,033 |
|
$ |
5,713 |
|
6 |
% |
$ |
18,068 |
|
$ |
17,134 |
|
5 |
% |
Third Quarter 2014 Results
(All comparisons vs. third quarter 2013, unless noted otherwise)
Net income of $919 million after-tax increased $55 million, or 6%, due to an increase in both net realized investment gains and operating income. Current period net realized investment gains resulted from the sale of substantially all of one of the companys real estate joint venture investments. Operating income of $893 million after-tax increased $10 million, or 1%, primarily driven by higher net investment income and a continued strong, but lower, underwriting gain.
Underwriting results
· The combined ratio increased 1.1 points to 90.0% as the benefit of lower catastrophe losses (0.3 points) was more than offset by lower net favorable prior year reserve development (0.9 points) and a higher underlying combined ratio (0.5 points).
· The underlying combined ratio increased 0.5 points to 90.5% as the benefit of earned pricing that exceeded loss cost trends was more than offset by higher non-catastrophe weather-related losses.
· Net favorable prior year reserve development occurred in all segments. Catastrophe losses were primarily due to wind and hail storms in several regions of the United States, as well as increases in estimated losses related to wind and hail storms that occurred in the second quarter.
Net investment income of $568 million after-tax ($719 million pre-tax) increased due to strong private equity performance, partially offset by lower reinvestment rates in the fixed income portfolio.
Net written premiums of $6.033 billion increased 6% primarily due to the inclusion of Dominion and domestic business insurance growth within Business and International Insurance.
Year-to-Date 2014 Results
(All comparisons vs. year-to-date 2013, unless noted otherwise)
Net income of $2.654 billion after-tax decreased $31 million, or 1%, due to lower net realized investment gains. Prior period net realized investment gains related to a short position in U.S. Treasury futures contracts. Operating income of $2.618 billion after-tax increased $32 million, or 1%, driven by higher net investment income and a higher underwriting gain, partially offset by a decline in other income due to the inclusion of a benefit in the prior year period of a $91 million pre-tax favorable legal settlement, as well as the inclusion in the prior year period of a $63 million benefit from a favorable tax settlement. The current period operating income included a $49 million after-tax benefit recorded in the first quarter resulting from a reduction in the estimated liability for state assessments to be paid by the company related to workers compensation premiums.
Underwriting results
· The combined ratio improved 0.3 points to 90.3% due to an improved underlying combined ratio (0.9 points), partially offset by higher catastrophe losses (0.5 points) and lower net favorable prior year reserve development (0.1 points).
· The underlying combined ratio improved 0.9 points to 89.9% as the benefits of earned pricing that exceeded loss cost trends and an improved expense ratio were partially offset by higher non-catastrophe weather-related losses. The expense ratio benefited from the above mentioned reduction in the estimated liability for state assessments.
· Net favorable prior year reserve development occurred in all segments. Catastrophe losses were primarily due to wind, hail and winter storms in several regions in the United States.
Net investment income of $1.703 billion after-tax ($2.150 billion pre-tax) increased primarily due to strong private equity performance and higher real estate partnership returns, partially offset by lower reinvestment rates in the fixed income portfolio.
Net written premiums of $18.068 billion increased 5% primarily due to the inclusion of Dominion and domestic business insurance growth within Business and International Insurance.
Shareholders Equity
Shareholdersequity of $25.321 billion decreased 1% and increased 2%, respectively, from the end of second quarter 2014 and year-end 2013. Included in shareholders equity were after-tax net unrealized investment gains of $1.914 billion, compared to $2.013 billion at the end of second quarter 2014 and $1.322 billion at year-end 2013. Book value per share of $76.42 increased 1% and 9%, respectively, from the end of second quarter 2014 and year-end 2013, while adjusted book value per share of $70.64 increased 2% and 6%, respectively, from the end of second quarter 2014 and year-end 2013.
The company repurchased 8.1 million shares during the third quarter and 26.1 million shares year-to-date at a total cost of $751 million and $2.332 billion, respectively. The company has $2.484 billion of remaining capacity under its existing share repurchase authorization. At the end of third quarter 2014, statutory surplus was $21.005 billion and the ratio of
debt-to-capital (excluding after-tax net unrealized investment gains) was 21.3%, well within the companys target range of 15% to 25%.
The Board of Directors has declared a quarterly dividend today of $0.55 per share. This dividend is payable on December 31, 2014 to shareholders of record as of the close of business on December 10, 2014.
Business and International Insurance Segment Financial Results
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||||||||
($ in millions and pre-tax, unless noted otherwise) |
|
2014 |
|
2013 |
|
Change |
|
2014 |
|
2013 |
|
Change |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Underwriting gain: |
|
$ |
160 |
|
$ |
234 |
|
$ |
(74 |
) |
$ |
584 |
|
$ |
625 |
|
$ |
(41 |
) |
Underwriting gain includes: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net favorable prior year reserve development |
|
21 |
|
77 |
|
(56 |
) |
163 |
|
277 |
|
(114 |
) | ||||||
Catastrophes, net of reinsurance |
|
(31 |
) |
(59 |
) |
28 |
|
(356 |
) |
(283 |
) |
(73 |
) | ||||||
Net investment income |
|
557 |
|
504 |
|
53 |
|
1,666 |
|
1,544 |
|
122 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Other |
|
10 |
|
8 |
|
2 |
|
32 |
|
135 |
|
(103 |
) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Operating income before income taxes |
|
727 |
|
746 |
|
(19 |
) |
2,282 |
|
2,304 |
|
(22 |
) | ||||||
Income tax expense |
|
175 |
|
180 |
|
(5 |
) |
565 |
|
531 |
|
34 |
| ||||||
Operating income |
|
$ |
552 |
|
$ |
566 |
|
$ |
(14 |
) |
$ |
1,717 |
|
$ |
1,773 |
|
$ |
(56 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Combined ratio |
|
95.2 |
% |
92.7 |
% |
2.5 |
pts |
94.2 |
% |
93.3 |
% |
0.9 |
pts | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Impact on combined ratio |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net favorable prior year reserve development |
|
(0.6 |
)pts |
(2.3 |
)pts |
1.7 |
pts |
(1.5 |
)pts |
(2.8 |
)pts |
1.3 |
pts | ||||||
Catastrophes, net of reinsurance |
|
0.9 |
pts |
1.8 |
pts |
(0.9 |
)pts |
3.3 |
pts |
2.9 |
pts |
0.4 |
pts | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Underlying combined ratio |
|
94.9 |
% |
93.2 |
% |
1.7 |
pts |
92.4 |
% |
93.2 |
% |
(0.8 |
)pts | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net written premiums by market |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Domestic |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Select Accounts |
|
$ |
654 |
|
$ |
654 |
|
|
% |
$ |
2,077 |
|
$ |
2,087 |
|
|
% | ||
Middle Market |
|
1,545 |
|
1,487 |
|
4 |
|
4,597 |
|
4,489 |
|
2 |
| ||||||
National Accounts |
|
249 |
|
236 |
|
6 |
|
792 |
|
755 |
|
5 |
| ||||||
First Party |
|
369 |
|
382 |
|
(3 |
) |
1,206 |
|
1,198 |
|
1 |
| ||||||
Specialized Distribution |
|
262 |
|
273 |
|
(4 |
) |
812 |
|
831 |
|
(2 |
) | ||||||
Total Domestic |
|
3,079 |
|
3,032 |
|
2 |
|
9,484 |
|
9,360 |
|
1 |
| ||||||
International |
|
481 |
|
217 |
|
122 |
|
1,577 |
|
787 |
|
100 |
| ||||||
Total |
|
$ |
3,560 |
|
$ |
3,249 |
|
10 |
% |
$ |
11,061 |
|
$ |
10,147 |
|
9 |
% |
Third Quarter 2014 Results
(All comparisons vs. third quarter 2013, unless noted otherwise)
Operating income of $552 million after-tax decreased $14 million, or 2%, as higher net investment income was more than offset by a lower underwriting gain.
Underwriting results
· The combined ratio increased 2.5 points to 95.2% as the benefit of lower catastrophe losses (0.9 points) was more than offset by a higher underlying combined ratio (1.7 points) and lower net favorable prior year reserve development (1.7 points).
· The underlying combined ratio increased 1.7 points to 94.9% as the benefit of earned pricing that exceeded loss cost trends was more than offset by higher non-catastrophe weather-related losses.
· Net favorable prior year reserve development resulted from (i) a $162 million pre-tax benefit related to better than expected loss experience related to, and the commutation of reinsurance treaties associated with, a workers compensation reinsurance pool for accident years 1996 and prior and (ii) better than expected loss experience in the general liability product line for accident years 2009 through 2012 as well as the property product line for accident years 2012 and 2013, partially offset by (iii) a $250 million pre-tax increase to asbestos reserves, and (iv) a $77 million pre-tax increase to unallocated loss adjusted expense (ULAE) reserves for the accrual of interest resulting from a court decision received in the third quarter, for which the associated settlement amount had been previously included in our asbestos reserves.
· The asbestos reserve strengthening, which resulted from our annual in-depth asbestos claim review that was completed in the third quarter, was driven by increases in the companys estimate for projected settlement and defense costs related to a broad number of policyholders. The increase in the estimate of projected settlement and defense costs resulted from recent payment trends that were higher than previously anticipated. While the overall view of the underlying asbestos environment is essentially unchanged from recent periods, there remains a high degree of uncertainty with respect to future exposure from asbestos claims.
Net written premiums of $3.560 billion increased 10% primarily driven by the inclusion of Dominion. Domestic net written premiums of $3.079 billion increased 2% driven by continued positive renewal premium changes. Retention remained strong and improved from recent quarters.
Year-to-Date 2014 Results
(All comparisons vs. year-to-date 2013, unless noted otherwise)
Operating income of $1.717 billion after-tax decreased $56 million, or 3%, as higher net investment income was more than offset by a decline in other income due to the inclusion of a benefit in the prior year period of a $91 million pre-tax favorable legal settlement, the inclusion in the prior year period of a $43 million benefit from a favorable tax settlement, as well as a lower underwriting gain. The current period operating income included a $49 million after-tax benefit recorded in the first quarter resulting from a reduction in the estimated liability for state assessments to be paid by the company related to workers compensation premiums.
Underwriting results
· The combined ratio increased 0.9 points to 94.2% as the benefit of an improved underlying combined ratio (0.8 points) was more than offset by lower net favorable prior year reserve development (1.3 points) and higher catastrophe losses (0.4 points).
· The underlying combined ratio improved 0.8 points to 92.4% as the benefits of earned pricing that exceeded loss cost trends and an improved expense ratio were partially offset by higher non-catastrophe weather-related losses. The expense ratio benefited from the above mentioned reduction in the estimated liability for state assessments.
· Net favorable prior year reserve development resulted from (i) better than expected loss experience in the general liability product line for accident years 2012 and prior as well as the property product line for accident years 2010 through 2013, (ii) a $162 million pre-tax benefit resulting from better than expected loss experience related to, and the commutation of reinsurance treaties associated with, a workers compensation reinsurance pool, partially offset by (iii) a $250 million pre-tax increase to asbestos reserves, (iv) an $87 million pre-tax increase to environmental reserves, (v) a $77 million pre-tax increase to unallocated loss adjusted expense (ULAE) reserves for the accrual of interest resulting from a court decision received in the third quarter, for which the associated settlement amount had been previously included in our asbestos reserves, and (vi) higher than expected loss experience related to the liability coverages in the commercial multi-peril product line for accident years 2010 through 2013.
Net written premiums of $11.061 billion increased 9% primarily driven by the inclusion of Dominion. Domestic net written premiums of $9.484 billion increased 1% driven by continued positive renewal premium changes and high retention levels.
Bond & Specialty Insurance Segment Financial Results
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
| ||||||||||||||
($ in millions and pre-tax, unless noted otherwise) |
|
2014 |
|
2013 |
|
Change |
|
2014 |
|
2013 |
|
Change |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Underwriting gain |
|
$ |
173 |
|
$ |
102 |
|
$ |
71 |
|
$ |
544 |
|
$ |
337 |
|
$ |
207 |
| |
Underwriting gain includes: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Net favorable prior year reserve development |
|
79 |
|
33 |
|
46 |
|
270 |
|
131 |
|
139 |
| |||||||
Catastrophes, net of reinsurance |
|
(1 |
) |
(2 |
) |
1 |
|
(6 |
) |
(7 |
) |
1 |
| |||||||
Net investment income |
|
64 |
|
63 |
|
1 |
|
192 |
|
195 |
|
(3 |
) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Other |
|
5 |
|
5 |
|
|
|
15 |
|
15 |
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Operating income before income taxes |
|
242 |
|
170 |
|
72 |
|
751 |
|
547 |
|
204 |
| |||||||
Income tax expense |
|
77 |
|
50 |
|
27 |
|
240 |
|
148 |
|
92 |
| |||||||
Operating income |
|
$ |
165 |
|
$ |
120 |
|
$ |
45 |
|
$ |
511 |
|
$ |
399 |
|
$ |
112 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Combined ratio |
|
66.9 |
% |
79.4 |
% |
(12.5 |
)pts |
64.6 |
% |
76.7 |
% |
(12.1) |
pts | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Impact on combined ratio |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Net favorable prior year reserve development |
|
(15.0 |
)pts |
(6.6 |
)pts |
(8.4 |
)pts |
(17.4 |
)pts |
(8.9 |
)pts |
(8.5 |
)pts | |||||||
Catastrophes, net of reinsurance |
|
0.2 |
pts |
0.3 |
pts |
(0.1 |
)pts |
0.5 |
pts |
0.4 |
pts |
0.1 |
pts | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Underlying combined ratio |
|
81.7 |
% |
85.7 |
% |
(4.0 |
)pts |
81.5 |
% |
85.2 |
% |
(3.7 |
)pts | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Net written premiums by market |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Management Liability |
|
348 |
|
350 |
|
(1 |
)% |
1,003 |
|
932 |
|
8 |
% | |||||||
Surety |
|
208 |
|
203 |
|
2 |
|
575 |
|
547 |
|
5 |
| |||||||
Total |
|
$ |
556 |
|
$ |
553 |
|
1 |
% |
$ |
1,578 |
|
$ |
1,479 |
|
7 |
% |
Third Quarter 2014 Results
(All comparisons vs. third quarter 2013, unless noted otherwise)
Operating income of $165 million after-tax increased $45 million, or 38%, primarily due to a higher underwriting gain.
Underwriting results
· The combined ratio improved 12.5 points to 66.9% primarily due to higher net favorable prior year reserve development (8.4 points), an improved underlying combined ratio (4.0 points) and lower catastrophe losses (0.1 points).
· The underlying combined ratio improved 4.0 points to 81.7% primarily driven by lower reinsurance costs and the benefit of earned pricing that exceeded loss cost trends.
· Net favorable prior year reserve development primarily resulted from better than expected loss experience in the contract surety product line for accident years 2009 through 2011.
Bond & Specialty Insurance net written premiums of $556 million increased 1%.
Year-to-Date 2014 Results
(All comparisons vs. year-to-date 2013, unless noted otherwise)
Operating income of $511 million after-tax increased $112 million, or 28%, primarily due to a higher underwriting gain. The prior year period operating income included a $15 million after-tax favorable tax settlement.
Underwriting results
· The combined ratio improved 12.1 points to 64.6% due to higher net favorable prior year reserve development (8.5 points) and an improved underlying combined ratio (3.7 points), partially offset by higher catastrophe losses (0.1 points).
· The underlying combined ratio improved 3.7 points to 81.5% primarily driven by lower reinsurance costs and the benefit of earned pricing that exceeded loss cost trends.
· Net favorable prior year reserve development primarily resulted from better than expected loss experience in the contract surety product line for accident years 2007 through 2011.
Bond & Specialty Insurance net written premiums of $1.578 billion increased 7% as a result of lower reinsurance costs and higher business volumes in Surety.
Personal Insurance Segment Financial Results
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
| ||||||||||||||
($ in millions and pre-tax, unless noted otherwise) |
|
2014 |
|
2013 |
|
Change |
|
2014 |
|
2013 |
|
Change |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Underwriting gain: |
|
$ |
231 |
|
$ |
259 |
|
$ |
(28 |
) |
$ |
484 |
|
$ |
516 |
|
$ |
(32 |
) |
Underwriting gain includes: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net favorable prior year reserve development |
|
13 |
|
48 |
|
(35 |
) |
157 |
|
173 |
|
(16 |
) | ||||||
Catastrophes, net of reinsurance |
|
(51 |
) |
(38 |
) |
(13 |
) |
(306 |
) |
(248 |
) |
(58 |
) | ||||||
Net investment income |
|
98 |
|
90 |
|
8 |
|
292 |
|
275 |
|
17 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Other |
|
19 |
|
34 |
|
(15 |
) |
62 |
|
67 |
|
(5 |
) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Operating income before income taxes |
|
348 |
|
383 |
|
(35 |
) |
838 |
|
858 |
|
(20 |
) | ||||||
Income tax expense |
|
109 |
|
121 |
|
(12 |
) |
256 |
|
257 |
|
(1 |
) | ||||||
Operating income |
|
$ |
239 |
|
$ |
262 |
|
$ |
(23 |
) |
$ |
582 |
|
$ |
601 |
|
$ |
(19 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Combined ratio |
|
86.1 |
% |
84.7 |
% |
1.4 |
pts |
89.8 |
% |
89.5 |
% |
0.3 |
pts | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Impact on combined ratio |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net favorable prior year reserve development |
|
(0.7 |
)pts |
(2.6 |
)pts |
1.9 |
pts |
(2.9 |
)pts |
(3.2 |
)pts |
0.3 |
pts | ||||||
Catastrophes, net of reinsurance |
|
2.8 |
pts |
2.0 |
pts |
0.8 |
pts |
5.6 |
pts |
4.5 |
pts |
1.1 |
pts | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Underlying combined ratio |
|
84.0 |
% |
85.3 |
% |
(1.3 |
)pts |
87.1 |
% |
88.2 |
% |
(1.1 |
)pts | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net written premiums |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Agency Automobile(1) |
|
$ |
849 |
|
$ |
828 |
|
3 |
% |
$ |
2,468 |
|
$ |
2,493 |
|
(1 |
)% | ||
Agency Homeowners & Other(1) |
|
1,017 |
|
1,039 |
|
(2 |
) |
2,821 |
|
2,892 |
|
(2 |
) | ||||||
Direct to Consumer |
|
51 |
|
44 |
|
16 |
|
140 |
|
123 |
|
14 |
| ||||||
Total |
|
$ |
1,917 |
|
$ |
1,911 |
|
|
% |
$ |
5,429 |
|
$ |
5,508 |
|
(1 |
)% |
(1) Represents business sold through agents, brokers and other intermediaries and excludes direct to consumer.
Third Quarter 2014 Results
(All comparisons vs. third quarter 2013, unless noted otherwise)
Operating income of $239 million after-tax decreased $23 million, or 9%, as the benefit of a higher underlying underwriting gain was more than offset by lower net favorable prior year reserve development and higher catastrophe losses.
Underwriting results
· The combined ratio increased 1.4 points to 86.1% as an improved underlying combined ratio (1.3 points) was more than offset by lower net favorable prior year reserve development (1.9 points) and higher catastrophe losses (0.8 points).
· The underlying combined ratio improved 1.3 points to 84.0% primarily due to the benefits of earned pricing that exceeded loss cost trends, the companys previously announced expense reduction initiatives and lower homeowners commission expense, partially offset by the impact of higher new business.
· Net favorable prior year reserve development resulted from better than expected loss experience in Homeowners & Other for accident years 2011 through 2013 related to catastrophe losses.
Personal Insurance net written premiums of $1.917 billion were slightly above the prior year period, due to increased new business from the companys new auto product, Quantum 2.0.
Year-to-Date 2014 Results
(All comparisons vs. year-to-date 2013, unless noted otherwise)
Operating income of $582 million after-tax decreased $19 million, or 3%, as higher net investment income was more than offset by a lower underwriting gain. The prior year period operating income included a $5 million after-tax favorable tax settlement.
