-
Operating income of $495 million or $1.26 per diluted share generated
an operating return on equity of 9%.
-
Quarter reflected underlying underwriting margin improvement across
all segments and strong net investment income given the continuing low
interest rate environment.
-
Written rate gains continued across all segments.
-
Book value per share of $64.90, up 9% from end of prior year quarter
and 4% from year-end 2011.
-
Board of Directors approved quarterly dividend per share of $0.46.
NEW YORK--(BUSINESS WIRE)--
The Travelers Companies, Inc. today reported net income of $499 million,
or $1.26 per diluted share, for the quarter ended June 30, 2012,
compared to a net loss of $364 million, or $0.88 per diluted share, in
the prior year quarter. Operating income in the current quarter was $495
million, or $1.26 per diluted share, compared to an operating loss of
$377 million, or $0.91 per diluted share, in the prior year quarter.
Catastrophe losses in the current quarter were $357 million after tax
($549 million pre tax), compared to $1.085 billion after tax ($1.668
billion pre tax) in the prior year quarter.
|
Consolidated Highlights |
|
($ in millions, except for per share amounts,
|
|
| Three Months Ended June 30, | |
|
| Six Months Ended June 30, | |
and after-tax, except for premiums & revenues)
| | | 2012 |
|
| 2011 |
|
| Change | | | | 2012 |
|
| 2011 |
|
| Change | |
| | | | | | | | | | | | | | | | | | | |
|
Net written premiums | | | $ |
| 5,868 | | | | $ |
| 5,817 | | | | 1 | | % | | | $ |
| 11,365 | | | | $ |
| 11,254 | | | | 1 | |
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | |
| | | | | | | | | | | | | | | | | | | |
|
Total revenues | | | $ | | 6,359 | | | | $ | | 6,388 | | | | - | | | | | $ | | 12,751 | | | | $ | | 12,666 | | | | 1 | | |
| | | | | | | | | | | | | | | | | | | |
|
Operating income (loss) | | | $ | | 495 | | | | $ | | (377 | ) | | | NM | | | | | $ | | 1,296 | | | | $ | | 449 | | | | 189 | | |
per diluted share | | | $ | | 1.26 | | | | $ | | (0.91 | ) | | | NM | | | | |
$
| |
3.27
| | | |
$
| |
1.04
| | | | 214 | | |
| | | | | | | | | | | | | | | | | | | |
|
Net income (loss) | | | $ | | 499 | | | | $ | | (364 | ) | | | NM | | | | | $ | | 1,305 | | | | $ | | 475 | | | | 175 | | |
per diluted share | | | $ | | 1.26 | | | | $ | | (0.88 | ) | | | NM | | | | |
$
| |
3.29
| | | |
$
| |
1.10
| | | | 199 | | |
| | | | | | | | | | | | | | | | | | | |
|
Diluted weighted average | | | | | 391.6 | | | | | | 418.6 | | | | (6 | ) | | | | | | 393.5 | | | | | | 429.1 | | | | (8 | ) | |
shares outstanding | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
|
GAAP combined ratio | | | | | 100.5 | % | | | | | 125.0 | % | | | (24.5 | ) | pts | | | | | 96.3 | % | | | | | 110.1 | % | | | (13.8 | ) | pts |
| | | | | | | | | | | | | | | | | | | |
|
Operating return on equity | | | | | 9.0 | % | | | | | (6.6 | %) | | | 15.6 | | pts | | | | | 11.8 | % | | | | | 3.9 | % | | | 7.9 | | pts |
Return on equity | | | | | 8.0 | % | | | | | (5.8 | %) | | | 13.8 | | pts | | | | | 10.5 | % | | | | | 3.8 | % | | | 6.7 | | pts |
| | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | As of June 30, | |
| | | | | | | | | | | | | 2012 | | | 2011 | | | Change | |
Book value per share | | | | | | | | | | | | | $ | | 64.90 | | | | $ | | 59.62 | | | | 9 | | % |
Adjusted book value per share | | | | | | | | | | | | | $ | | 57.18 | | | | $ | | 54.32 | | | | 5 | | |
| | | | | | | | | | | | | | | | | | | |
|
See Glossary of Financial Measures for definitions and the
statistical supplement for additional financial data.
|
NM = Not Meaningful.
|
|
“Our second quarter net income of $499 million benefited from meaningful
improvement in our underlying underwriting margins as well as strong net
investment income given the continuing low interest rate environment,”
commented Jay Fishman, Chairman and Chief Executive Officer. “However,
earnings were also impacted by weather-related losses which, while much
lower than in the prior year quarter, were considerably higher than we
would have expected based on historical experience.