Underwriting results
· The combined ratio increased 0.3 points to 89.8% as an improved underlying combined ratio (1.1 points) was more than offset by higher catastrophe losses (1.1 points) and lower net favorable prior year reserve development (0.3 points).
· The underlying combined ratio improved 1.1 points to 87.1% due to the benefits of earned pricing that exceeded loss cost trends, lower homeowners commission expenses and the companys previously announced expense reduction initiatives partially offset by higher non-catastrophe weather-related losses and the impact of higher new business.
· Net favorable prior year reserve development resulted from better than expected loss experience in Homeowners & Other, primarily driven by better than expected loss experience for accident year 2013 for non-catastrophe weather-related losses and for accident years 2011 through 2013 for catastrophe losses.
Personal Insurance net written premiums of $5.429 billion decreased 1%.
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 a.m. Eastern (8 a.m. Central) on Tuesday, October 21, 2014. Investors can access the call via webcast at http://investor.travelers.com or by dialing 1-800-754-1382 within the U.S. and 1-212-231-2932 outside the U.S. (use passcode 14788 for both the U.S. and international calls). 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 at the same website. An audio playback can also be accessed by phone at 1-800-633-8284 within the U.S. and 1-402-977-9140 outside the U.S. (use reservation 21733237 for both the U.S. and international calls).
About Travelers
The Travelers Companies, Inc. (NYSE: TRV) is a leading provider of property casualty insurance for auto, home and business. A component of the Dow Jones Industrial Average, Travelers has approximately 30,000 employees and generated revenues of approximately $26 billion in 2013. 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 is organized into the following reportable business segments:
Business and International Insurance: The Business and International Insurance segment offers a broad array of property and casualty insurance and insurance related services to its clients, primarily in the United States, as well as in Canada, the United Kingdom, the Republic of Ireland and throughout other parts of the world as a corporate member of Lloyds.
Bond & Specialty Insurance: The Bond & Specialty Insurance segment includes surety and financial liability coverages, which primarily use credit-based underwriting processes, and provide a wide range of primarily domestic customers with bond and insurance products and risk management services.
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.
On June 10, 2014, the company announced a realignment of its management team, effective July 1, 2014, that gave rise to a realignment of two of its three reportable business segments. The companys International Insurance group, which had previously been included in the Financial, Professional & International Insurance segment, was combined with the companys previous Business Insurance segment to create a new Business and International Insurance segment. The Bond & Financial Products group, which comprised the remaining businesses in the Financial, Professional & International Insurance segment, now comprises the new Bond & Specialty Insurance segment. The Personal Insurance segment was not impacted by these changes. The realignment of segments described above was made to reflect the realignment of the companys senior management responsibilities and the manner in which the companys businesses have been managed starting July 1, 2014, and the aggregation of products and services based on the type of customer, how the business is marketed and the manner in which risks are underwritten. In connection with these changes, the company has realigned and revised the names of several businesses that comprise the Business and International Insurance segment.
* * * * *
Forward-Looking Statement
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 outlook, share repurchase plans, expected margin improvement, potential returns, 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, including initiatives, such as in Personal Insurance, to improve profitability and competitiveness.
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 and investment operations including reinsurance or structured settlements;
· 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 state or federal regulations or enforcement practices could impose significant burdens on the company and otherwise adversely impact the companys 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, such as Quantum 2.0, or expand in targeted markets may not be successful and may create enhanced risks;
· the company may be adversely affected if its pricing and capital models provide materially different indications than actual results;
· the 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 United States, including in the European Union, could adversely impact the companys results of operations and limit its growth;
· loss of or significant restriction on the use of particular types of underwriting criteria, such as credit scoring, in the pricing and underwriting of the companys products could reduce the companys future profitability;
· acquisitions and integration of acquired businesses may result in operating difficulties and other unintended consequences;
· the company could be adversely affected if its controls 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;
· intellectual property is important to the companys business, and the company may be unable to protect and enforce its own intellectual property or the company may be subject to claims for infringing on the intellectual property of others;
· changes to existing accounting standards may adversely impact the companys reported results;
· changes in U.S. tax laws or in the tax laws of other jurisdictions in which the company operates could adversely impact the company; and
· the 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 and related financings), 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 in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 13, 2014 and Managements Discussion and Analysis of Financial Condition and Results of Operations in our most recent annual report on Form 10-K as updated by our current report on Form 8-K filed with the SEC on September 10, 2014 and our quarterly report on Form 10-Q filed with the SEC.
*****
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 |
|
Nine Months Ended |
| ||||||||
|
|
September 30, |
|
September 30, |
| ||||||||
($ in millions, pre-tax) |
|
2014 |
|
2013 |
|
2014 |
|
2013 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
|
$ |
1,218 |
|
$ |
1,199 |
|
$ |
3,572 |
|
$ |
3,419 |
|
Net realized investment gains (losses) |
|
40 |
|
(22 |
) |
57 |
|
155 |
| ||||
Net income |
|
$ |
1,258 |
|
$ |
1,177 |
|
$ |
3,629 |
|
$ |
3,574 |
|
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
September 30, |
|
September 30, |
| ||||||||
($ in millions, after-tax) |
|
2014 |
|
2013 |
|
2014 |
|
2013 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
|
$ |
893 |
|
$ |
883 |
|
$ |
2,618 |
|
$ |
2,586 |
|
Net realized investment gains (losses) |
|
26 |
|
(19 |
) |
36 |
|
99 |
| ||||
Net income |
|
$ |
919 |
|
$ |
864 |
|
$ |
2,654 |
|
$ |
2,685 |
|
|
|
Twelve Months Ended December 31, |
| |||||||||||||||||||||||||
($ in millions, after-tax) |
|
2013 |
|
2012 |
|
2011 |
|
2010 |
|
2009 |
|
2008 |
|
2007 |
|
2006 |
|
2005 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Operating income, less preferred dividends |
|
$ |
3,567 |
|
$ |
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 |
|
3,567 |
|
2,441 |
|
1,390 |
|
3,043 |
|
3,600 |
|
3,195 |
|
4,500 |
|
4,200 |
|
2,026 |
| |||||||||
Net realized investment gains (losses) |
|
106 |
|
32 |
|
36 |
|
173 |
|
22 |
|
(271 |
) |
101 |
|
8 |
|
35 |
| |||||||||
Income from continuing operations |
|
3,673 |
|
2,473 |
|
1,426 |
|
3,216 |
|
3,622 |
|
2,924 |
|
4,601 |
|
4,208 |
|
2,061 |
| |||||||||
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(439 |
) | |||||||||
Net income |
|
$ |
3,673 |
|
$ |
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 |
|
Nine Months Ended |
| ||||||||
|
|
September 30, |
|
September 30, |
| ||||||||
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Basic earnings per share |
|
|
|
|
|
|
|
|
| ||||
Operating income |
|
$ |
2.64 |
|
$ |
2.38 |
|
$ |
7.58 |
|
$ |
6.86 |
|
Net realized investment gains (losses) |
|
0.08 |
|
(0.05 |
) |
0.10 |
|
0.26 |
| ||||
Net income |
|
$ |
2.72 |
|
$ |
2.33 |
|
$ |
7.68 |
|
$ |
7.12 |
|
|
|
|
|
|
|
|
|
|
| ||||
Diluted earnings per share |
|
|
|
|
|
|
|
|
| ||||
Operating income |
|
$ |
2.61 |
|
$ |
2.35 |
|
$ |
7.50 |
|
$ |
6.79 |
|
Net realized investment gains (losses) |
|
0.08 |
|
(0.05 |
) |
0.10 |
|
0.26 |
| ||||
Net income |
|
$ |
2.69 |
|
$ |
2.30 |
|
$ |
7.60 |
|
$ |
7.05 |
|
Reconciliation of Operating Income by Segment to Total Operating Income
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
September 30, |
|
September 30, |
| ||||||||
($ in millions, after-tax) |
|
2014 |
|
2013 |
|
2014 |
|
2013 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Business and International Insurance |
|
$ |
552 |
|
$ |
566 |
|
$ |
1,717 |
|
$ |
1,773 |
|
Bond & Specialty Insurance |
|
165 |
|
120 |
|
511 |
|
399 |
| ||||
Personal Insurance |
|
239 |
|
262 |
|
582 |
|
601 |
| ||||
Total segment operating income |
|
956 |
|
948 |
|
2,810 |
|
2,773 |
| ||||
Interest Expense and Other |
|
(63 |
) |
(65 |
) |
(192 |
) |
(187 |
) | ||||
Total operating income |
|
$ |
893 |
|
$ |
883 |
|
$ |
2,618 |
|
$ |
2,586 |
|
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 and discontinued operations.
Reconciliation of Adjusted Shareholders Equity to Shareholders Equity
|
|
As of September 30, |
| ||||
($ in millions) |
|
2014 |
|
2013 |
| ||
|
|
|
|
|
| ||
Adjusted shareholders equity |
|
$ |
23,371 |
|
$ |
23,153 |
|
Net unrealized investment gains, net of tax |
|
1,914 |
|
1,559 |
| ||
Net realized investment gains, net of tax |
|
36 |
|
99 |
| ||
Shareholders equity |
|
$ |
25,321 |
|
$ |
24,811 |
|
|
|
As of December 31, |
| ||||||||||||||||||||||||||||
($ in millions) |
|
2013 |
|
2012 |
|
2011 |
|
2010 |
|
2009 |
|
2008 |
|
2007 |
|
2006 |
|
2005 |
|
2004 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Adjusted shareholders equity |
|
$ |
23,368 |
|
$ |
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 |
|
1,322 |
|
3,103 |
|
2,871 |
|
1,859 |
|
1,856 |
|
(146 |
) |
620 |
|
453 |
|
327 |
|
866 |
| ||||||||||
Net realized investment gains (losses), net of tax |
|
106 |
|
32 |
|
36 |
|
173 |
|
22 |
|
(271 |
) |
101 |
|
8 |
|
35 |
|
(28 |
) | ||||||||||
Preferred stock |
|
|
|
|
|
|
|
68 |
|
79 |
|
89 |
|
112 |
|
129 |
|
153 |
|
188 |
| ||||||||||
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(439 |
) |
88 |
| ||||||||||
Shareholders equity |
|
$ |
24,796 |
|
$ |
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 |
|
Nine Months Ended |
| ||||||||
|
|
September 30, |
|
September 30, |
| ||||||||
($ in millions, after-tax) |
|
2014 |
|
2013 |
|
2014 |
|
2013 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Annualized operating income |
|
$ |
3,570 |
|
$ |
3,534 |
|
$ |
3,490 |
|
$ |
3,448 |
|
Adjusted average shareholders equity |
|
23,450 |
|
23,235 |
|
23,552 |
|
22,886 |
| ||||
Operating return on equity |
|
15.2 |
% |
15.2 |
% |
14.8 |
% |
15.1 |
% | ||||
|
|
|
|
|
|
|
|
|
| ||||
Annualized net income |
|
$ |
3,676 |
|
$ |
3,458 |
|
$ |
3,539 |
|
$ |
3,580 |
|
Average shareholders equity |
|
25,427 |
|
24,851 |
|
25,326 |
|
25,198 |
| ||||
Return on equity |
|
14.5 |
% |
13.9 |
% |
14.0 |
% |
14.2 |
% |
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 September 30, 2014
|
|
Nine Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
|
|
September 30, |
|
Twelve Months Ended December 31, |
| |||||||||||||||||||||||||||||
($ in millions) |
|
2014 |
|
2013 |
|
2013 |
|
2012 |
|
2011 |
|
2010 |
|
2009 |
|
2008 |
|
2007 |
|
2006 |
|
2005 |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Operating income, less preferred dividends |
|
$ |
2,618 |
|
$ |
2,586 |
|
$ |
3,567 |
|
$ |
2,441 |
|
$ |
1,389 |
|
$ |
3,040 |
|
$ |
3,597 |
|
$ |
3,191 |
|
$ |
4,496 |
|
$ |
4,195 |
|
$ |
2,020 |
|
Annualized operating income |
|
3,490 |
|
3,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Adjusted average shareholders equity |
|
23,552 |
|
22,886 |
|
23,004 |
|
22,158 |
|
22,806 |
|
24,285 |
|
25,777 |
|
25,668 |
|
25,350 |
|
23,381 |
|
21,118 |
| |||||||||||
Operating return on equity |
|
14.8 |
% |
15.1 |
% |
15.5 |
% |
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 Jan. 1, 2005 through Sept. 30, 2014 |
|
|
|
|
|
13.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
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 (loss), 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 |
|
Nine Months Ended |
| ||||||||
|
|
September 30, |
|
September 30, |
| ||||||||
($ in millions, after-tax except as noted) |
|
2014 |
|
2013 |
|
2014 |
|
2013 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Pre-tax underwriting gain excluding the impact of catastrophes and net favorable prior year loss reserve development |
|
$ |
534 |
|
$ |
536 |
|
$ |
1,690 |
|
$ |
1,435 |
|
Pre-tax impact of catastrophes |
|
(83 |
) |
(99 |
) |
(668 |
) |
(538 |
) | ||||
Pre-tax impact of net favorable prior year loss reserve development |
|
113 |
|
158 |
|
590 |
|
581 |
| ||||
Pre-tax underwriting gain |
|
564 |
|
595 |
|
1,612 |
|
1,478 |
| ||||
Income tax expense on underwriting results |
|
200 |
|
208 |
|
579 |
|
471 |
| ||||
Underwriting gain |
|
364 |
|
387 |
|
1,033 |
|
1,007 |
| ||||
Net investment income |
|
568 |
|
531 |
|
1,703 |
|
1,624 |
| ||||
Other, including interest expense |
|
(39 |
) |
(35 |
) |
(118 |
) |
(45 |
) | ||||
Operating income |
|
893 |
|
883 |
|
2,618 |
|
2,586 |
| ||||
Net realized investment gains (losses) |
|
26 |
|
(19 |
) |
36 |
|
99 |
| ||||
Net income |
|
$ |
919 |
|
$ |
864 |
|
$ |
2,654 |
|
$ |
2,685 |
|
COMBINED RATIO AND ADJUSTMENTS FOR UNDERLYING COMBINED RATIO
Combined ratio: For Statutory Accounting Practices (SAP), the combined ratio is the sum of the SAP loss and LAE ratio and the SAP underwriting expense ratio as defined in the statutory financial statements required by insurance regulators. The combined ratio as used in this earnings release is the equivalent of, and is calculated in the same manner as, the
SAP combined ratio except that the SAP underwriting expense ratio is based on net written premium and the underwriting expense ratio as used in this earnings release is based on net earned premiums.
For SAP, loss and LAE ratio is the ratio of incurred losses and loss adjustment expenses less certain administrative services fee income to net earned premiums as defined in the statutory financial statements required by insurance regulators. The loss and LAE ratio as used in this earnings release is calculated in the same manner as the SAP ratio.
For SAP, the underwriting expense ratio is the ratio of underwriting expenses incurred (including commissions paid), less certain administrative services fee income and billing and policy fees, to net written premiums as defined in the statutory financial statements required by insurance regulators. The underwriting expense ratio as used in this earnings release, is the ratio of underwriting expenses (including the amortization of deferred acquisition costs), less certain administrative services fee income and billing and policy fees, to net earned premiums.
The combined ratio, loss and LAE ratio, and underwriting expense ratio are used as indicators of the companys underwriting discipline, efficiency in acquiring and servicing its business and overall underwriting profitability. A combined ratio under 100% generally indicates an underwriting profit. A combined ratio over 100% generally indicates an underwriting loss.
Other companies method of computing similarly titled measures may not be comparable to the companys method of computing these ratios.
Underlying combined ratio represents the combined ratio excluding the impact of net prior year reserve development and catastrophes. The underlying combined ratio is an indicator of the companys underwriting discipline and underwriting profitability for the current accident year.
Calculation of the Combined Ratio
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
September 30, |
|
September 30, |
| ||||||||
($ in millions, pre-tax) |
|
2014 |
|
2013 |
|
2014 |
|
2013 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Loss and loss adjustment expense ratio |
|
|
|
|
|
|
|
|
| ||||
Claims and claim adjustment expenses |
|
$ |
3,520 |
|
$ |
3,297 |
|
$ |
10,661 |
|
$ |
9,980 |
|
Less: |
|
|
|
|
|
|
|
|
| ||||
Policyholder dividends |
|
9 |
|
7 |
|
27 |
|
30 |
| ||||
Allocated fee income |
|
43 |
|
44 |
|
132 |
|
113 |
| ||||
Loss ratio numerator |
|
$ |
3,468 |
|
$ |
3,246 |
|
$ |
10,502 |
|
$ |
9,837 |
|
|
|
|
|
|
|
|
|
|
| ||||
Underwriting expense ratio |
|
|
|
|
|
|
|
|
| ||||
Amortization of deferred acquisition costs |
|
$ |
984 |
|
$ |
953 |
|
$ |
2,899 |
|
$ |
2,851 |
|
General and administrative expenses (G&A) |
|
1,031 |
|
934 |
|
2,913 |
|
2,780 |
| ||||
Less: |
|
|
|
|
|
|
|
|
| ||||
G&A included in Interest Expense and Other |
|
6 |
|
6 |
|
22 |
|
17 |
| ||||
Allocated fee income |
|
67 |
|
63 |
|
197 |
|
173 |
| ||||
Billing and policy fees and other |
|
25 |
|
25 |
|
80 |
|
74 |
| ||||
Expense ratio numerator |
|
$ |
1,917 |
|
$ |
1,793 |
|
$ |
5,513 |
|
$ |
5,367 |
|
|
|
|
|
|
|
|
|
|
| ||||
Earned premium |
|
$ |
5,983 |
|
$ |
5,666 |
|
$ |
17,734 |
|
$ |
16,786 |
|
|
|
|
|
|
|
|
|
|
| ||||
Combined ratio (1) |
|
|
|
|
|
|
|
|
| ||||
Loss and loss adjustment expense ratio |
|
58.0 |
% |
57.3 |
% |
59.2 |
% |
58.6 |
% | ||||
Underwriting expense ratio |
|
32.0 |
% |
31.6 |
% |
31.1 |
% |
32.0 |
% | ||||
Combined ratio |
|
90.0 |
% |
88.9 |
% |
90.3 |
% |
90.6 |
% |
(1) For purposes of computing 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.
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 to an analysis of the results of the International market and the Business and International Insurance segment.
Reconciliation of the Impact of Changes in Foreign Exchange Rates on International Net Written Premiums to International Net Written Premiums
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||||||
|
|
September 30, |
|
September 30, |
| ||||||||||||
($ in millions) |
|
2014 |
|
2013 |
|
Change |
|
2014 |
|
2013 |
|
Change |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net written premiums - holding foreign exchange rates constant |
|
$ |
478 |
|
$ |
217 |
|
120 |
% |
$ |
1,568 |
|
$ |
787 |
|
99 |
% |
Impact of changes in foreign exchange rates |
|
3 |
|
|
|
|
|
9 |
|
|
|
|
| ||||
Net written premiums |
|
$ |
481 |
|
$ |
217 |
|
122 |
% |
$ |
1,577 |
|
$ |
787 |
|
100 |
% |
Reconciliation of the Impact of Changes in Foreign Exchange Rates on Business and International Insurance Net Written Premiums to Business and International Insurance Net Written Premiums
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||||||
|
|
September 30, |
|
September 30, |
| ||||||||||||
($ in millions) |
|
2014 |
|
2013 |
|
Change |
|
2014 |
|
2013 |
|
Change |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net written premiums - holding foreign exchange rates constant |
|
$ |
3,557 |
|
$ |
3,249 |
|
9 |
% |
$ |
11,052 |
|
$ |
10,147 |
|
9 |
% |
Impact of changes in foreign exchange rates |
|
3 |
|
|
|
|
|
9 |
|
|
|
|
| ||||
Net written premiums |
|
$ |
3,560 |
|
$ |
3,249 |
|
10 |
% |
$ |
11,061 |
|
$ |
10,147 |
|
9 |
% |
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 per share is useful in an analysis of a property casualty companys book value per share 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 |
| |||||||
|
|
September 30, |
|
December 31, |
|
September 30, |
| |||
($ in millions, except per share amounts) |
|
2014 |
|
2013 |
|
2013 |
| |||
|
|
|
|
|
|
|
| |||
Tangible shareholders equity |
|
$ |
19,526 |
|
$ |
19,543 |
|
$ |
19,589 |
|
Goodwill |
|
3,621 |
|
3,634 |
|
3,365 |
| |||
Other intangible assets |
|
316 |
|
351 |
|
347 |
| |||
Less: Impact of deferred tax on other intangible assets |
|
(56 |
) |
(54 |
) |
(49 |
) | |||
Adjusted shareholders equity |
|
23,407 |
|
23,474 |
|
23,252 |
| |||
Net unrealized investment gains, net of tax |
|
1,914 |
|
1,322 |
|
1,559 |
| |||
Shareholders equity |
|
$ |
25,321 |
|
$ |
24,796 |
|
$ |
24,811 |
|
|
|
|
|
|
|
|
| |||
Common shares outstanding |
|
331.4 |
|
353.5 |
|
364.1 |
| |||
|
|
|
|
|
|
|
| |||
Tangible book value per share |
|
$ |
58.93 |
|
$ |
55.29 |
|
$ |
53.81 |
|
Adjusted book value per share |
|
70.64 |
|
66.41 |
|
63.87 |
| |||
Book value per share |
|
76.42 |
|
70.15 |
|
68.15 |
|
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 |
| |||||||
|
|
September 30, |
|
December 31, |
|
September 30, |
| |||
($ in millions) |
|
2014 |
|
2013 |
|
2013 |
| |||
|
|
|
|
|
|
|
| |||
Debt |
|
$ |
6,348 |
|
$ |
6,346 |
|
$ |
6,346 |
|
Shareholders equity |
|
25,321 |
|
24,796 |
|
24,811 |
| |||
Total capitalization |
|
31,669 |
|
31,142 |
|
31,157 |
| |||
Net unrealized investment gains, net of tax |
|
1,914 |
|
1,322 |
|
1,559 |
| |||
Total capitalization excluding net unrealized gain on investments, net of tax |
|
$ |
29,755 |
|
$ |
29,820 |
|
$ |
29,598 |
|
|
|
|
|
|
|
|
| |||
Debt-to-capital ratio |
|
20.0 |
% |
20.4 |
% |
20.4 |
% | |||
Debt-to-capital ratio excluding net unrealized investment gains, net of tax |
|
21.3 |
% |
21.3 |
% |
21.4 |
% |
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 and International Insurance and Bond & Specialty 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 and International Insurance segment, retention, renewal premium change and new business volumes exclude National Accounts and Surety.
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 (SEC) as updated by the companys Current Report on Form 8-K filed with the SEC on September 10, 2014.
###
Contacts
Media: |
|
Institutional Investors: |
|
Individual Investors: |
Patrick Linehan |
|
Gabriella Nawi |
|
Marc Parr |
917.778.6267 |
|
917.778.6844 |
|
860.277.0779 |
Exhibit 99.2
The Travelers Companies, Inc. |
|
|
|
Page Number |
Business Realignment |
|
|
Business and International Insurance |
|
i |
Bond & Specialty Insurance |
|
ii |
|
|
|
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 and International Insurance |
|
|
Operating Income |
|
8 |
Operating Income by Major Component and Combined Ratio |
|
9 |
Selected Statistics |
|
10 |
Net Written Premiums |
|
11 |
|
|
|
Bond & Specialty Insurance |
|
|
Operating Income |
|
12 |
Operating Income by Major Component and Combined Ratio |
|
13 |
Selected Statistics |
|
14 |
Net Written Premiums |
|
15 |
|
|
|
Personal Insurance |
|
|
Operating Income |
|
16 |
Operating Income 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 |
On November 1, 2013, the Company acquired all of the issued and outstanding shares of The Dominion of Canada General Insurance Company (Dominion) for an aggregate purchase price of approximately $1.035 billion. The results of operations of the acquired business are reported in the Companys Business and International Insurance segment from the closing date.
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 Supplement - Third Quarter 2014 Business Realignment |
|
On June 10, 2014, the Company announced a realignment of its management team, effective July 1, 2014, that gave rise to a realignment of two of its three reportable business segments, as follows:
· The Companys International Insurance group, which had previously been included in the Financial, Professional & International Insurance segment, was combined with the Companys previous Business Insurance segment to create a new Business and International Insurance segment.
· The Bond & Financial Products group, which comprised the remaining businesses in the Financial, Professional & International Insurance segment, now comprises the new Bond & Specialty Insurance segment.
· The Personal Insurance segment was not impacted by these changes.
The realignment of segments described above was made to reflect the realignment of the Companys senior management responsibilities and the manner in which the Companys businesses have been managed starting July 1, 2014, and the aggregation of products and services based on the type of customer, how the business is marketed and the manner in which risks are underwritten.
In connection with these changes, the Company has realigned and revised the names of several businesses that comprise the Business and International Insurance segment. The new reportable business segments are as follows:
Business and International Insurance
The Business and International Insurance segment offers a broad array of property and casualty insurance and insurance related services to its clients, primarily in the United States, as well as in Canada, the United Kingdom, the Republic of Ireland and throughout other parts of the world as a corporate member of Lloyds. Business and International Insurance is organized as follows:
Domestic
· Select Accounts provides small businesses with property and casualty products, including commercial multi-peril, commercial property, general liability, commercial auto and workers compensation insurance.
· Middle Market provides mid-sized businesses with property and casualty products, including commercial multi-peril, commercial property, general liability, commercial auto and workers compensation insurance, as well as risk management, claims handling and other services. Middle Market generally provides these products to mid-sized businesses through Commercial Accounts, as well as to targeted industries through Construction, Technology, Public Sector Services and Oil & Gas. Middle Market also provides mono-line umbrella and excess coverage insurance through Excess Casualty and insurance coverages for foreign organizations with United States exposures through Global Partner Services.
· National Accounts provides large companies with casualty products and services, including workers compensation, general liability and automobile liability, generally utilizing loss-sensitive products, on both a bundled and unbundled basis. National Accounts also includes the Companys commercial residual market business, which primarily offers workers compensation products and services to the involuntary market.
· First Party provides traditional and customized property insurance programs to large and mid-sized customers through National Property, insurance for goods in transit and movable objects, as well as builders risk insurance, through Inland Marine, insurance for the marine transportation industry and related services, as well as other businesses involved in international trade, through Ocean Marine and comprehensive breakdown coverages for equipment, including property and business interruption coverages, through Boiler & Machinery.
· Specialized Distribution markets and underwrites its products to customers predominantly through licensed wholesale agents and program managers that manage customers unique insurance requirements. Specialized Distribution provides insurance coverage for the commercial transportation industry, as well as commercial liability and commercial property policies for small, difficult to place specialty classes of commercial business primarily on an excess and surplus lines basis, through Northland, and tailored property and casualty programs on an admitted basis for customers with common risk characteristics or coverage requirements through National Programs. Specialized Distribution also serves small to medium-sized agricultural businesses, including farms, ranches, wineries and related operations, through Agribusiness.
The Travelers Companies, Inc. Financial Supplement - Third Quarter 2014 Business Realignment (Continued) |
|
International
· International, through its operations in Canada, the United Kingdom and the Republic of Ireland, offers property and casualty insurance and risk management services to several customer groups, including, among others, those in the technology, public services, and financial and professional services industry sectors. In addition, International markets personal lines and small commercial insurance business in Canada through The Dominion of Canada General Insurance Company (Dominion), which the Company acquired on November 1, 2013. International, through its Lloyds syndicate (Syndicate 5000), for which the Company provides 100% of the capital, underwrites five principal businesses marine, global property, accident & special risks, power & utilities and aviation.
International also inlcudes the Companys 49.5% ownership of the common stock of J. Malucelli Participações em Seguros e Resseguros S.A. (JMalucelli), its joint venture in Brazil. JMalucelli is currently the market leader in surety in Brazil based on market share. JMalucelli commenced writing other property and casualty insurance business in 2012. The Companys investment in JMalucelli is accounted for using the equity method and is included in other investments on the consolidated balance sheet.
Business and International Insurance also includes the Specialty Liability Group (which manages the Companys asbestos and environmental liabilities) and the assumed reinsurance and certain other runoff operations, which are collectively referred to as Business and International Insurance Other.
Bond & Specialty Insurance
The Bond & Specialty Insurance segment provides a wide range of customers with bond and insurance products and risk management services. The range of coverages includes performance, payment and commercial surety and fidelity bonds for construction and general commercial enterprises; management liability coverages for losses caused by the actual or alleged negligence or misconduct of directors and officers or employee dishonesty; employment practices liability coverages and fiduciary coverages for public corporations, private companies and not-for-profit organizations; professional liability coverage for actual or alleged errors and omissions committed in the course of professional conduct or practice for a variety of professionals including, among others, lawyers and design professionals; and professional and management liability, property, workers compensation, auto and general liability and fidelity insurance for financial institutions. The surety and financial liability coverages provided by Bond & Specialty Insurance primarily use credit-based underwriting processes.
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.
The Travelers Companies, Inc. Financial Highlights ($ and shares in millions, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net income |
|
$ |
896 |
|
$ |
925 |
|
$ |
864 |
|
$ |
988 |
|
$ |
1,052 |
|
$ |
683 |
|
$ |
919 |
|
$ |
2,685 |
|
$ |
2,654 |
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Basic |
|
$ |
2.36 |
|
$ |
2.44 |
|
$ |
2.33 |
|
$ |
2.73 |
|
$ |
2.98 |
|
$ |
1.98 |
|
$ |
2.72 |
|
$ |
7.12 |
|
$ |
7.68 |
|
Diluted |
|
$ |
2.33 |
|
$ |
2.41 |
|
$ |
2.30 |
|
$ |
2.70 |
|
$ |
2.95 |
|
$ |
1.95 |
|
$ |
2.69 |
|
$ |
7.05 |
|
$ |
7.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Operating income |
|
$ |
887 |
|
$ |
816 |
|
$ |
883 |
|
$ |
981 |
|
$ |
1,052 |
|
$ |
673 |
|
$ |
893 |
|
$ |
2,586 |
|
$ |
2,618 |
|
Operating income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Basic |
|
$ |
2.33 |
|
$ |
2.15 |
|
$ |
2.38 |
|
$ |
2.71 |
|
$ |
2.98 |
|
$ |
1.95 |
|
$ |
2.64 |
|
$ |
6.86 |
|
$ |
7.58 |
|
Diluted |
|
$ |
2.31 |
|
$ |
2.13 |
|
$ |
2.35 |
|
$ |
2.68 |
|
$ |
2.95 |
|
$ |
1.93 |
|
$ |
2.61 |
|
$ |
6.79 |
|
$ |
7.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Return on equity |
|
14.1 |
% |
14.6 |
% |
13.9 |
% |
15.9 |
% |
16.8 |
% |
10.7 |
% |
14.5 |
% |
14.2 |
% |
14.0 |
% | |||||||||
Operating return on equity |
|
15.8 |
% |
14.2 |
% |
15.2 |
% |
16.8 |
% |
17.8 |
% |
11.4 |
% |
15.2 |
% |
15.1 |
% |
14.8 |
% | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Total assets, at period end |
|
$ |
103,897 |
|
$ |
101,900 |
|
$ |
102,685 |
|
$ |
103,812 |
|
$ |
104,134 |
|
$ |
104,811 |
|
$ |
104,522 |
|
$ |
102,685 |
|
$ |
104,522 |
|
Total equity, at period end |
|
$ |
25,596 |
|
$ |
24,890 |
|
$ |
24,811 |
|
$ |
24,796 |
|
$ |
25,387 |
|
$ |
25,532 |
|
$ |
25,321 |
|
$ |
24,811 |
|
$ |
25,321 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Book value per share, at period end |
|
$ |
68.00 |
|
$ |
66.65 |
|
$ |
68.15 |
|
$ |
70.15 |
|
$ |
73.06 |
|
$ |
75.32 |
|
$ |
76.42 |
|
$ |
68.15 |
|
$ |
76.42 |
|
Less: Net unrealized investment gains, net of tax |
|
7.61 |
|
4.53 |
|
4.28 |
|
3.74 |
|
4.81 |
|
5.94 |
|
5.78 |
|
4.28 |
|
5.78 |
| |||||||||
Adjusted book value per share, at period end |
|
$ |
60.39 |
|
$ |
62.12 |
|
$ |
63.87 |
|
$ |
66.41 |
|
$ |
68.25 |
|
$ |
69.38 |
|
$ |
70.64 |
|
$ |
63.87 |
|
$ |
70.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Weighted average number of common shares outstanding (basic) |
|
377.7 |
|
375.9 |
|
368.9 |
|
359.1 |
|
350.9 |
|
343.0 |
|
335.1 |
|
374.1 |
|
342.9 |
| |||||||||
Weighted average number of common shares outstanding and common stock equivalents (diluted) |
|
381.9 |
|
379.9 |
|
372.9 |
|
363.4 |
|
354.6 |
|
346.7 |
|
338.9 |
|
378.1 |
|
346.5 |
| |||||||||
Common shares outstanding at period end |
|
376.4 |
|
373.5 |
|
364.1 |
|
353.5 |
|
347.5 |
|
339.0 |
|
331.4 |
|
364.1 |
|
331.4 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Common stock dividends declared |
|
$ |
176 |
|
$ |
191 |
|
$ |
185 |
|
$ |
182 |
|
$ |
177 |
|
$ |
190 |
|
$ |
186 |
|
$ |
552 |
|
$ |
553 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Common stock repurchased: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Under Board of Directors authorization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Shares |
|
3.7 |
|
3.6 |
|
9.7 |
|
11.4 |
|
7.8 |
|
9.5 |
|
8.1 |
|
17.0 |
|
25.4 |
| |||||||||
Cost |
|
$ |
300 |
|
$ |
300 |
|
$ |
800 |
|
$ |
1,000 |
|
$ |
650 |
|
$ |
875 |
|
$ |
750 |
|
$ |
1,400 |
|
$ |
2,275 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Shares |
|
0.7 |
|
|
|
0.1 |
|
|
|
0.7 |
|
|
|
|
|
0.8 |
|
0.7 |
| |||||||||
Cost |
|
$ |
58 |
|
$ |
1 |
|
$ |
1 |
|
$ |
1 |
|
$ |
55 |
|
$ |
1 |
|
$ |
1 |
|
$ |
60 |
|
$ |
57 |
|
See Business Realignment on pages i and ii and 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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Operating income |
|
$ |
887 |
|
$ |
816 |
|
$ |
883 |
|
$ |
981 |
|
$ |
1,052 |
|
$ |
673 |
|
$ |
893 |
|
$ |
2,586 |
|
$ |
2,618 |
|
Net realized investment gains (losses), after-tax |
|
9 |
|
109 |
|
(19 |
) |
7 |
|
|
|
10 |
|
26 |
|
99 |
|
36 |
| |||||||||
Net income |
|
$ |
896 |
|
$ |
925 |
|
$ |
864 |
|
$ |
988 |
|
$ |
1,052 |
|
$ |
683 |
|
$ |
919 |
|
$ |
2,685 |
|
$ |
2,654 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Basic earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Operating income |
|
$ |
2.33 |
|
$ |
2.15 |
|
$ |
2.38 |
|
$ |
2.71 |
|
$ |
2.98 |
|
$ |
1.95 |
|
$ |
2.64 |
|
$ |
6.86 |
|
$ |
7.58 |
|
Net realized investment gains (losses), after-tax |
|
0.03 |
|
0.29 |
|
(0.05 |
) |
0.02 |
|
|
|
0.03 |
|
0.08 |
|
0.26 |
|
0.10 |
| |||||||||
Net income |
|
$ |
2.36 |
|
$ |
2.44 |
|
$ |
2.33 |
|
$ |
2.73 |
|
$ |
2.98 |
|
$ |
1.98 |
|
$ |
2.72 |
|
$ |
7.12 |
|
$ |
7.68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Diluted earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Operating income |
|
$ |
2.31 |
|
$ |
2.13 |
|
$ |
2.35 |
|
$ |
2.68 |
|
$ |
2.95 |
|
$ |
1.93 |
|
$ |
2.61 |
|
$ |
6.79 |
|
$ |
7.50 |
|
Net realized investment gains (losses), after-tax |
|
0.02 |
|
0.28 |
|
(0.05 |
) |
0.02 |
|
|
|
0.02 |
|
0.08 |
|
0.26 |
|
0.10 |
| |||||||||
Net income |
|
$ |
2.33 |
|
$ |
2.41 |
|
$ |
2.30 |
|
$ |
2.70 |
|
$ |
2.95 |
|
$ |
1.95 |
|
$ |
2.69 |
|
$ |
7.05 |
|
$ |
7.60 |
|
Adjustments to net income and weighted average shares for net income EPS calculations: (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
Basic and Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net income, as reported |
|
$ |
896 |
|
$ |
925 |
|
$ |
864 |
|
$ |
988 |
|
$ |
1,052 |
|
$ |
683 |
|
$ |
919 |
|
$ |
2,685 |
|
$ |
2,654 |
|
Participating share-based awards - allocated income |
|
(6 |
) |
(7 |
) |
(6 |
) |
(8 |
) |
(7 |
) |
(5 |
) |
(7 |
) |
(20 |
) |
(19 |
) | |||||||||
Net income available to common shareholders - basic and diluted |
|
$ |
890 |
|
$ |
918 |
|
$ |
858 |
|
$ |
980 |
|
$ |
1,045 |
|
$ |
678 |
|
$ |
912 |
|
$ |
2,665 |
|
$ |
2,635 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Common Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Weighted average shares outstanding |
|
377.7 |
|
375.9 |
|
368.9 |
|
359.1 |
|
350.9 |
|
343.0 |
|
335.1 |
|
374.1 |
|
342.9 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Weighted average shares outstanding |
|
377.7 |
|
375.9 |
|
368.9 |
|
359.1 |
|
350.9 |
|
343.0 |
|
335.1 |
|
374.1 |
|
342.9 |
| |||||||||
Weighted average effects of dilutive securities - stock options and performance shares |
|
4.2 |
|
4.0 |
|
4.0 |
|
4.3 |
|
3.7 |
|
3.7 |
|
3.8 |
|
4.0 |
|
3.6 |
| |||||||||
Diluted weighted average shares outstanding |
|
381.9 |
|
379.9 |
|
372.9 |
|
363.4 |
|
354.6 |
|
346.7 |
|
338.9 |
|
378.1 |
|
346.5 |
|
(1) Adjustments to net income and weighted average shares for net income EPS calculations can generally be used for the operating income EPS calculations.