“We continue to be very pleased with pricing trends across our
businesses. In Business Insurance, renewal rate change exceeded 7%, with
stable retentions, demonstrating the success of our active pricing
strategy and our continued focus on improving profitability. In
Financial, Professional and International Insurance, renewal rate change
continued to improve from recent quarters. Notably, renewal rate change
in Management Liability not only improved from recent quarters but also
accelerated within the quarter. In Personal Insurance, renewal premium
change, which includes changes in exposure, increased to 6% in Agency
Auto and 11% in Agency Homeowners & Other and also accelerated within
the quarter.
“We remain committed to our strategy of improved profitability through
actively and selectively seeking rate and improvements in terms and
conditions given the persistent low interest rate environment and
continuing unusual weather patterns,” concluded Mr. Fishman.
|
Second Quarter 2012 Consolidated Results |
|
($ in millions)
|
|
| Three Months Ended June 30, |
| | | 2012 |
|
| 2011 |
|
| 2012 |
|
| 2011 |
| | | Pre-tax | | | After-tax |
| | | | | | | | | | | | | | |
|
Underwriting loss | | | $ | (62 | ) | | | | $ | (1,411 | ) | | | | $ | (47 | ) | | | | $ | (924 | ) |
Underwriting loss includes: | | | | | | | | | | | | | | | |
Net favorable prior year reserve development | | | | 221 | | | | | | 168 | | | | | | 147 | | | | | | 111 | |
Catastrophes, net of reinsurance | | | | (549 | ) | | | | | (1,668 | ) | | | | | (357 | ) | | | | | (1,085 | ) |
| | | | | | | | | | | | | | |
|
Net investment income | | | | 738 | | | | | | 758 | | | | | | 589 | | | | | | 606 | |
| | | | | | | | | | | | | | |
|
Other, including interest expense | | |
| (72 | ) | | | |
| (93 | ) | | | |
| (47 | ) | | | |
| (59 | ) |
Operating income (loss) | | | | 604 | | | | | | (746 | ) | | | | | 495 | | | | | | (377 | ) |
Net realized investment gains | | |
| 4 |
| | | |
| 19 |
| | | |
| 4 |
| | | |
| 13 |
|
Income (loss) before income taxes | | | $ | 608 |
| | | | $ | (727 | ) | | | | | | | | |
Net income (loss) | | | | | | | | | | | $ | 499 |
| | | | $ | (364 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | |
|
GAAP combined ratio | | | | 100.5 | | % | | | | 125.0 | | % | | | | | | | |
| | | | | | | | | | | | | | |
|
GAAP combined ratio excluding incremental impact
| | | | | | | | | | | | | | | | | | | |
of direct to consumer initiative
| | | |
99.8
| |
%
| | | |
124.1
| |
%
| | | | | | | |
| | | | | | | | | | | | | | |
|
Impact on GAAP combined ratio | | |
| | | | | | | | | | | | |
Net favorable prior year reserve development
| | | |
(4.0
|
)
|
pts
| | | |
(3.1
|
)
|
pts
| | | | | | | |
Catastrophes, net of reinsurance
|
|
|
|
10.0
|
|
pts
|
|
|
|
30.3
|
|
pts
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | | | | |
|
Operating income of $495 million after tax increased $872 million from
the prior year quarter due to an $877 million after-tax improvement in
the underwriting loss.
The underwriting loss in the current quarter reflected a GAAP combined
ratio of 100.5 percent, as compared to 125.0 percent in the prior year
quarter. This improvement of 24.5 points in the combined ratio was
primarily due to a $1.119 billion pre-tax decrease in catastrophe losses
(improvement of 20.3 points) and a $53 million pre-tax increase in net
favorable prior year reserve development (improvement of 0.9 points).
Catastrophe losses in the current quarter primarily resulted from wind
and hail storms in several regions of the United States. Net favorable
prior year reserve development in the current quarter occurred in all
three segments.