See Business Realignment on pages i and ii and Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Statement of Income - Consolidated ($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Premiums |
|
$ |
5,517 |
|
$ |
5,603 |
|
$ |
5,666 |
|
$ |
5,851 |
|
$ |
5,823 |
|
$ |
5,928 |
|
$ |
5,983 |
|
$ |
16,786 |
|
$ |
17,734 |
|
Net investment income |
|
670 |
|
687 |
|
657 |
|
702 |
|
736 |
|
695 |
|
719 |
|
2,014 |
|
2,150 |
| |||||||||
Fee income |
|
97 |
|
82 |
|
107 |
|
109 |
|
107 |
|
112 |
|
110 |
|
286 |
|
329 |
| |||||||||
Net realized investment gains (losses) |
|
10 |
|
167 |
|
(22 |
) |
11 |
|
1 |
|
16 |
|
40 |
|
155 |
|
57 |
| |||||||||
Other revenues |
|
34 |
|
135 |
|
44 |
|
64 |
|
41 |
|
34 |
|
34 |
|
213 |
|
109 |
| |||||||||
Total revenues |
|
6,328 |
|
6,674 |
|
6,452 |
|
6,737 |
|
6,708 |
|
6,785 |
|
6,886 |
|
19,454 |
|
20,379 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Claims and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Claims and claim adjustment expenses |
|
3,153 |
|
3,530 |
|
3,297 |
|
3,327 |
|
3,315 |
|
3,826 |
|
3,520 |
|
9,980 |
|
10,661 |
| |||||||||
Amortization of deferred acquisition costs |
|
948 |
|
950 |
|
953 |
|
970 |
|
950 |
|
965 |
|
984 |
|
2,851 |
|
2,899 |
| |||||||||
General and administrative expenses |
|
915 |
|
931 |
|
934 |
|
977 |
|
881 |
|
1,001 |
|
1,031 |
|
2,780 |
|
2,913 |
| |||||||||
Interest expense |
|
92 |
|
86 |
|
91 |
|
92 |
|
92 |
|
92 |
|
93 |
|
269 |
|
277 |
| |||||||||
Total claims and expenses |
|
5,108 |
|
5,497 |
|
5,275 |
|
5,366 |
|
5,238 |
|
5,884 |
|
5,628 |
|
15,880 |
|
16,750 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Income before income taxes |
|
1,220 |
|
1,177 |
|
1,177 |
|
1,371 |
|
1,470 |
|
901 |
|
1,258 |
|
3,574 |
|
3,629 |
| |||||||||
Income tax expense |
|
324 |
|
252 |
|
313 |
|
383 |
|
418 |
|
218 |
|
339 |
|
889 |
|
975 |
| |||||||||
Net income |
|
$ |
896 |
|
$ |
925 |
|
$ |
864 |
|
$ |
988 |
|
$ |
1,052 |
|
$ |
683 |
|
$ |
919 |
|
$ |
2,685 |
|
$ |
2,654 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Other-than-temporary impairments (OTTI) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Total OTTI gains (losses) |
|
$ |
|
|
$ |
(1 |
) |
$ |
|
|
$ |
(9 |
) |
$ |
(7 |
) |
$ |
(1 |
) |
$ |
(8 |
) |
$ |
(1 |
) |
$ |
(16 |
) |
OTTI losses recognized in net realized investment gains (losses) |
|
$ |
(5 |
) |
$ |
(2 |
) |
$ |
(3 |
) |
$ |
(5 |
) |
$ |
(9 |
) |
$ |
(1 |
) |
$ |
(10 |
) |
$ |
(10 |
) |
$ |
(20 |
) |
OTTI gains (losses) recognized in other comprehensive income |
|
$ |
5 |
|
$ |
1 |
|
$ |
3 |
|
$ |
(4 |
) |
$ |
2 |
|
$ |
|
|
$ |
2 |
|
$ |
9 |
|
$ |
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Other statistics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Effective tax rate on net investment income |
|
19.2 |
% |
19.7 |
% |
19.1 |
% |
20.0 |
% |
21.0 |
% |
20.5 |
% |
20.9 |
% |
19.3 |
% |
20.8 |
% | |||||||||
Net investment income (after-tax) |
|
$ |
542 |
|
$ |
551 |
|
$ |
531 |
|
$ |
562 |
|
$ |
582 |
|
$ |
553 |
|
$ |
568 |
|
$ |
1,624 |
|
$ |
1,703 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Catastrophes, net of reinsurance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pre-tax |
|
$ |
99 |
|
$ |
340 |
|
$ |
99 |
|
$ |
53 |
|
$ |
149 |
|
$ |
436 |
|
$ |
83 |
|
$ |
538 |
|
$ |
668 |
|
After-tax |
|
$ |
65 |
|
$ |
221 |
|
$ |
64 |
|
$ |
37 |
|
$ |
97 |
|
$ |
284 |
|
$ |
54 |
|
$ |
350 |
|
$ |
435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Prior year reserve development - favorable (unfavorable) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pre-tax |
|
$ |
231 |
|
$ |
192 |
|
$ |
158 |
|
$ |
259 |
|
$ |
294 |
|
$ |
183 |
|
$ |
113 |
|
$ |
581 |
|
$ |
590 |
|
After-tax |
|
$ |
154 |
|
$ |
125 |
|
$ |
107 |
|
$ |
166 |
|
$ |
190 |
|
$ |
122 |
|
$ |
74 |
|
$ |
386 |
|
$ |
386 |
|
See Business Realignment on pages i and ii and 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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Underwriting gain |
|
$ |
385 |
|
$ |
235 |
|
$ |
387 |
|
$ |
435 |
|
$ |
507 |
|
$ |
162 |
|
$ |
364 |
|
$ |
1,007 |
|
$ |
1,033 |
|
Net investment income |
|
542 |
|
551 |
|
531 |
|
562 |
|
582 |
|
553 |
|
568 |
|
1,624 |
|
1,703 |
| |||||||||
Other, including interest expense |
|
(40 |
) |
30 |
|
(35 |
) |
(16 |
) |
(37 |
) |
(42 |
) |
(39 |
) |
(45 |
) |
(118 |
) | |||||||||
Operating income |
|
887 |
|
816 |
|
883 |
|
981 |
|
1,052 |
|
673 |
|
893 |
|
2,586 |
|
2,618 |
| |||||||||
Net realized investment gains (losses) |
|
9 |
|
109 |
|
(19 |
) |
7 |
|
|
|
10 |
|
26 |
|
99 |
|
36 |
| |||||||||
Net income |
|
$ |
896 |
|
$ |
925 |
|
$ |
864 |
|
$ |
988 |
|
$ |
1,052 |
|
$ |
683 |
|
$ |
919 |
|
$ |
2,685 |
|
$ |
2,654 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Combined ratio (1) (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Loss and loss adjustment expense ratio |
|
56.2 |
% |
62.3 |
% |
57.3 |
% |
56.0 |
% |
56.0 |
% |
63.6 |
% |
58.0 |
% |
58.6 |
% |
59.2 |
% | |||||||||
Underwriting expense ratio |
|
32.3 |
% |
32.0 |
% |
31.6 |
% |
31.7 |
% |
29.7 |
% |
31.5 |
% |
32.0 |
% |
32.0 |
% |
31.1 |
% | |||||||||
Combined ratio |
|
88.5 |
% |
94.3 |
% |
88.9 |
% |
87.7 |
% |
85.7 |
% |
95.1 |
% |
90.0 |
% |
90.6 |
% |
90.3 |
% | |||||||||
Combined ratio excluding incremental impact of direct to consumer initiative |
|
87.8 |
% |
93.8 |
% |
88.4 |
% |
87.1 |
% |
85.3 |
% |
94.6 |
% |
89.4 |
% |
90.0 |
% |
89.8 |
% | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Impact of catastrophes on combined ratio |
|
1.8 |
% |
6.1 |
% |
1.7 |
% |
0.9 |
% |
2.6 |
% |
7.3 |
% |
1.4 |
% |
3.2 |
% |
3.7 |
% | |||||||||
Impact of prior year reserve development on combined ratio |
|
-4.1 |
% |
-3.5 |
% |
-2.8 |
% |
-4.4 |
% |
-5.1 |
% |
-3.1 |
% |
-1.9 |
% |
-3.4 |
% |
-3.3 |
% |
(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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
Billing and policy fees and other |
|
$ |
24 |
|
$ |
25 |
|
$ |
25 |
|
$ |
28 |
|
$ |
30 |
|
$ |
25 |
|
$ |
25 |
|
$ |
74 |
|
$ |
80 |
|
Fee income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Loss and loss adjustment expenses |
|
$ |
42 |
|
$ |
27 |
|
$ |
44 |
|
$ |
46 |
|
$ |
43 |
|
$ |
46 |
|
$ |
43 |
|
$ |
113 |
|
$ |
132 |
|
Underwriting expenses |
|
55 |
|
55 |
|
63 |
|
63 |
|
64 |
|
66 |
|
67 |
|
173 |
|
197 |
| |||||||||
Total fee income |
|
$ |
97 |
|
$ |
82 |
|
$ |
107 |
|
$ |
109 |
|
$ |
107 |
|
$ |
112 |
|
$ |
110 |
|
$ |
286 |
|
$ |
329 |
|
See Business Realignment on pages i and ii and Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Operating Income - Consolidated ($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Premiums |
|
$ |
5,517 |
|
$ |
5,603 |
|
$ |
5,666 |
|
$ |
5,851 |
|
$ |
5,823 |
|
$ |
5,928 |
|
$ |
5,983 |
|
$ |
16,786 |
|
$ |
17,734 |
|
Net investment income |
|
670 |
|
687 |
|
657 |
|
702 |
|
736 |
|
695 |
|
719 |
|
2,014 |
|
2,150 |
| |||||||||
Fee income |
|
97 |
|
82 |
|
107 |
|
109 |
|
107 |
|
112 |
|
110 |
|
286 |
|
329 |
| |||||||||
Other revenues |
|
34 |
|
135 |
|
44 |
|
64 |
|
41 |
|
34 |
|
34 |
|
213 |
|
109 |
| |||||||||
Total revenues |
|
6,318 |
|
6,507 |
|
6,474 |
|
6,726 |
|
6,707 |
|
6,769 |
|
6,846 |
|
19,299 |
|
20,322 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Claims and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Claims and claim adjustment expenses |
|
3,153 |
|
3,530 |
|
3,297 |
|
3,327 |
|
3,315 |
|
3,826 |
|
3,520 |
|
9,980 |
|
10,661 |
| |||||||||
Amortization of deferred acquisition costs |
|
948 |
|
950 |
|
953 |
|
970 |
|
950 |
|
965 |
|
984 |
|
2,851 |
|
2,899 |
| |||||||||
General and administrative expenses |
|
915 |
|
931 |
|
934 |
|
977 |
|
881 |
|
1,001 |
|
1,031 |
|
2,780 |
|
2,913 |
| |||||||||
Interest expense |
|
92 |
|
86 |
|
91 |
|
92 |
|
92 |
|
92 |
|
93 |
|
269 |
|
277 |
| |||||||||
Total claims and expenses |
|
5,108 |
|
5,497 |
|
5,275 |
|
5,366 |
|
5,238 |
|
5,884 |
|
5,628 |
|
15,880 |
|
16,750 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Operating income before income taxes |
|
1,210 |
|
1,010 |
|
1,199 |
|
1,360 |
|
1,469 |
|
885 |
|
1,218 |
|
3,419 |
|
3,572 |
| |||||||||
Income tax expense |
|
323 |
|
194 |
|
316 |
|
379 |
|
417 |
|
212 |
|
325 |
|
833 |
|
954 |
| |||||||||
Operating income |
|
$ |
887 |
|
$ |
816 |
|
$ |
883 |
|
$ |
981 |
|
$ |
1,052 |
|
$ |
673 |
|
$ |
893 |
|
$ |
2,586 |
|
$ |
2,618 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Other statistics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Effective tax rate on net investment income |
|
19.2 |
% |
19.7 |
% |
19.1 |
% |
20.0 |
% |
21.0 |
% |
20.5 |
% |
20.9 |
% |
19.3 |
% |
20.8 |
% | |||||||||
Net investment income (after-tax) |
|
$ |
542 |
|
$ |
551 |
|
$ |
531 |
|
$ |
562 |
|
$ |
582 |
|
$ |
553 |
|
$ |
568 |
|
$ |
1,624 |
|
$ |
1,703 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Catastrophes, net of reinsurance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pre-tax |
|
$ |
99 |
|
$ |
340 |
|
$ |
99 |
|
$ |
53 |
|
$ |
149 |
|
$ |
436 |
|
$ |
83 |
|
$ |
538 |
|
$ |
668 |
|
After-tax |
|
$ |
65 |
|
$ |
221 |
|
$ |
64 |
|
$ |
37 |
|
$ |
97 |
|
$ |
284 |
|
$ |
54 |
|
$ |
350 |
|
$ |
435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Prior year reserve development - favorable (unfavorable) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pre-tax |
|
$ |
231 |
|
$ |
192 |
|
$ |
158 |
|
$ |
259 |
|
$ |
294 |
|
$ |
183 |
|
$ |
113 |
|
$ |
581 |
|
$ |
590 |
|
After-tax |
|
$ |
154 |
|
$ |
125 |
|
$ |
107 |
|
$ |
166 |
|
$ |
190 |
|
$ |
122 |
|
$ |
74 |
|
$ |
386 |
|
$ |
386 |
|
See Business Realignment on pages i and ii and 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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
Statutory underwriting |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross written premiums |
|
$ |
6,188 |
|
$ |
6,247 |
|
$ |
6,310 |
|
$ |
5,912 |
|
$ |
6,401 |
|
$ |
6,525 |
|
$ |
6,578 |
|
$ |
18,745 |
|
$ |
19,504 |
|
Net written premiums |
|
$ |
5,597 |
|
$ |
5,824 |
|
$ |
5,713 |
|
$ |
5,633 |
|
$ |
5,873 |
|
$ |
6,168 |
|
$ |
6,033 |
|
$ |
17,134 |
|
$ |
18,074 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net earned premiums |
|
$ |
5,517 |
|
$ |
5,603 |
|
$ |
5,666 |
|
$ |
5,851 |
|
$ |
5,823 |
|
$ |
5,934 |
|
$ |
5,983 |
|
$ |
16,786 |
|
$ |
17,740 |
|
Losses and loss adjustment expenses |
|
3,070 |
|
3,490 |
|
3,250 |
|
3,282 |
|
3,267 |
|
3,766 |
|
3,468 |
|
9,810 |
|
10,501 |
| |||||||||
Underwriting expenses |
|
1,799 |
|
1,808 |
|
1,799 |
|
1,794 |
|
1,783 |
|
1,918 |
|
1,946 |
|
5,406 |
|
5,647 |
| |||||||||
Statutory underwriting gain |
|
648 |
|
305 |
|
617 |
|
775 |
|
773 |
|
250 |
|
569 |
|
1,570 |
|
1,592 |
| |||||||||
Policyholder dividends |
|
10 |
|
13 |
|
7 |
|
5 |
|
11 |
|
7 |
|
9 |
|
30 |
|
27 |
| |||||||||
Statutory underwriting gain after policyholder dividends |
|
$ |
638 |
|
$ |
292 |
|
$ |
610 |
|
$ |
770 |
|
$ |
762 |
|
$ |
243 |
|
$ |
560 |
|
$ |
1,540 |
|
$ |
1,565 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Other statutory statistics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Reserves for losses and loss adjustment expenses |
|
$ |
40,215 |
|
$ |
40,145 |
|
$ |
40,037 |
|
$ |
41,568 |
|
$ |
41,383 |
|
$ |
41,715 |
|
$ |
41,525 |
|
$ |
40,037 |
|
$ |
41,525 |
|
Increase (decrease) in reserves |
|
$ |
(441 |
) |
$ |
(70 |
) |
$ |
(108 |
) |
$ |
1,531 |
|
$ |
(185 |
) |
$ |
332 |
|
$ |
(190 |
) |
$ |
(619 |
) |
$ |
(43 |
) |
Statutory basis surplus |
|
$ |
20,692 |
|
$ |
20,672 |
|
$ |
21,509 |
|
$ |
21,123 |
|
$ |
21,440 |
|
$ |
21,036 |
|
$ |
21,005 |
|
$ |
21,509 |
|
$ |
21,005 |
|
Net written premiums/surplus (1) |
|
1.09:1 |
|
1.09:1 |
|
1.05:1 |
|
1.08:1 |
|
1.07:1 |
|
1.11:1 |
|
1.13:1 |
|
1.05:1 |
|
1.13:1 |
|
(1) Based on 12 months of rolling net written premiums.
See Business Realignment on pages i and ii and Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
Written premiums |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross |
|
$ |
6,188 |
|
$ |
6,247 |
|
$ |
6,310 |
|
$ |
5,912 |
|
$ |
6,401 |
|
$ |
6,519 |
|
$ |
6,578 |
|
$ |
18,745 |
|
$ |
19,498 |
|
Ceded |
|
(591 |
) |
(423 |
) |
(597 |
) |
(279 |
) |
(528 |
) |
(357 |
) |
(545 |
) |
(1,611 |
) |
(1,430 |
) | |||||||||
Net |
|
$ |
5,597 |
|
$ |
5,824 |
|
$ |
5,713 |
|
$ |
5,633 |
|
$ |
5,873 |
|
$ |
6,162 |
|
$ |
6,033 |
|
$ |
17,134 |
|
$ |
18,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Earned premiums |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross |
|
$ |
5,985 |
|
$ |
6,091 |
|
$ |
6,163 |
|
$ |
6,369 |
|
$ |
6,295 |
|
$ |
6,378 |
|
$ |
6,437 |
|
$ |
18,239 |
|
$ |
19,110 |
|
Ceded |
|
(468 |
) |
(488 |
) |
(497 |
) |
(518 |
) |
(472 |
) |
(450 |
) |
(454 |
) |
(1,453 |
) |
(1,376 |
) | |||||||||
Net |
|
$ |
5,517 |
|
$ |
5,603 |
|
$ |
5,666 |
|
$ |
5,851 |
|
$ |
5,823 |
|
$ |
5,928 |
|
$ |
5,983 |
|
$ |
16,786 |
|
$ |
17,734 |
|
See Business Realignment on pages i and ii and Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. |
|
Historical results conform with current business segment definitions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Premiums |
|
$ |
3,199 |
|
$ |
3,277 |
|
$ |
3,325 |
|
$ |
3,531 |
|
$ |
3,558 |
|
$ |
3,631 |
|
$ |
3,660 |
|
$ |
9,801 |
|
$ |
10,849 |
|
Net investment income |
|
513 |
|
527 |
|
504 |
|
543 |
|
570 |
|
539 |
|
557 |
|
1,544 |
|
1,666 |
| |||||||||
Fee income |
|
97 |
|
82 |
|
107 |
|
109 |
|
107 |
|
112 |
|
110 |
|
286 |
|
329 |
| |||||||||
Other revenues |
|
13 |
|
114 |
|
8 |
|
25 |
|
12 |
|
10 |
|
10 |
|
135 |
|
32 |
| |||||||||
Total revenues |
|
3,822 |
|
4,000 |
|
3,944 |
|
4,208 |
|
4,247 |
|
4,292 |
|
4,337 |
|
11,766 |
|
12,876 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Claims and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Claims and claim adjustment expenses |
|
1,853 |
|
2,179 |
|
2,087 |
|
2,166 |
|
2,177 |
|
2,455 |
|
2,360 |
|
6,119 |
|
6,992 |
| |||||||||
Amortization of deferred acquisition costs |
|
527 |
|
534 |
|
536 |
|
561 |
|
565 |
|
580 |
|
589 |
|
1,597 |
|
1,734 |
| |||||||||
General and administrative expenses |
|
585 |
|
586 |
|
575 |
|
623 |
|
554 |
|
653 |
|
661 |
|
1,746 |
|
1,868 |
| |||||||||
Total claims and expenses |
|
2,965 |
|
3,299 |
|
3,198 |
|
3,350 |
|
3,296 |
|
3,688 |
|
3,610 |
|
9,462 |
|
10,594 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Operating income before income taxes |
|
857 |
|
701 |
|
746 |
|
858 |
|
951 |
|
604 |
|
727 |
|
2,304 |
|
2,282 |
| |||||||||
Income tax expense |
|
221 |
|
130 |
|
180 |
|
227 |
|
257 |
|
133 |
|
175 |
|
531 |
|
565 |
| |||||||||
Operating income |
|
$ |
636 |
|
$ |
571 |
|
$ |
566 |
|
$ |
631 |
|
$ |
694 |
|
$ |
471 |
|
$ |
552 |
|
$ |
1,773 |
|
$ |
1,717 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Other statistics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Effective tax rate on net investment income |
|
19.3 |
% |
19.9 |
% |
19.2 |
% |
20.2 |
% |
21.1 |
% |
20.6 |
% |
21.0 |
% |
19.5 |
% |
20.9 |
% | |||||||||
Net investment income (after-tax) |
|
$ |
414 |
|
$ |
422 |
|
$ |
408 |
|
$ |
433 |
|
$ |
450 |
|
$ |
427 |
|
$ |
440 |
|
$ |
1,244 |
|
$ |
1,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Catastrophes, net of reinsurance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pre-tax |
|
$ |
35 |
|
$ |
189 |
|
$ |
59 |
|
$ |
50 |
|
$ |
83 |
|
$ |
242 |
|
$ |
31 |
|
$ |
283 |
|
$ |
356 |
|
After-tax |
|
$ |
23 |
|
$ |
123 |
|
$ |
39 |
|
$ |
35 |
|
$ |
55 |
|
$ |
158 |
|
$ |
19 |
|
$ |
185 |
|
$ |
232 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Prior year reserve development - favorable (unfavorable) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pre-tax |
|
$ |
142 |
|
$ |
58 |
|
$ |
77 |
|
$ |
122 |
|
$ |
95 |
|
$ |
47 |
|
$ |
21 |
|
$ |
277 |
|
$ |
163 |
|
After-tax |
|
$ |
96 |
|
$ |
38 |
|
$ |
54 |
|
$ |
78 |
|
$ |
61 |
|
$ |
33 |
|
$ |
14 |
|
$ |
188 |
|
$ |
108 |
|
See Business Realignment on pages i and ii and 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 and International Insurance ($ in millions, net of tax) |
|
Historical results conform with current business segment definitions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Underwriting gain |
|
$ |
214 |
|
$ |
74 |
|
$ |
153 |
|
$ |
180 |
|
$ |
236 |
|
$ |
37 |
|
$ |
104 |
|
$ |
441 |
|
$ |
377 |
|
Net investment income |
|
414 |
|
422 |
|
408 |
|
433 |
|
450 |
|
427 |
|
440 |
|
1,244 |
|
1,317 |
| |||||||||
Other |
|
8 |
|
75 |
|
5 |
|
18 |
|
8 |
|
7 |
|
8 |
|
88 |
|
23 |
| |||||||||
Operating income |
|
$ |
636 |
|
$ |
571 |
|
$ |
566 |
|
$ |
631 |
|
$ |
694 |
|
$ |
471 |
|
$ |
552 |
|
$ |
1,773 |
|
$ |
1,717 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Combined ratio (1) (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Loss and loss adjustment expense ratio |
|
56.3 |
% |
65.4 |
% |
61.3 |
% |
59.9 |
% |
59.8 |
% |
66.2 |
% |
63.1 |
% |
61.1 |
% |
63.0 |
% | |||||||||
Underwriting expense ratio |
|
32.9 |
% |
32.3 |
% |
31.4 |
% |
31.6 |
% |
29.4 |
% |
31.9 |
% |
32.1 |
% |
32.2 |
% |
31.2 |
% | |||||||||
Combined ratio |
|
89.2 |
% |
97.7 |
% |
92.7 |
% |
91.5 |
% |
89.2 |
% |
98.1 |
% |
95.2 |
% |
93.3 |
% |
94.2 |
% | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Impact of catastrophes on combined ratio |
|
1.1 |
% |
5.8 |
% |
1.8 |
% |
1.4 |
% |
2.4 |
% |
6.6 |
% |
0.9 |
% |
2.9 |
% |
3.3 |
% | |||||||||
Impact of prior year reserve development on combined ratio |
|
-4.5 |
% |
-1.8 |
% |
-2.3 |
% |
-3.4 |
% |
-2.7 |
% |
-1.3 |
% |
-0.6 |
% |
-2.8 |
% |
-1.5 |
% |
(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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
Billing and policy fees and other |
|
$ |
4 |
|
$ |
5 |
|
$ |
4 |
|
$ |
7 |
|
$ |
8 |
|
$ |
7 |
|
$ |
7 |
|
$ |
13 |
|
$ |
22 |
|
Fee income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Loss and loss adjustment expenses |
|
$ |
42 |
|
$ |
27 |
|
$ |
44 |
|
$ |
46 |
|
$ |
43 |
|
$ |
46 |
|
$ |
43 |
|
$ |
113 |
|
$ |
132 |
|
Underwriting expenses |
|
55 |
|
55 |
|
63 |
|
63 |
|
64 |
|
66 |
|
67 |
|
173 |
|
197 |
| |||||||||
Total fee income |
|
$ |
97 |
|
$ |
82 |
|
$ |
107 |
|
$ |
109 |
|
$ |
107 |
|
$ |
112 |
|
$ |
110 |
|
$ |
286 |
|
$ |
329 |
|
See Business Realignment on pages i and ii and Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Selected Statistics - Business and International Insurance ($ in millions) |
|
Historical results conform with current business segment definitions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Statutory underwriting |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross written premiums |
|
$ |
3,927 |
|
$ |
3,707 |
|
$ |
3,721 |
|
$ |
3,637 |
|
$ |
4,224 |
|
$ |
4,067 |
|
$ |
4,057 |
|
$ |
11,355 |
|
$ |
12,348 |
|
Net written premiums |
|
$ |
3,512 |
|
$ |
3,386 |
|
$ |
3,249 |
|
$ |
3,365 |
|
$ |
3,772 |
|
$ |
3,735 |
|
$ |
3,560 |
|
$ |
10,147 |
|
$ |
11,067 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net earned premiums |
|
$ |
3,199 |
|
$ |
3,277 |
|
$ |
3,325 |
|
$ |
3,531 |
|
$ |
3,558 |
|
$ |
3,637 |
|
$ |
3,660 |
|
$ |
9,801 |
|
$ |
10,855 |
|
Losses and loss adjustment expenses |
|
1,772 |
|
2,141 |
|
2,042 |
|
2,117 |
|
2,132 |
|
2,397 |
|
2,310 |
|
5,955 |
|
6,839 |
| |||||||||
Underwriting expenses |
|
1,100 |
|
1,063 |
|
1,028 |
|
1,073 |
|
1,105 |
|
1,178 |
|
1,169 |
|
3,191 |
|
3,452 |
| |||||||||
Statutory underwriting gain |
|
327 |
|
73 |
|
255 |
|
341 |
|
321 |
|
62 |
|
181 |
|
655 |
|
564 |
| |||||||||
Policyholder dividends |
|
9 |
|
10 |
|
5 |
|
4 |
|
8 |
|
5 |
|
7 |
|
24 |
|
20 |
| |||||||||
Statutory underwriting gain after policyholder dividends |
|
$ |
318 |
|
$ |
63 |
|
$ |
250 |
|
$ |
337 |
|
$ |
313 |
|
$ |
57 |
|
$ |
174 |
|
$ |
631 |
|
$ |
544 |
|
See Business Realignment on pages i and ii and Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Net Written Premiums - Business and International Insurance ($ in millions) |
|
Historical results conform with current business segment definitions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net written premiums by market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Domestic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Select Accounts |
|
$ |
724 |
|
$ |
709 |
|
$ |
654 |
|
$ |
637 |
|
$ |
718 |
|
$ |
705 |
|
$ |
654 |
|
$ |
2,087 |
|
$ |
2,077 |
|
Middle Market |
|
1,610 |
|
1,392 |
|
1,487 |
|
1,373 |
|
1,632 |
|
1,420 |
|
1,545 |
|
4,489 |
|
4,597 |
| |||||||||
National Accounts |
|
277 |
|
242 |
|
236 |
|
255 |
|
300 |
|
243 |
|
249 |
|
755 |
|
792 |
| |||||||||
First Party |
|
383 |
|
433 |
|
382 |
|
354 |
|
387 |
|
450 |
|
369 |
|
1,198 |
|
1,206 |
| |||||||||
Specialized Distribution |
|
266 |
|
292 |
|
273 |
|
254 |
|
267 |
|
283 |
|
262 |
|
831 |
|
812 |
| |||||||||
Total Domestic |
|
3,260 |
|
3,068 |
|
3,032 |
|
2,873 |
|
3,304 |
|
3,101 |
|
3,079 |
|
9,360 |
|
9,484 |
| |||||||||
International |
|
252 |
|
318 |
|
217 |
|
492 |
|
468 |
|
628 |
|
481 |
|
787 |
|
1,577 |
| |||||||||
Total |
|
$ |
3,512 |
|
$ |
3,386 |
|
$ |
3,249 |
|
$ |
3,365 |
|
$ |
3,772 |
|
$ |
3,729 |
|
$ |
3,560 |
|
$ |
10,147 |
|
$ |
11,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net written premiums by product line |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Commercial multi-peril |
|
$ |
828 |
|
$ |
771 |
|
$ |
755 |
|
$ |
729 |
|
$ |
821 |
|
$ |
750 |
|
$ |
759 |
|
$ |
2,354 |
|
$ |
2,330 |
|
Workers compensation |
|
1,056 |
|
860 |
|
885 |
|
841 |
|
1,076 |
|
904 |
|
921 |
|
2,801 |
|
2,901 |
| |||||||||
Commercial automobile |
|
484 |
|
476 |
|
488 |
|
449 |
|
490 |
|
456 |
|
484 |
|
1,448 |
|
1,430 |
| |||||||||
Commercial property |
|
427 |
|
484 |
|
424 |
|
413 |
|
440 |
|
505 |
|
415 |
|
1,335 |
|
1,360 |
| |||||||||
General liability |
|
458 |
|
469 |
|
458 |
|
438 |
|
469 |
|
477 |
|
478 |
|
1,385 |
|
1,424 |
| |||||||||
International |
|
252 |
|
318 |
|
217 |
|
492 |
|
468 |
|
628 |
|
481 |
|
787 |
|
1,577 |
| |||||||||
Other |
|
7 |
|
8 |
|
22 |
|
3 |
|
8 |
|
9 |
|
22 |
|
37 |
|
39 |
| |||||||||
Total |
|
$ |
3,512 |
|
$ |
3,386 |
|
$ |
3,249 |
|
$ |
3,365 |
|
$ |
3,772 |
|
$ |
3,729 |
|
$ |
3,560 |
|
$ |
10,147 |
|
$ |
11,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
National Accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Additions to claim volume under administration (1) |
|
$ |
701 |
|
$ |
523 |
|
$ |
523 |
|
$ |
596 |
|
$ |
727 |
|
$ |
511 |
|
$ |
546 |
|
$ |
1,747 |
|
$ |
1,784 |
|
Written fees |
|
$ |
104 |
|
$ |
88 |
|
$ |
92 |
|
$ |
81 |
|
$ |
111 |
|
$ |
87 |
|
$ |
95 |
|
$ |
284 |
|
$ |
293 |
|
(1) Includes new and renewal business.
See Business Realignment on pages i and ii and Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Operating Income - Bond & Specialty Insurance ($ in millions) |
|
Historical results conform with current business segment definitions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Premiums |
|
$ |
478 |
|
$ |
492 |
|
$ |
506 |
|
$ |
505 |
|
$ |
503 |
|
$ |
524 |
|
$ |
527 |
|
$ |
1,476 |
|
$ |
1,554 |
|
Net investment income |
|
66 |
|
66 |
|
63 |
|
65 |
|
66 |
|
62 |
|
64 |
|
195 |
|
192 |
| |||||||||
Other revenues |
|
5 |
|
5 |
|
5 |
|
5 |
|
4 |
|
6 |
|
5 |
|
15 |
|
15 |
| |||||||||
Total revenues |
|
549 |
|
563 |
|
574 |
|
575 |
|
573 |
|
592 |
|
596 |
|
1,686 |
|
1,761 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Claims and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Claims and claim adjustment expenses |
|
198 |
|
161 |
|
209 |
|
127 |
|
159 |
|
110 |
|
152 |
|
568 |
|
421 |
| |||||||||
Amortization of deferred acquisition costs |
|
91 |
|
94 |
|
98 |
|
95 |
|
93 |
|
95 |
|
101 |
|
283 |
|
289 |
| |||||||||
General and administrative expenses |
|
94 |
|
97 |
|
97 |
|
100 |
|
97 |
|
102 |
|
101 |
|
288 |
|
300 |
| |||||||||
Total claims and expenses |
|
383 |
|
352 |
|
404 |
|
322 |
|
349 |
|
307 |
|
354 |
|
1,139 |
|
1,010 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Operating income before income taxes |
|
166 |
|
211 |
|
170 |
|
253 |
|
224 |
|
285 |
|
242 |
|
547 |
|
751 |
| |||||||||
Income tax expense |
|
49 |
|
49 |
|
50 |
|
79 |
|
70 |
|
93 |
|
77 |
|
148 |
|
240 |
| |||||||||
Operating income |
|
$ |
117 |
|
$ |
162 |
|
$ |
120 |
|
$ |
174 |
|
$ |
154 |
|
$ |
192 |
|
$ |
165 |
|
$ |
399 |
|
$ |
511 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Other statistics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Effective tax rate on net investment income |
|
17.8 |
% |
17.9 |
% |
17.6 |
% |
18.1 |
% |
18.9 |
% |
18.4 |
% |
19.0 |
% |
17.8 |
% |
18.8 |
% | |||||||||
Net investment income (after-tax) |
|
$ |
55 |
|
$ |
54 |
|
$ |
51 |
|
$ |
54 |
|
$ |
53 |
|
$ |
52 |
|
$ |
51 |
|
$ |
160 |
|
$ |
156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Catastrophes, net of reinsurance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pre-tax |
|
$ |
|
|
$ |
5 |
|
$ |
2 |
|
$ |
1 |
|
$ |
1 |
|
$ |
4 |
|
$ |
1 |
|
$ |
7 |
|
$ |
6 |
|
After-tax |
|
$ |
|
|
$ |
3 |
|
$ |
1 |
|
$ |
1 |
|
$ |
|
|
$ |
3 |
|
$ |
1 |
|
$ |
4 |
|
$ |
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Prior year reserve development - favorable (unfavorable) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pre-tax |
|
$ |
29 |
|
$ |
69 |
|
$ |
33 |
|
$ |
101 |
|
$ |
67 |
|
$ |
124 |
|
$ |
79 |
|
$ |
131 |
|
$ |
270 |
|
After-tax |
|
$ |
19 |
|
$ |
45 |
|
$ |
21 |
|
$ |
66 |
|
$ |
43 |
|
$ |
81 |
|
$ |
52 |
|
$ |
85 |
|
$ |
176 |
|
See Business Realignment on pages i and ii and 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 - Bond & Specialty Insurance ($ in millions, net of tax) |
|
Historical results conform with current business segment definitions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Underwriting gain |
|
$ |
59 |
|
$ |
104 |
|
$ |
66 |
|
$ |
117 |
|
$ |
99 |
|
$ |
136 |
|
$ |
110 |
|
$ |
229 |
|
$ |
345 |
|
Net investment income |
|
55 |
|
54 |
|
51 |
|
54 |
|
53 |
|
52 |
|
51 |
|
160 |
|
156 |
| |||||||||
Other |
|
3 |
|
4 |
|
3 |
|
3 |
|
2 |
|
4 |
|
4 |
|
10 |
|
10 |
| |||||||||
Operating income |
|
$ |
117 |
|
$ |
162 |
|
$ |
120 |
|
$ |
174 |
|
$ |
154 |
|
$ |
192 |
|
$ |
165 |
|
$ |
399 |
|
$ |
511 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Combined ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Loss and loss adjustment expense ratio |
|
41.1 |
% |
32.3 |
% |
40.8 |
% |
25.0 |
% |
31.0 |
% |
20.5 |
% |
28.7 |
% |
38.1 |
% |
26.7 |
% | |||||||||
Underwriting expense ratio |
|
38.7 |
% |
38.7 |
% |
38.6 |
% |
38.7 |
% |
37.6 |
% |
37.9 |
% |
38.2 |
% |
38.6 |
% |
37.9 |
% | |||||||||
Combined ratio |
|
79.8 |
% |
71.0 |
% |
79.4 |
% |
63.7 |
% |
68.6 |
% |
58.4 |
% |
66.9 |
% |
76.7 |
% |
64.6 |
% | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Impact of catastrophes on combined ratio |
|
0.0 |
% |
1.0 |
% |
0.3 |
% |
0.3 |
% |
0.2 |
% |
0.9 |
% |
0.2 |
% |
0.4 |
% |
0.5 |
% | |||||||||
Impact of prior year reserve development on combined ratio |
|
-6.0 |
% |
-14.0 |
% |
-6.6 |
% |
-20.1 |
% |
-13.2 |
% |
-23.7 |
% |
-15.0 |
% |
-8.9 |
% |
-17.4 |
% |
See Business Realignment on pages i and ii and Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Selected Statistics - Bond & Specialty Insurance ($ in millions) |
|
Historical results conform with current business segment definitions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Statutory underwriting |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross written premiums |
|
$ |
498 |
|
$ |
543 |
|
$ |
561 |
|
$ |
529 |
|
$ |
528 |
|
$ |
542 |
|
$ |
562 |
|
$ |
1,602 |
|
$ |
1,632 |
|
Net written premiums |
|
$ |
395 |
|
$ |
531 |
|
$ |
553 |
|
$ |
551 |
|
$ |
482 |
|
$ |
540 |
|
$ |
556 |
|
$ |
1,479 |
|
$ |
1,578 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net earned premiums |
|
$ |
478 |
|
$ |
492 |
|
$ |
506 |
|
$ |
505 |
|
$ |
503 |
|
$ |
524 |
|
$ |
527 |
|
$ |
1,476 |
|
$ |
1,554 |
|
Losses and loss adjustment expenses |
|
196 |
|
159 |
|
207 |
|
127 |
|
155 |
|
108 |
|
152 |
|
562 |
|
415 |
| |||||||||
Underwriting expenses |
|
186 |
|
193 |
|
198 |
|
192 |
|
197 |
|
201 |
|
205 |
|
577 |
|
603 |
| |||||||||
Statutory underwriting gain |
|
96 |
|
140 |
|
101 |
|
186 |
|
151 |
|
215 |
|
170 |
|
337 |
|
536 |
| |||||||||
Policyholder dividends |
|
1 |
|
3 |
|
2 |
|
1 |
|
3 |
|
2 |
|
2 |
|
6 |
|
7 |
| |||||||||
Statutory underwriting gain after policyholder dividends |
|
$ |
95 |
|
$ |
137 |
|
$ |
99 |
|
$ |
185 |
|
$ |
148 |
|
$ |
213 |
|
$ |
168 |
|
$ |
331 |
|
$ |
529 |
|
See Business Realignment on pages i and ii and Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Net Written Premiums - Bond & Specialty Insurance ($ in millions) |
|
Historical results conform with current business segment definitions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net written premiums by product line |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
General liability |
|
$ |
168 |
|
$ |
237 |
|
$ |
249 |
|
$ |
280 |
|
$ |
223 |
|
$ |
239 |
|
$ |
247 |
|
$ |
654 |
|
$ |
709 |
|
Fidelity & surety |
|
178 |
|
253 |
|
255 |
|
232 |
|
211 |
|
257 |
|
260 |
|
686 |
|
728 |
| |||||||||
Other |
|
49 |
|
41 |
|
49 |
|
39 |
|
48 |
|
44 |
|
49 |
|
139 |
|
141 |
| |||||||||
Total |
|
$ |
395 |
|
$ |
531 |
|
$ |
553 |
|
$ |
551 |
|
$ |
482 |
|
$ |
540 |
|
$ |
556 |
|
$ |
1,479 |
|
$ |
1,578 |
|
See Business Realignment on pages i and ii and Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Operating Income - Personal Insurance ($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Premiums |
|
$ |
1,840 |
|
$ |
1,834 |
|
$ |
1,835 |
|
$ |
1,815 |
|
$ |
1,762 |
|
$ |
1,773 |
|
$ |
1,796 |
|
$ |
5,509 |
|
$ |
5,331 |
|
Net investment income |
|
91 |
|
94 |
|
90 |
|
94 |
|
100 |
|
94 |
|
98 |
|
275 |
|
292 |
| |||||||||
Other revenues |
|
18 |
|
15 |
|
34 |
|
36 |
|
26 |
|
17 |
|
19 |
|
67 |
|
62 |
| |||||||||
Total revenues |
|
1,949 |
|
1,943 |
|
1,959 |
|
1,945 |
|
1,888 |
|
1,884 |
|
1,913 |
|
5,851 |
|
5,685 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Claims and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Claims and claim adjustment expenses |
|
1,102 |
|
1,190 |
|
1,001 |
|
1,034 |
|
979 |
|
1,261 |
|
1,008 |
|
3,293 |
|
3,248 |
| |||||||||
Amortization of deferred acquisition costs |
|
330 |
|
322 |
|
319 |
|
314 |
|
292 |
|
290 |
|
294 |
|
971 |
|
876 |
| |||||||||
General and administrative expenses |
|
232 |
|
241 |
|
256 |
|
251 |
|
223 |
|
237 |
|
263 |
|
729 |
|
723 |
| |||||||||
Total claims and expenses |
|
1,664 |
|
1,753 |
|
1,576 |
|
1,599 |
|
1,494 |
|
1,788 |
|
1,565 |
|
4,993 |
|
4,847 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Operating income before income taxes |
|
285 |
|
190 |
|
383 |
|
346 |
|
394 |
|
96 |
|
348 |
|
858 |
|
838 |
| |||||||||
Income tax expense |
|
88 |
|
48 |
|
121 |
|
109 |
|
126 |
|
21 |
|
109 |
|
257 |
|
256 |
| |||||||||
Operating income |
|
$ |
197 |
|
$ |
142 |
|
$ |
262 |
|
$ |
237 |
|
$ |
268 |
|
$ |
75 |
|
$ |
239 |
|
$ |
601 |
|
$ |
582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Other statistics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Effective tax rate on net investment income |
|
19.5 |
% |
20.1 |
% |
19.5 |
% |
20.3 |
% |
21.3 |
% |
20.7 |
% |
21.8 |
% |
19.7 |
% |
21.3 |
% | |||||||||
Net investment income (after-tax) |
|
$ |
73 |
|
$ |
75 |
|
$ |
72 |
|
$ |
75 |
|
$ |
79 |
|
$ |
74 |
|
$ |
77 |
|
$ |
220 |
|
$ |
230 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Catastrophes, net of reinsurance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pre-tax |
|
$ |
64 |
|
$ |
146 |
|
$ |
38 |
|
$ |
2 |
|
$ |
65 |
|
$ |
190 |
|
$ |
51 |
|
$ |
248 |
|
$ |
306 |
|
After-tax |
|
$ |
42 |
|
$ |
95 |
|
$ |
24 |
|
$ |
1 |
|
$ |
42 |
|
$ |
123 |
|
$ |
34 |
|
$ |
161 |
|
$ |
199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Prior year reserve development - favorable (unfavorable) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pre-tax |
|
$ |
60 |
|
$ |
65 |
|
$ |
48 |
|
$ |
36 |
|
$ |
132 |
|
$ |
12 |
|
$ |
13 |
|
$ |
173 |
|
$ |
157 |
|
After-tax |
|
$ |
39 |
|
$ |
42 |
|
$ |
32 |
|
$ |
22 |
|
$ |
86 |
|
$ |
8 |
|
$ |
8 |
|
$ |
113 |
|
$ |
102 |
|
See Business Realignment on pages i and ii and 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 - Personal Insurance ($ in millions, net of tax) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Underwriting gain (loss) |
|
$ |
112 |
|
$ |
57 |
|
$ |
168 |
|
$ |
138 |
|
$ |
172 |
|
$ |
(11 |
) |
$ |
150 |
|
$ |
337 |
|
$ |
311 |
|
Net investment income |
|
73 |
|
75 |
|
72 |
|
75 |
|
79 |
|
74 |
|
77 |
|
220 |
|
230 |
| |||||||||
Other |
|
12 |
|
10 |
|
22 |
|
24 |
|
17 |
|
12 |
|
12 |
|
44 |
|
41 |
| |||||||||
Operating income |
|
$ |
197 |
|
$ |
142 |
|
$ |
262 |
|
$ |
237 |
|
$ |
268 |
|
$ |
75 |
|
$ |
239 |
|
$ |
601 |
|
$ |
582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Combined ratio (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Loss and loss adjustment expense ratio |
|
59.9 |
% |
64.9 |
% |
54.5 |
% |
57.0 |
% |
55.6 |
% |
71.1 |
% |
56.0 |
% |
59.8 |
% |
60.9 |
% | |||||||||
Underwriting expense ratio |
|
29.5 |
% |
29.6 |
% |
30.2 |
% |
29.9 |
% |
28.0 |
% |
28.7 |
% |
30.1 |
% |
29.7 |
% |
28.9 |
% | |||||||||
Combined ratio |
|
89.4 |
% |
94.5 |
% |
84.7 |
% |
86.9 |
% |
83.6 |
% |
99.8 |
% |
86.1 |
% |
89.5 |
% |
89.8 |
% | |||||||||
Combined ratio excluding incremental impact of direct to consumer initiative |
|
87.5 |
% |
92.9 |
% |
82.9 |
% |
85.1 |
% |
82.0 |
% |
98.3 |
% |
84.2 |
% |
87.8 |
% |
88.1 |
% | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Impact of catastrophes on combined ratio |
|
3.5 |
% |
8.0 |
% |
2.0 |
% |
0.1 |
% |
3.7 |
% |
10.7 |
% |
2.8 |
% |
4.5 |
% |
5.6 |
% | |||||||||
Impact of prior year reserve development on combined ratio |
|
-3.3 |
% |
-3.5 |
% |
-2.6 |
% |
-2.0 |
% |
-7.5 |
% |
-0.7 |
% |
-0.7 |
% |
-3.2 |
% |
-2.9 |
% |
(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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
Billing and policy fees and other |
|
$ |
20 |
|
$ |
20 |
|
$ |
21 |
|
$ |
21 |
|
$ |
22 |
|
$ |
18 |
|
$ |
18 |
|
$ |
61 |
|
$ |
58 |
|
See Business Realignment on pages i and ii and Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Selected Statistics - Personal Insurance ($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Statutory underwriting |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross written premiums |
|
$ |
1,763 |
|
$ |
1,997 |
|
$ |
2,028 |
|
$ |
1,746 |
|
$ |
1,649 |
|
$ |
1,916 |
|
$ |
1,959 |
|
$ |
5,788 |
|
$ |
5,524 |
|
Net written premiums |
|
$ |
1,690 |
|
$ |
1,907 |
|
$ |
1,911 |
|
$ |
1,717 |
|
$ |
1,619 |
|
$ |
1,893 |
|
$ |
1,917 |
|
$ |
5,508 |
|
$ |
5,429 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net earned premiums |
|
$ |
1,840 |
|
$ |
1,834 |
|
$ |
1,835 |
|
$ |
1,815 |
|
$ |
1,762 |
|
$ |
1,773 |
|
$ |
1,796 |
|
$ |
5,509 |
|
$ |
5,331 |
|
Losses and loss adjustment expenses |
|
1,102 |
|
1,190 |
|
1,001 |
|
1,038 |
|
980 |
|
1,261 |
|
1,006 |
|
3,293 |
|
3,247 |
| |||||||||
Underwriting expenses |
|
513 |
|
552 |
|
573 |
|
529 |
|
481 |
|
539 |
|
572 |
|
1,638 |
|
1,592 |
| |||||||||
Statutory underwriting gain |
|
$ |
225 |
|
$ |
92 |
|
$ |
261 |
|
$ |
248 |
|
$ |
301 |
|
$ |
(27 |
) |
$ |
218 |
|
$ |
578 |
|
$ |
492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Policies in force (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Automobile (1) |
|
2,273 |
|
2,204 |
|
2,139 |
|
2,091 |
|
2,068 |
|
2,068 |
|
2,083 |
|
2,139 |
|
2,083 |
| |||||||||
Homeowners and other |
|
4,563 |
|
4,477 |
|
4,386 |
|
4,294 |
|
4,232 |
|
4,199 |
|
4,164 |
|
4,386 |
|
4,164 |
|
(1) Policies in force have been adjusted to exclude assigned risk auto business for all periods presented.
See Business Realignment on pages i and ii and 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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Statutory underwriting |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross written premiums |
|
$ |
835 |
|
$ |
838 |
|
$ |
834 |
|
$ |
770 |
|
$ |
795 |
|
$ |
834 |
|
$ |
852 |
|
$ |
2,507 |
|
$ |
2,481 |
|
Net written premiums |
|
$ |
831 |
|
$ |
834 |
|
$ |
828 |
|
$ |
765 |
|
$ |
788 |
|
$ |
831 |
|
$ |
849 |
|
$ |
2,493 |
|
$ |
2,468 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net earned premiums |
|
$ |
844 |
|
$ |
837 |
|
$ |
827 |
|
$ |
812 |
|
$ |
787 |
|
$ |
792 |
|
$ |
804 |
|
$ |
2,508 |
|
$ |
2,383 |
|
Losses and loss adjustment expenses |
|
594 |
|
599 |
|
591 |
|
636 |
|
533 |
|
588 |
|
564 |
|
1,784 |
|
1,685 |
| |||||||||
Underwriting expenses |
|
218 |
|
224 |
|
222 |
|
208 |
|
208 |
|
221 |
|
224 |
|
664 |
|
653 |
| |||||||||
Statutory underwriting gain (loss) |
|
$ |
32 |
|
$ |
14 |
|
$ |
14 |
|
$ |
(32 |
) |
$ |
46 |
|
$ |
(17 |
) |
$ |
16 |
|
$ |
60 |
|
$ |
45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Other statistics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Combined ratio (2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Loss and loss adjustment expense ratio |
|
70.4 |
% |
71.6 |
% |
71.5 |
% |
77.8 |
% |
67.7 |
% |
74.3 |
% |
70.1 |
% |
71.1 |
% |
70.8 |
% | |||||||||
Underwriting expense ratio |
|
25.6 |
% |
26.2 |
% |
26.4 |
% |
26.2 |
% |
25.6 |
% |
26.5 |
% |
26.6 |
% |
26.1 |
% |
26.2 |
% | |||||||||
Combined ratio |
|
96.0 |
% |
97.8 |
% |
97.9 |
% |
104.0 |
% |
93.3 |
% |
100.8 |
% |
96.7 |
% |
97.2 |
% |
97.0 |
% | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Impact of catastrophes on combined ratio |
|
1.0 |
% |
1.4 |
% |
0.3 |
% |
0.0 |
% |
0.0 |
% |
4.6 |
% |
0.6 |
% |
0.9 |
% |
1.8 |
% | |||||||||
Impact of prior year reserve development on combined ratio |
|
0.6 |
% |
0.0 |
% |
0.0 |
% |
1.8 |
% |
0.0 |
% |
0.0 |
% |
0.0 |
% |
0.2 |
% |
0.0 |
% | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Catastrophe losses, net of reinsurance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pre-tax |
|
$ |
8 |
|
$ |
12 |
|
$ |
2 |
|
$ |
|
|
$ |
|
|
$ |
36 |
|
$ |
5 |
|
$ |
22 |
|
$ |
41 |
|
After-tax |
|
$ |
6 |
|
$ |
7 |
|
$ |
1 |
|
$ |
|
|
$ |
|
|
$ |
23 |
|
$ |
4 |
|
$ |
14 |
|
$ |
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Prior year reserve development - favorable (unfavorable) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pre-tax |
|
$ |
(6 |
) |
$ |
|
|
$ |
|
|
$ |
(14 |
) |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
(6 |
) |
$ |
|
|
After-tax |
|
$ |
(4 |
) |
$ |
|
|
$ |
|
|
$ |
(10 |
) |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
(4 |
) |
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Policies in force (in thousands) (3) |
|
2,191 |
|
2,123 |
|
2,058 |
|
2,010 |
|
1,985 |
|
1,981 |
|
1,990 |
|
|
|
|
| |||||||||
Change from prior year quarter |
|
-10.9 |
% |
-11.9 |
% |
-12.0 |
% |
-11.2 |
% |
-9.4 |
% |
-6.7 |
% |
-3.3 |
% |
|
|
|
| |||||||||
Change from prior quarter |
|
-3.3 |
% |
-3.1 |
% |
-3.1 |
% |
-2.3 |
% |
-1.3 |
% |
-0.2 |
% |
0.5 |
% |
|
|
|
|
(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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
Billing and policy fees and other |
|
$ |
10 |
|
$ |
9 |
|
$ |
9 |
|
$ |
9 |
|
$ |
9 |
|
$ |
8 |
|
$ |
9 |
|
$ |
28 |
|
$ |
26 |
|
(3) Policies in force have been adjusted to exclude assigned risk auto business for all periods presented.
See Business Realignment on pages i and ii and 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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Statutory underwriting |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross written premiums |
|
$ |
889 |
|
$ |
1,119 |
|
$ |
1,150 |
|
$ |
936 |
|
$ |
811 |
|
$ |
1,036 |
|
$ |
1,055 |
|
$ |
3,158 |
|
$ |
2,902 |
|
Net written premiums |
|
$ |
820 |
|
$ |
1,033 |
|
$ |
1,039 |
|
$ |
913 |
|
$ |
788 |
|
$ |
1,016 |
|
$ |
1,017 |
|
$ |
2,892 |
|
$ |
2,821 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net earned premiums |
|
$ |
957 |
|
$ |
958 |
|
$ |
969 |
|
$ |
963 |
|
$ |
935 |
|
$ |
938 |
|
$ |
948 |
|
$ |
2,884 |
|
$ |
2,821 |
|
Losses and loss adjustment expenses |
|
480 |
|
561 |
|
382 |
|
371 |
|
419 |
|
639 |
|
414 |
|
1,423 |
|
1,472 |
| |||||||||
Underwriting expenses |
|
255 |
|
293 |
|
313 |
|
286 |
|
240 |
|
283 |
|
303 |
|
861 |
|
826 |
| |||||||||
Statutory underwriting gain |
|
$ |
222 |
|
$ |
104 |
|
$ |
274 |
|
$ |
306 |
|
$ |
276 |
|
$ |
16 |
|
$ |
231 |
|
$ |
600 |
|
$ |
523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Other statistics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Combined ratio (2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Loss and loss adjustment expense ratio |
|
50.2 |
% |
58.6 |
% |
39.4 |
% |
38.5 |
% |
44.8 |
% |
68.1 |
% |
43.6 |
% |
49.3 |
% |
52.2 |
% | |||||||||
Underwriting expense ratio |
|
29.8 |
% |
30.1 |
% |
30.8 |
% |
30.7 |
% |
27.6 |
% |
28.0 |
% |
29.9 |
% |
30.3 |
% |
28.5 |
% | |||||||||
Combined ratio |
|
80.0 |
% |
88.7 |
% |
70.2 |
% |
69.2 |
% |
72.4 |
% |
96.1 |
% |
73.5 |
% |
79.6 |
% |
80.7 |
% | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Impact of catastrophes on combined ratio |
|
5.6 |
% |
13.9 |
% |
3.6 |
% |
0.0 |
% |
6.8 |
% |
15.9 |
% |
4.8 |
% |
7.7 |
% |
9.2 |
% | |||||||||
Impact of prior year reserve development on combined ratio |
|
-6.7 |
% |
-6.7 |
% |
-5.0 |
% |
-5.1 |
% |
-14.1 |
% |
-1.3 |
% |
-1.4 |
% |
-6.2 |
% |
-5.5 |
% | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Catastrophe losses, net of reinsurance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pre-tax |
|
$ |
54 |
|
$ |
133 |
|
$ |
35 |
|
$ |
1 |
|
$ |
64 |
|
$ |
150 |
|
$ |
46 |
|
$ |
222 |
|
$ |
260 |
|
After-tax |
|
$ |
35 |
|
$ |
87 |
|
$ |
22 |
|
$ |
1 |
|
$ |
41 |
|
$ |
98 |
|
$ |
30 |
|
$ |
144 |
|
$ |
169 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Prior year reserve development - favorable (unfavorable) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pre-tax |
|
$ |
65 |
|
$ |
65 |
|
$ |
48 |
|
$ |
50 |
|
$ |
132 |
|
$ |
12 |
|
$ |
13 |
|
$ |
178 |
|
$ |
157 |
|
After-tax |
|
$ |
42 |
|
$ |
42 |
|
$ |
32 |
|
$ |
32 |
|
$ |
86 |
|
$ |
8 |
|
$ |
8 |
|
$ |
116 |
|
$ |
102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Policies in force (in thousands) |
|
4,484 |
|
4,396 |
|
4,303 |
|
4,209 |
|
4,146 |
|
4,110 |
|
4,072 |
|
|
|
|
| |||||||||
Change from prior year quarter |
|
-8.5 |
% |
-9.0 |
% |
-8.8 |
% |
-8.4 |
% |
-7.5 |
% |
-6.5 |
% |
-5.4 |
% |
|
|
|
| |||||||||
Change from prior quarter |
|
-2.4 |
% |
-2.0 |
% |
-2.1 |
% |
-2.2 |
% |
-1.5 |
% |
-0.9 |
% |
-0.9 |
% |
|
|
|
|
(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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
Billing and policy fees and other |
|
$ |
9 |
|
$ |
10 |
|
$ |
12 |
|
$ |
12 |
|
$ |
13 |
|
$ |
9 |
|
$ |
9 |
|
$ |
31 |
|
$ |
31 |
|
See Business Realignment on pages i and ii and 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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net written premiums |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Automobile |
|
$ |
29 |
|
$ |
27 |
|
$ |
30 |
|
$ |
26 |
|
$ |
31 |
|
$ |
31 |
|
$ |
36 |
|
$ |
86 |
|
$ |
98 |
|
Homeowners and other |
|
10 |
|
13 |
|
14 |
|
13 |
|
12 |
|
15 |
|
15 |
|
37 |
|
42 |
| |||||||||
Total net written premiums |
|
$ |
39 |
|
$ |
40 |
|
$ |
44 |
|
$ |
39 |
|
$ |
43 |
|
$ |
46 |
|
$ |
51 |
|
$ |
123 |
|
$ |
140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Premiums |
|
$ |
39 |
|
$ |
39 |
|
$ |
39 |
|
$ |
40 |
|
$ |
40 |
|
$ |
43 |
|
$ |
44 |
|
$ |
117 |
|
$ |
127 |
|
Other revenues |
|
|
|
|
|
1 |
|
|
|
|
|
|
|
1 |
|
1 |
|
1 |
| |||||||||
Total revenues |
|
39 |
|
39 |
|
40 |
|
40 |
|
40 |
|
43 |
|
45 |
|
118 |
|
128 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Claims and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Claims and claim adjustment expenses |
|
28 |
|
30 |
|
28 |
|
31 |
|
28 |
|
33 |
|
29 |
|
86 |
|
90 |
| |||||||||
Amortization of deferred acquisition costs |
|
1 |
|
1 |
|
1 |
|
1 |
|
1 |
|
1 |
|
1 |
|
3 |
|
3 |
| |||||||||
General and administrative expenses |
|
40 |
|
34 |
|
37 |
|
36 |
|
33 |
|
35 |
|
43 |
|
111 |
|
111 |
| |||||||||
Total claims and expenses |
|
69 |
|
65 |
|
66 |
|
68 |
|
62 |
|
69 |
|
73 |
|
200 |
|
204 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Operating loss before income taxes |
|
(30 |
) |
(26 |
) |
(26 |
) |
(28 |
) |
(22 |
) |
(26 |
) |
(28 |
) |
(82 |
) |
(76 |
) | |||||||||
Income taxes |
|
(11 |
) |
(9 |
) |
(9 |
) |
(10 |
) |
(8 |
) |
(9 |
) |
(10 |
) |
(29 |
) |
(27 |
) | |||||||||
Operating loss |
|
$ |
(19 |
) |
$ |
(17 |
) |
$ |
(17 |
) |
$ |
(18 |
) |
$ |
(14 |
) |
$ |
(17 |
) |
$ |
(18 |
) |
$ |
(53 |
) |
$ |
(49 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Other statistics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Policies in force (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Automobile |
|
82 |
|
81 |
|
81 |
|
81 |
|
83 |
|
87 |
|
93 |
|
|
|
|
| |||||||||
Homeowners and other |
|
79 |
|
81 |
|
83 |
|
85 |
|
86 |
|
89 |
|
92 |
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Catastrophes, net of reinsurance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pre-tax |
|
$ |
2 |
|
$ |
1 |
|
$ |
1 |
|
$ |
1 |
|
$ |
1 |
|
$ |
4 |
|
$ |
|
|
$ |
4 |
|
$ |
5 |
|
After-tax |
|
$ |
1 |
|
$ |
1 |
|
$ |
1 |
|
$ |
|
|
$ |
1 |
|
$ |
2 |
|
$ |
|
|
$ |
3 |
|
$ |
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Prior year reserve development - favorable (unfavorable) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Pre-tax |
|
$ |
1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
1 |
|
$ |
|
|
After-tax |
|
$ |
1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
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 Business Realignment on pages i and ii and Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Interest Expense and Other ($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Other revenues |
|
$ |
(2 |
) |
$ |
1 |
|
$ |
(3 |
) |
$ |
(2 |
) |
$ |
(1 |
) |
$ |
1 |
|
$ |
|
|
$ |
(4 |
) |
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Claims and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Interest expense |
|
92 |
|
86 |
|
91 |
|
92 |
|
92 |
|
92 |
|
93 |
|
269 |
|
277 |
| |||||||||
General and administrative expenses |
|
4 |
|
7 |
|
6 |
|
3 |
|
7 |
|
9 |
|
6 |
|
17 |
|
22 |
| |||||||||
Total claims and expenses |
|
96 |
|
93 |
|
97 |
|
95 |
|
99 |
|
101 |
|
99 |
|
286 |
|
299 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Operating loss before income tax benefit |
|
(98 |
) |
(92 |
) |
(100 |
) |
(97 |
) |
(100 |
) |
(100 |
) |
(99 |
) |
(290 |
) |
(299 |
) | |||||||||
Income taxes |
|
(35 |
) |
(33 |
) |
(35 |
) |
(36 |
) |
(36 |
) |
(35 |
) |
(36 |
) |
(103 |
) |
(107 |
) | |||||||||
Operating loss |
|
$ |
(63 |
) |
$ |
(59 |
) |
$ |
(65 |
) |
$ |
(61 |
) |
$ |
(64 |
) |
$ |
(65 |
) |
$ |
(63 |
) |
$ |
(187 |
) |
$ |
(192 |
) |
See Business Realignment on pages i and ii and Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Consolidated Balance Sheet (in millions) |
|
|
|
September 30, |
|
December 31, |
| ||
|
|
2014 |
|
2013 |
| ||
|
|
|
|
|
| ||
Assets |
|
|
|
|
| ||
Fixed maturities, available for sale, at fair value (amortized cost $61,043 and $62,196) |
|
$ |
63,622 |
|
$ |
63,956 |
|
Equity securities, available for sale, at fair value (cost $609 and $686) |
|
949 |
|
943 |
| ||
Real estate investments |
|
949 |
|
938 |
| ||
Short-term securities |
|
5,033 |
|
3,882 |
| ||
Other investments |
|
3,637 |
|
3,441 |
| ||
Total investments |
|
74,190 |
|
73,160 |
| ||
|
|
|
|
|
| ||
Cash |
|
367 |
|
294 |
| ||
Investment income accrued |
|
663 |
|
734 |
| ||
Premiums receivable |
|
6,439 |
|
6,125 |
| ||
Reinsurance recoverables |
|
9,279 |
|
9,713 |
| ||
Ceded unearned premiums |
|
848 |
|
801 |
| ||
Deferred acquisition costs |
|
1,890 |
|
1,804 |
| ||
Deferred taxes |
|
|
|
303 |
| ||
Contractholder receivables |
|
4,367 |
|
4,328 |
| ||
Goodwill |
|
3,621 |
|
3,634 |
| ||
Other intangible assets |
|
316 |
|
351 |
| ||
Other assets |
|
2,542 |
|
2,565 |
| ||
Total assets |
|
$ |
104,522 |
|
$ |
103,812 |
|
|
|
|
|
|
| ||
Liabilities |
|
|
|
|
| ||
Claims and claim adjustment expense reserves |
|
$ |
50,402 |
|
$ |
50,895 |
|
Unearned premium reserves |
|
12,181 |
|
11,850 |
| ||
Contractholder payables |
|
4,367 |
|
4,328 |
| ||
Payables for reinsurance premiums |
|
491 |
|
298 |
| ||
Deferred taxes |
|
122 |
|
|
| ||
Debt |
|
6,348 |
|
6,346 |
| ||
Other liabilities |
|
5,290 |
|
5,299 |
| ||
Total liabilities |
|
79,201 |
|
79,016 |
| ||
|
|
|
|
|
| ||
Shareholders equity |
|
|
|
|
| ||
Common stock (1,750.0 shares authorized; 331.4 and 353.5 shares issued and outstanding) |
|
21,764 |
|
21,500 |
| ||
Retained earnings |
|
26,394 |
|
24,291 |
| ||
Accumulated other comprehensive income |
|
1,300 |
|
810 |
| ||
Treasury stock, at cost (427.6 and 401.5 shares) |
|
(24,137 |
) |
(21,805 |
) | ||
Total shareholders equity |
|
25,321 |
|
24,796 |
| ||
Total liabilities and shareholders equity |
|
$ |
104,522 |
|
$ |
103,812 |
|
The Travelers Companies, Inc. Investment Portfolio (at carrying value, $ in millions) |
|
|
|
September 30, |
|
Pre-tax Book |
|
December 31, |
|
Pre-tax Book |
| ||
|
|
2014 |
|
Yield (1) |
|
2013 |
|
Yield (1) |
| ||
Investment portfolio |
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||
Taxable fixed maturities (including redeemable preferred stock) |
|
$ |
30,115 |
|
3.49 |
% |
$ |
28,788 |
|
3.55 |
% |
Tax-exempt fixed maturities |
|
33,507 |
|
3.77 |
% |
35,168 |
|
3.84 |
% | ||
Total fixed maturities |
|
63,622 |
|
3.64 |
% |
63,956 |
|
3.71 |
% | ||
|
|
|
|
|
|
|
|
|
| ||
Non-redeemable preferred stocks |
|
241 |
|
5.74 |
% |
333 |
|
5.70 |
% | ||
Public common stocks |
|
708 |
|
|
|
610 |
|
|
| ||
Total equity securities |
|
949 |
|
|
|
943 |
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||
Real estate investments |
|
949 |
|
|
|
938 |
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||
Short-term securities |
|
5,033 |
|
0.15 |
% |
3,882 |
|
0.15 |
% | ||
|
|
|
|
|
|
|
|
|
| ||
Private equities |
|
2,087 |
|
|
|
1,926 |
|
|
| ||
Hedge funds |
|
430 |
|
|
|
390 |
|
|
| ||
Real estate partnerships |
|
615 |
|
|
|
618 |
|
|
| ||
Other investments |
|
505 |
|
|
|
507 |
|
|
| ||
Total other investments |
|
3,637 |
|
|
|
3,441 |
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||
Total investments |
|
$ |
74,190 |
|
|
|
$ |
73,160 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Net unrealized investment gains, net of tax, included in shareholders equity |
|
$ |
1,914 |
|
|
|
$ |
1,322 |
|
|
|
(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) |
|
|
|
September 30, |
|
December 31, |
| ||
|
|
2014 |
|
2013 |
| ||
Fixed maturities |
|
|
|
|
| ||
U.S. Treasury securities and obligations of U.S. Government corporations and agencies |
|
$ |
2,074 |
|
$ |
2,315 |
|
Obligations of states and political subdivisions: |
|
|
|
|
| ||
Pre-refunded |
|
7,807 |
|
9,518 |
| ||
All other |
|
26,090 |
|
26,044 |
| ||
Total |
|
33,897 |
|
35,562 |
| ||
Debt securities issued by foreign governments |
|
2,468 |
|
2,577 |
| ||
Mortgage-backed securities - principally obligations of U.S. Government agencies |
|
2,274 |
|
2,424 |
| ||
Corporates (including redeemable preferreds) |
|
22,909 |
|
21,078 |
| ||
Total fixed maturities |
|
$ |
63,622 |
|
$ |
63,956 |
|
Fixed Maturities |
Quality Characteristics (1) |
|
|
September 30, 2014 |
| |||
|
|
Amount |
|
% of Total |
| |
Quality Ratings |
|
|
|
|
| |
Aaa |
|
$ |
26,592 |
|
41.8 |
% |
Aa |
|
19,130 |
|
30.1 |
| |
A |
|
9,599 |
|
15.1 |
| |
Baa |
|
6,333 |
|
9.9 |
| |
Total investment grade |
|
61,654 |
|
96.9 |
| |
Ba |
|
1,085 |
|
1.7 |
| |
B |
|
468 |
|
0.7 |
| |
Caa and lower |
|
415 |
|
0.7 |
| |
Total below investment grade |
|
1,968 |
|
3.1 |
| |
Total fixed maturities |
|
$ |
63,622 |
|
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 |
|
3.5 |
|
|
|
(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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross investment income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Fixed maturities |
|
$ |
586 |
|
$ |
574 |
|
$ |
571 |
|
$ |
579 |
|
$ |
580 |
|
$ |
562 |
|
$ |
552 |
|
$ |
1,731 |
|
$ |
1,694 |
|
Short-term securities |
|
2 |
|
2 |
|
3 |
|
4 |
|
2 |
|
2 |
|
2 |
|
7 |
|
6 |
| |||||||||
Other |
|
92 |
|
120 |
|
91 |
|
129 |
|
163 |
|
140 |
|
174 |
|
303 |
|
477 |
| |||||||||
|
|
680 |
|
696 |
|
665 |
|
712 |
|
745 |
|
704 |
|
728 |
|
2,041 |
|
2,177 |
| |||||||||
Investment expenses |
|
10 |
|
9 |
|
8 |
|
10 |
|
9 |
|
9 |
|
9 |
|
27 |
|
27 |
| |||||||||
Net investment income, pre-tax |
|
670 |
|
687 |
|
657 |
|
702 |
|
736 |
|
695 |
|
719 |
|
2,014 |
|
2,150 |
| |||||||||
Income taxes |
|
128 |
|
136 |
|
126 |
|
140 |
|
154 |
|
142 |
|
151 |
|
390 |
|
447 |
| |||||||||
Net investment income, after-tax |
|
$ |
542 |
|
$ |
551 |
|
$ |
531 |
|
$ |
562 |
|
$ |
582 |
|
$ |
553 |
|
$ |
568 |
|
$ |
1,624 |
|
$ |
1,703 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Effective tax rate |
|
19.2 |
% |
19.7 |
% |
19.1 |
% |
20.0 |
% |
21.0 |
% |
20.5 |
% |
20.9 |
% |
19.3 |
% |
20.8 |
% | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Average invested assets (1) |
|
$ |
69,996 |
|
$ |
69,701 |
|
$ |
70,419 |
|
$ |
72,165 |
|
$ |
72,112 |
|
$ |
71,880 |
|
$ |
72,062 |
|
$ |
70,128 |
|
$ |
72,062 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Average yield pre-tax (1) |
|
3.8 |
% |
3.9 |
% |
3.7 |
% |
3.9 |
% |
4.1 |
% |
3.9 |
% |
4.0 |
% |
3.8 |
% |
4.0 |
% | |||||||||
Average yield after-tax |
|
3.1 |
% |
3.2 |
% |
3.0 |
% |
3.1 |
% |
3.2 |
% |
3.1 |
% |
3.2 |
% |
3.1 |
% |
3.2 |
% |
(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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net realized investment gains (losses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Fixed maturities |
|
$ |
11 |
|
$ |
14 |
|
$ |
5 |
|
$ |
6 |
|
$ |
6 |
|
$ |
9 |
|
$ |
|
|
$ |
30 |
|
$ |
15 |
|
Equity securities |
|
6 |
|
4 |
|
(1 |
) |
1 |
|
(4 |
) |
15 |
|
|
|
9 |
|
11 |
| |||||||||
Other (1) |
|
(7 |
) |
149 |
|
(26 |
) |
4 |
|
(1 |
) |
(8 |
) |
40 |
|
116 |
|
31 |
| |||||||||
Realized investment gains (losses) before tax |
|
10 |
|
167 |
|
(22 |
) |
11 |
|
1 |
|
16 |
|
40 |
|
155 |
|
57 |
| |||||||||
Related taxes |
|
1 |
|
58 |
|
(3 |
) |
4 |
|
1 |
|
6 |
|
14 |
|
56 |
|
21 |
| |||||||||
Net realized investment gains (losses) |
|
$ |
9 |
|
$ |
109 |
|
$ |
(19 |
) |
$ |
7 |
|
$ |
|
|
$ |
10 |
|
$ |
26 |
|
$ |
99 |
|
$ |
36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross investment gains (1) |
|
$ |
108 |
|
$ |
352 |
|
$ |
12 |
|
$ |
57 |
|
$ |
59 |
|
$ |
46 |
|
$ |
101 |
|
$ |
472 |
|
$ |
206 |
|
Gross investment losses before impairments (1) |
|
(93 |
) |
(183 |
) |
(31 |
) |
(41 |
) |
(49 |
) |
(29 |
) |
(51 |
) |
(307 |
) |
(129 |
) | |||||||||
Net investment gains before impairments |
|
15 |
|
169 |
|
(19 |
) |
16 |
|
10 |
|
17 |
|
50 |
|
165 |
|
77 |
| |||||||||
Other-than-temporary impairment losses |
|
(5 |
) |
(2 |
) |
(3 |
) |
(5 |
) |
(9 |
) |
(1 |
) |
(10 |
) |
(10 |
) |
(20 |
) | |||||||||
Net realized investment gains (losses) before tax |
|
10 |
|
167 |
|
(22 |
) |
11 |
|
1 |
|
16 |
|
40 |
|
155 |
|
57 |
| |||||||||
Related taxes |
|
1 |
|
58 |
|
(3 |
) |
4 |
|
1 |
|
6 |
|
14 |
|
56 |
|
21 |
| |||||||||
Net realized investment gains (losses) |
|
$ |
9 |
|
$ |
109 |
|
$ |
(19 |
) |
$ |
7 |
|
$ |
|
|
$ |
10 |
|
$ |
26 |
|
$ |
99 |
|
$ |
36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
March 31, |
|
June 30, |
|
September 30, |
|
December 31, |
|
March 31, |
|
June 30, |
|
September 30, |
|
|
|
|
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net unrealized investment gains, net of tax, by asset type |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Fixed maturities |
|
$ |
4,121 |
|
$ |
2,349 |
|
$ |
2,142 |
|
$ |
1,760 |
|
$ |
2,276 |
|
$ |
2,742 |
|
$ |
2,579 |
|
|
|
|
| ||
Equity securities & other |
|
274 |
|
250 |
|
252 |
|
270 |
|
293 |
|
346 |
|
356 |
|
|
|
|
| |||||||||
Unrealized investment gains before tax |
|
4,395 |
|
2,599 |
|
2,394 |
|
2,030 |
|
2,569 |
|
3,088 |
|
2,935 |
|
|
|
|
| |||||||||
Related taxes |
|
1,531 |
|
907 |
|
835 |
|
708 |
|
895 |
|
1,075 |
|
1,021 |
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Balance, end of period |
|
$ |
2,864 |
|
$ |
1,692 |
|
$ |
1,559 |
|
$ |
1,322 |
|
$ |
1,674 |
|
$ |
2,013 |
|
$ |
1,914 |
|
|
|
|
|
(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 |
|
$ |
56 |
|
$ |
287 |
|
$ |
|
|
$ |
|
|
$ |
4 |
|
$ |
4 |
|
$ |
6 |
|
$ |
343 |
|
$ |
14 |
|
|
Gross investment Treasury future losses |
|
$ |
75 |
|
$ |
153 |
|
$ |
|
|
$ |
|
|
$ |
3 |
|
$ |
5 |
|
$ |
6 |
|
$ |
228 |
|
$ |
14 |
|
The Company entered into these arrangements as part of its strategy to manage 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) |
|
|
|
September 30, |
|
December 31, |
| ||
|
|
2014 |
|
2013 |
| ||
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses |
|
$ |
4,365 |
|
$ |
4,707 |
|
Allowance for uncollectible reinsurance |
|
(233 |
) |
(239 |
) | ||
Net reinsurance recoverables (i) |
|
4,132 |
|
4,468 |
| ||
Mandatory pools and associations (ii) |
|
1,851 |
|
1,897 |
| ||
Structured settlements (iii) |
|
3,296 |
|
3,348 |
| ||
Total reinsurance recoverables |
|
$ |
9,279 |
|
$ |
9,713 |
|
(i) The Companys top five reinsurer groups, including retroactive reinsurance, included in net reinsurance recoverables is as follows:
|
|
A.M. Best Rating of Groups |
|
September 30, |
|
|
| |
Reinsurer |
|
Predominant Reinsurer |
|
2014 |
|
|
| |
Munich Re Group |
|
A+ second highest of 16 ratings |
|
$ |
485 |
|
|
|
Swiss Re Group |
|
A+ second highest of 16 ratings |
|
456 |
|
|
| |
Sompo Japan Nipponkoa Group (1) |
|
A+ second highest of 16 ratings |
|
256 |
|
|
| |
Berkshire Hathaway |
|
A++ highest of 16 ratings |
|
222 |
|
|
| |
XL Capital Group |
|
A third highest of 16 ratings |
|
196 |
|
|
| |
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 September 30, 2014, after deducting mandatory pools and associations and structured settlement balances, $3.3 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: 6% related to the Companys participation in voluntary pools, 11% related to recoverables from captive insurance companies and 3% were balances from other companies not rated by A.M. Best Company. In addition, $1.2 billion of the net recoverables were collateralized by letters of credit, funds held or trust agreements at September 30, 2014.
(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. Recoverables due from the National Flood Insurance Program are included with mandatory pools.
(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 |
|
September 30, |
|
|
| |
Group |
|
Predominant Insurer |
|
2014 |
|
|
| |
Fidelity and Guaranty Life |
|
B++ fifth highest of 16 ratings |
|
$ |
944 |
|
|
|
Metlife |
|
A+ second highest of 16 ratings |
|
442 |
|
|
| |
Genworth Financial Group |
|
A third highest of 16 ratings |
|
417 |
|
|
| |
John Hancock Group |
|
A+ second highest of 16 ratings |
|
261 |
|
|
| |
Symetra Financial Corporation |
|
A third highest of 16 ratings |
|
242 |
|
|
| |
(1) On September 1, 2014, NKSJ Holdings, Inc. changed its name to Sompo Japan Nipponkoa Holdings, Inc.
The Travelers Companies, Inc. Net Reserves for Losses and Loss Adjustment Expense ($ in millions) |
|
Historical results conform with current business segment definitions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
Statutory Basis Reserves for Losses and Loss Adjustment Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Business and International Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Beginning of period |
|
$ |
33,270 |
|
$ |
32,934 |
|
$ |
33,011 |
|
$ |
33,079 |
|
$ |
34,717 |
|
$ |
34,661 |
|
$ |
34,929 |
|
$ |
33,270 |
|
$ |
34,717 |
|
Incurred |
|
1,772 |
|
2,141 |
|
2,042 |
|
2,117 |
|
2,132 |
|
2,397 |
|
2,310 |
|
5,955 |
|
6,839 |
| |||||||||
Paid |
|
(2,033 |
) |
(2,048 |
) |
(2,051 |
) |
(2,249 |
) |
(2,109 |
) |
(2,231 |
) |
(2,170 |
) |
(6,132 |
) |
(6,510 |
) | |||||||||
Acquired reserves, foreign exchange and other (1) |
|
(75 |
) |
(16 |
) |
77 |
|
1,770 |
|
(79 |
) |
102 |
|
(182 |
) |
(14 |
) |
(159 |
) | |||||||||
End of period |
|
$ |
32,934 |
|
$ |
33,011 |
|
$ |
33,079 |
|
$ |
34,717 |
|
$ |
34,661 |
|
$ |
34,929 |
|
$ |
34,887 |
|
$ |
33,079 |
|
$ |
34,887 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Bond & Specialty Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Beginning of period |
|
$ |
3,699 |
|
$ |
3,752 |
|
$ |
3,668 |
|
$ |
3,664 |
|
$ |
3,595 |
|
$ |
3,585 |
|
$ |
3,501 |
|
$ |
3,699 |
|
$ |
3,595 |
|
Incurred |
|
196 |
|
159 |
|
207 |
|
127 |
|
155 |
|
108 |
|
152 |
|
562 |
|
415 |
| |||||||||
Paid |
|
(143 |
) |
(243 |
) |
(211 |
) |
(196 |
) |
(165 |
) |
(192 |
) |
(237 |
) |
(597 |
) |
(594 |
) | |||||||||
End of period |
|
$ |
3,752 |
|
$ |
3,668 |
|
$ |
3,664 |
|
$ |
3,595 |
|
$ |
3,585 |
|
$ |
3,501 |
|
$ |
3,416 |
|
$ |
3,664 |
|
$ |
3,416 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Personal Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Beginning of period |
|
$ |
3,687 |
|
$ |
3,529 |
|
$ |
3,466 |
|
$ |
3,294 |
|
$ |
3,256 |
|
$ |
3,137 |
|
$ |
3,285 |
|
$ |
3,687 |
|
$ |
3,256 |
|
Incurred |
|
1,102 |
|
1,190 |
|
1,001 |
|
1,038 |
|
980 |
|
1,261 |
|
1,006 |
|
3,293 |
|
3,247 |
| |||||||||
Paid |
|
(1,260 |
) |
(1,253 |
) |
(1,173 |
) |
(1,076 |
) |
(1,099 |
) |
(1,113 |
) |
(1,069 |
) |
(3,686 |
) |
(3,281 |
) | |||||||||
End of period |
|
$ |
3,529 |
|
$ |
3,466 |
|
$ |
3,294 |
|
$ |
3,256 |
|
$ |
3,137 |
|
$ |
3,285 |
|
$ |
3,222 |
|
$ |
3,294 |
|
$ |
3,222 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Beginning of period |
|
$ |
40,656 |
|
$ |
40,215 |
|
$ |
40,145 |
|
$ |
40,037 |
|
$ |
41,568 |
|
$ |
41,383 |
|
$ |
41,715 |
|
$ |
40,656 |
|
$ |
41,568 |
|
Incurred |
|
3,070 |
|
3,490 |
|
3,250 |
|
3,282 |
|
3,267 |
|
3,766 |
|
3,468 |
|
9,810 |
|
10,501 |
| |||||||||
Paid |
|
(3,436 |
) |
(3,544 |
) |
(3,435 |
) |
(3,521 |
) |
(3,373 |
) |
(3,536 |
) |
(3,476 |
) |
(10,415 |
) |
(10,385 |
) | |||||||||
Acquired reserves, foreign exchange and other (1) |
|
(75 |
) |
(16 |
) |
77 |
|
1,770 |
|
(79 |
) |
102 |
|
(182 |
) |
(14 |
) |
(159 |
) | |||||||||
End of period |
|
$ |
40,215 |
|
$ |
40,145 |
|
$ |
40,037 |
|
$ |
41,568 |
|
$ |
41,383 |
|
$ |
41,715 |
|
$ |
41,525 |
|
$ |
40,037 |
|
$ |
41,525 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Prior Year Reserve Development: Unfavorable (Favorable) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Business and International Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Asbestos |
|
$ |
|
|
$ |
|
|
$ |
190 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
250 |
|
$ |
190 |
|
$ |
250 |
|
Environmental |
|
|
|
65 |
|
|
|
|
|
|
|
87 |
|
|
|
65 |
|
87 |
| |||||||||
All other |
|
(142 |
) |
(123 |
) |
(267 |
) |
(122 |
) |
(95 |
) |
(134 |
) |
(271 |
) |
(532 |
) |
(500 |
) | |||||||||
Total Business and International Insurance (2) |
|
(142 |
) |
(58 |
) |
(77 |
) |
(122 |
) |
(95 |
) |
(47 |
) |
(21 |
) |
(277 |
) |
(163 |
) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Bond & Specialty Insurance |
|
(29 |
) |
(69 |
) |
(33 |
) |
(101 |
) |
(67 |
) |
(124 |
) |
(79 |
) |
(131 |
) |
(270 |
) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Personal Insurance |
|
(60 |
) |
(65 |
) |
(48 |
) |
(36 |
) |
(132 |
) |
(12 |
) |
(13 |
) |
(173 |
) |
(157 |
) | |||||||||
Total |
|
$ |
(231 |
) |
$ |
(192 |
) |
$ |
(158 |
) |
$ |
(259 |
) |
$ |
(294 |
) |
$ |
(183 |
) |
$ |
(113 |
) |
$ |
(581 |
) |
$ |
(590 |
) |
(1) Includes Dominion acquired reserves in 4Q 2013.
(2) Excludes accretion of discount.
See Business Realignment on pages i and ii and Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Asbestos and Environmental Reserves ($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Asbestos reserves |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Beginning reserves: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross |
|
$ |
2,689 |
|
$ |
2,626 |
|
$ |
2,566 |
|
$ |
2,686 |
|
$ |
2,606 |
|
$ |
2,547 |
|
$ |
2,482 |
|
$ |
2,689 |
|
$ |
2,606 |
|
Ceded |
|
(311 |
) |
(292 |
) |
(288 |
) |
(263 |
) |
(256 |
) |
(242 |
) |
(232 |
) |
(311 |
) |
(256 |
) | |||||||||
Net |
|
2,378 |
|
2,334 |
|
2,278 |
|
2,423 |
|
2,350 |
|
2,305 |
|
2,250 |
|
2,378 |
|
2,350 |
| |||||||||
Incurred losses and loss expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross |
|
|
|
|
|
190 |
|
|
|
|
|
|
|
258 |
|
190 |
|
258 |
| |||||||||
Ceded |
|
|
|
|
|
|
|
|
|
|
|
|
|
(8 |
) |
|
|
(8 |
) | |||||||||
Paid loss and loss expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross |
|
62 |
|
60 |
|
71 |
|
80 |
|
59 |
|
65 |
|
74 |
|
193 |
|
198 |
| |||||||||
Ceded |
|
(19 |
) |
(4 |
) |
(25 |
) |
(7 |
) |
(14 |
) |
(10 |
) |
(20 |
) |
(48 |
) |
(44 |
) | |||||||||
Foreign exchange and other: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross |
|
(1 |
) |
|
|
1 |
|
|
|
|
|
|
|
(1 |
) |
|
|
(1 |
) | |||||||||
Ceded |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Ending reserves: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross |
|
2,626 |
|
2,566 |
|
2,686 |
|
2,606 |
|
2,547 |
|
2,482 |
|
2,665 |
|
2,686 |
|
2,665 |
| |||||||||
Ceded |
|
(292 |
) |
(288 |
) |
(263 |
) |
(256 |
) |
(242 |
) |
(232 |
) |
(220 |
) |
(263 |
) |
(220 |
) | |||||||||
Net |
|
$ |
2,334 |
|
$ |
2,278 |
|
$ |
2,423 |
|
$ |
2,350 |
|
$ |
2,305 |
|
$ |
2,250 |
|
$ |
2,445 |
|
$ |
2,423 |
|
$ |
2,445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Environmental reserves |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Beginning reserves: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross |
|
$ |
352 |
|
$ |
340 |
|
$ |
399 |
|
$ |
371 |
|
$ |
355 |
|
$ |
331 |
|
$ |
396 |
|
$ |
352 |
|
$ |
355 |
|
Ceded |
|
(5 |
) |
(4 |
) |
(11 |
) |
(12 |
) |
(11 |
) |
(11 |
) |
(14 |
) |
(5 |
) |
(11 |
) | |||||||||
Net |
|
347 |
|
336 |
|
388 |
|
359 |
|
344 |
|
320 |
|
382 |
|
347 |
|
344 |
| |||||||||
Incurred losses and loss expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross |
|
|
|
72 |
|
|
|
|
|
|
|
94 |
|
|
|
72 |
|
94 |
| |||||||||
Ceded |
|
|
|
(7 |
) |
|
|
|
|
|
|
(7 |
) |
|
|
(7 |
) |
(7 |
) | |||||||||
Paid loss and loss expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross |
|
12 |
|
13 |
|
28 |
|
34 |
|
24 |
|
29 |
|
20 |
|
53 |
|
73 |
| |||||||||
Ceded |
|
(1 |
) |
|
|
1 |
|
(3 |
) |
|
|
(4 |
) |
(3 |
) |
|
|
(7 |
) | |||||||||
Acquired reserves, foreign exchange and other: (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross |
|
|
|
|
|
|
|
18 |
|
|
|
|
|
(1 |
) |
|
|
(1 |
) | |||||||||
Ceded |
|
|
|
|
|
|
|
(2 |
) |
|
|
|
|
|
|
|
|
|
| |||||||||
Ending reserves: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Gross |
|
340 |
|
399 |
|
371 |
|
355 |
|
331 |
|
396 |
|
375 |
|
371 |
|
375 |
| |||||||||
Ceded |
|
(4 |
) |
(11 |
) |
(12 |
) |
(11 |
) |
(11 |
) |
(14 |
) |
(11 |
) |
(12 |
) |
(11 |
) | |||||||||
Net |
|
$ |
336 |
|
$ |
388 |
|
$ |
359 |
|
$ |
344 |
|
$ |
320 |
|
$ |
382 |
|
$ |
364 |
|
$ |
359 |
|
$ |
364 |
|
(1) Includes Dominion acquired reserves in 4Q 2013.
See Business Realignment on pages i and ii and Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. Capitalization ($ in millions) |
|
|
|
September 30, |
|
December 31, |
| ||
|
|
2014 |
|
2013 |
| ||
Debt |
|
|
|
|
| ||
|
|
|
|
|
| ||
Short-term debt |
|
|
|
|
| ||
Commercial paper |
|
$ |
100 |
|
$ |
100 |
|
Total short-term debt |
|
100 |
|
100 |
| ||
|
|
|
|
|
| ||
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 |
| ||
4.60% Senior notes due August 1, 2043 (1) |
|
500 |
|
500 |
| ||
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 |
|
6,261 |
|
6,261 |
| ||
Unamortized fair value adjustment |
|
50 |
|
51 |
| ||
Unamortized debt issuance costs |
|
(63 |
) |
(66 |
) | ||
|
|
6,248 |
|
6,246 |
| ||
Total debt |
|
6,348 |
|
6,346 |
| ||
|
|
|
|
|
| ||
Common equity (excluding net unrealized investment gains, net of tax) |
|
23,407 |
|
23,474 |
| ||
|
|
|
|
|
| ||
Total capital (excluding net unrealized investment gains, net of tax) |
|
$ |
29,755 |
|
$ |
29,820 |
|
|
|
|
|
|
| ||
Total debt to capital (excluding net unrealized investment gains, net of tax) |
|
21.3 |
% |
21.3 |
% |
(1) Redeemable anytime with make-whole premium.
See Business Realignment on pages i and ii and 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) |
|
|
|
September 30, |
|
December 31, |
| ||
|
|
2014 (1) |
|
2013 |
| ||
|
|
|
|
|
| ||
Statutory basis surplus |
|
$ |
21,005 |
|
$ |
21,123 |
|
|
|
|
|
|
| ||
GAAP adjustments |
|
|
|
|
| ||
|
|
|
|
|
| ||
Goodwill and intangible assets |
|
3,770 |
|
3,816 |
| ||
|
|
|
|
|
| ||
Investments |
|
3,288 |
|
2,541 |
| ||
|
|
|
|
|
| ||
Noninsurance companies |
|
(4,262 |
) |
(4,453 |
) | ||
|
|
|
|
|
| ||
Deferred acquisition costs |
|
1,890 |
|
1,804 |
| ||
|
|
|
|
|
| ||
Deferred federal income tax |
|
(1,643 |
) |
(1,259 |
) | ||
|
|
|
|
|
| ||
Current federal income tax |
|
(39 |
) |
(32 |
) | ||
|
|
|
|
|
| ||
Reinsurance recoverables |
|
160 |
|
160 |
| ||
|
|
|
|
|
| ||
Furniture, equipment & software |
|
646 |
|
708 |
| ||
|
|
|
|
|
| ||
Employee benefits |
|
11 |
|
2 |
| ||
|
|
|
|
|
| ||
Agents balances |
|
156 |
|
135 |
| ||
|
|
|
|
|
| ||
Other |
|
339 |
|
251 |
| ||
|
|
|
|
|
| ||
Total GAAP adjustments |
|
4,316 |
|
3,673 |
| ||
|
|
|
|
|
| ||
GAAP shareholders equity |
|
$ |
25,321 |
|
$ |
24,796 |
|
(1) Estimated and Preliminary
See Business Realignment on pages i and ii and Glossary of Financial Measures and Description of Reportable Business Segments on page 35.
The Travelers Companies, Inc. |
|
Statement of Cash Flows | |
($ in millions) |
The Travelers Companies, Inc. |
|
Statement of Cash Flows (Continued) | |
($ in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD |
|
YTD |
| |||||||||
|
|
1Q |
|
2Q |
|
3Q |
|
4Q |
|
1Q |
|
2Q |
|
3Q |
|
3Q |
|
3Q |
| |||||||||
|
|
2013 |
|
2013 |
|
2013 |
|
2013 |
|
2014 |
|
2014 |
|
2014 |
|
2013 |
|
2014 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Payment of debt |
|
(500 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(500 |
) |
|
| |||||||||
Issuance of debt |
|
|
|
|
|
494 |
|
|
|
|
|
|
|
|
|
494 |
|
|
| |||||||||
Dividends paid to shareholders |
|
(175 |
) |
(191 |
) |
(183 |
) |
(180 |
) |
(176 |
) |
(189 |
) |
(184 |
) |
(549 |
) |
(549 |
) | |||||||||
Issuance of common stock - employee share options |
|
98 |
|
41 |
|
19 |
|
48 |
|
57 |
|
65 |
|
32 |
|
158 |
|
154 |
| |||||||||
Treasury stock acquired - share repurchase authorization |
|
(300 |
) |
(300 |
) |
(800 |
) |
(1,000 |
) |
(650 |
) |
(875 |
) |
(750 |
) |
(1,400 |
) |
(2,275 |
) | |||||||||
Treasury stock acquired - net employee share-based compensation |
|
(58 |
) |
(1 |
) |
(1 |
) |
(1 |
) |
(54 |
) |
(1 |
) |
(1 |
) |
(60 |
) |
(56 |
) | |||||||||
Excess tax benefits from share-based payment arrangements |
|
21 |
|
8 |
|
14 |
|
8 |
|
13 |
|
11 |
|
14 |
|
43 |
|
38 |
| |||||||||
Net cash used in financing activities |
|
(914 |
) |
(443 |
) |
(457 |
) |
(1,125 |
) |
(810 |
) |
(989 |
) |
(889 |
) |
(1,814 |
) |
(2,688 |
) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Effect of exchange rate changes on cash |
|
(6 |
) |
(3 |
) |
6 |
|
|
|
(2 |
) |
3 |
|
(6 |
) |
(3 |
) |
(5 |
) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net increase (decrease) in cash |
|
(87 |
) |
65 |
|
(13 |
) |
(1 |
) |
(34 |
) |
51 |
|
56 |
|
(35 |
) |
73 |
| |||||||||
Cash at beginning of period |
|
330 |
|
243 |
|
308 |
|
295 |
|
294 |
|
260 |
|
311 |
|
330 |
|
294 |
| |||||||||
Cash at end of period |
|
$ |
243 |
|
$ |
308 |
|
$ |
295 |
|
$ |
294 |
|
$ |
260 |
|
$ |
311 |
|
$ |
367 |
|
$ |
295 |
|
$ |
367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Income taxes paid |
|
$ |
27 |
|
$ |
468 |
|
$ |
229 |
|
$ |
333 |
|
$ |
93 |
|
$ |
634 |
|
$ |
58 |
|
$ |
724 |
|
$ |
785 |
|
Interest paid |
|
$ |
35 |
|
$ |
149 |
|
$ |
22 |
|
$ |
149 |
|
$ |
34 |
|
$ |
149 |
|
$ |
34 |
|
$ |
206 |
|
$ |
217 |
|
The Travelers Companies, Inc. |
|
Financial Supplement - Third Quarter 2014 | |
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.
Combined ratio For Statutory Accounting Practices (SAP), the combined ratio is the sum of the SAP loss and LAE ratio and the SAP underwriting expense ratio as defined in the statutory financial statements required by insurance regulators. The combined ratio, as used in this financial supplement, is the equivalent of, and is calculated in the same manner as, the SAP combined ratio except that the SAP underwriting expense ratio is based on net written premium and the underwriting expense ratio as used in this financial supplement is based on net earned premiums. For SAP, the loss and LAE ratio is the ratio of incurred losses and loss adjustment expenses less certain administrative services fee income to net earned premiums as defined in the statutory financial statements required by insurance regulators. The loss and LAE ratio as used in this financial supplement is calculated in the same manner as the SAP ratio. For SAP, the underwriting expense ratio is the ratio of underwriting expenses incurred (including commissions paid), less certain administrative services fee income and billing and policy fees, to net written premiums as defined in the statutory financial statements required by insurance regulators. The underwriting expense ratio as used in this financial supplement, is the ratio of underwriting expenses (including the amortization of deferred acquisition costs), less certain administrative services fee income and billing and policy fees, to net earned premiums.
The combined ratio, loss and LAE ratio, and underwriting expense ratio are used as indicators of the Companys underwriting discipline, efficiency in acquiring and servicing its business and overall underwriting profitability. A combined ratio under 100% generally indicates an underwriting profit. A combined ratio over 100% generally indicates an underwriting loss.
Other companies method of computing similarly titled measures may not be comparable to the Companys method of computing these ratios.
Combined ratio excluding the incremental impact of the direct to consumer initiative is the 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 per share is useful in an analysis of a property casualty companys book value per share 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, effective July 1, 2014:
Business and International Insurance - The Business and International Insurance segment offers a broad array of property and casualty insurance and insurance related services to its clients, primarily in the United States, as well as in Canada, the United Kingdom, the Republic of Ireland and throughout other parts of the world as a corporate member of Lloyds. Business and International Insurance is organized as follows: Select Accounts; Middle Market including Commercial Accounts, Construction, Technology, Public Sector Services, Oil & Gas, Excess Casualty and Global Partner Services; National Accounts; First Party including National Property, Inland Marine, Ocean Marine and Boiler & Machinery; Specialized Distribution including Northland, National Programs, and Agribusiness; and International. In addition, the Company owns 49.5% of the common stock of J. Malucelli Participações em Seguros e Resseguros S.A., its joint venture in Brazil. Business and International 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 are collectively referred to as Business and International Insurance Other.
Bond & Specialty Insurance - The Bond & Specialty Insurance segment provides a wide range of customers with bond and insurance products and risk management services. The range of coverages includes performance, payment and commercial surety and fidelity bonds for construction and general commercial enterprises; management liability coverages for losses caused by the actual or alleged negligence or misconduct of directors and officers or employee dishonesty; employment practices liability coverages and fiduciary coverages for public corporations, private companies and not-for-profit organizations; professional liability coverage for actual or alleged errors and omissions committed in the course of professional conduct or practice for a variety of professionals including, among others, lawyers and design professionals; and professional and management liability, property, workers compensation, auto and general liability and fidelity insurance for financial institutions. The surety and financial liability coverages provided by Bond & Specialty Insurance primarily use credit-based underwriting processes.
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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end