The current quarter underlying underwriting gain, which excludes net
favorable prior year reserve development and catastrophe losses,
reflected a GAAP combined ratio of 94.5 percent, as compared to 97.8
percent in the prior year quarter. This improvement of 3.3 points
primarily resulted from earned rate increases outpacing loss cost trends
as well as a lower level of large losses and non-catastrophe
weather-related losses.
Total revenues of $6.359 billion in the current quarter approximated the
prior year quarter. Within total revenues, earned premiums increased $26
million, while net investment income decreased $20 million. The slight
decrease in net investment income was primarily driven by lower
reinvestment rates in the fixed income portfolio.
Net written premiums of $5.868 billion in the current quarter increased
1 percent from the prior year quarter. Renewal rate gains continued
across all segments. Retention rates remained strong across each segment
and were consistent with recent quarters. New business volumes decreased
from the prior year quarter in all segments, largely as a result of the
company’s pricing strategy. Net written premiums in Business Insurance
benefited from continued positive exposure change at renewal, as well as
a meaningfully higher level of positive audit premiums compared to the
prior year quarter.
Capital Management
“During the quarter, we repaid $250 million of maturing debt from
existing holding company liquidity as planned,” commented Jay S. Benet,
Vice Chairman and Chief Financial Officer, “We successfully renewed our
catastrophe reinsurance program on July 1 and obtained reinsurance
through a new $250 million catastrophe bond in June. Further, all of our
capital ratios remained at or above target.”
During the second quarter of 2012, the company repurchased 5.6 million
common shares under its existing share repurchase authorization for a
total cost of $350 million and dividends were $181 million.
Shareholders’ equity was $25.049 billion at the end of the second
quarter of 2012, a 2 percent increase from the end of the prior year.
Included in shareholders’ equity at the end of the second quarter of
2012 were after-tax net unrealized investment gains of $2.980 billion,
compared to $2.871 billion at year-end 2011. Statutory surplus was
$19.841 billion, up modestly from the beginning of the year. The
company’s debt-to-capital ratio (excluding after-tax net unrealized
investment gains) was 22.3 percent, well within its target range, and
holding company liquidity was $1.976 billion.
The Board of Directors declared a quarterly dividend of $0.46 per common
share. This dividend is payable September 28, 2012 to shareholders of
record as of the close of business September 10, 2012.
Business Insurance Segment Financial Results
“In Business Insurance, we are pleased to report meaningfully higher
underlying underwriting margins in the quarter primarily as a result of
earned rate increases exceeding loss cost trends”, commented Brian
MacLean, President and Chief Operating Officer. “We continued to achieve
broad based rate increases across the segment along with stable
retentions. We remain optimistic about our ability to continue to
execute our targeted pricing strategy. Given our current view of pricing
and underlying loss cost trends, we expect higher underlying
underwriting margins for the remainder of the year as compared to the
first half of 2012 assuming weather patterns consistent with our
expectations.”
|
($ in millions)
|
|
| Three Months Ended June 30, |
| | | 2012 |
|
| 2011 |
|
| 2012 |
|
| 2011 |
| | | Pre-tax | | | After-tax |
| | | | | | | | | | | | | | |
|
Underwriting loss | | | $ | (100 | ) | | | | $ | (652 | ) | | | | $ | (71 | ) | | | | $ | (429 | ) |
Underwriting loss includes: | | | | | | | | | | | | | | | |
Net favorable prior year reserve development | | | | 58 | | | | | | 27 | | | | | | 38 | | | | | | 18 | |
Catastrophes, net of reinsurance | | | | (252 | ) | | | | | (697 | ) | | | | | (164 | ) | | | | | (453 | ) |
| | | | | | | | | | | | | | |
|
Net investment income | | | | 536 | | | | | | 541 | | | | | | 428 | | | | | | 433 | |
| | | | | | | | | | | | | | |
|
Other | | | | 8 | | | | | | 10 | | | | | | 5 | | | | | | 7 | |
| | |
|
|
| | | |
|
|
| | | |
|
|
| | | |
|
|
|
Operating income (loss) | | | $ | 444 |
| | | | $ | (101 | ) | | | | $ | 362 |
| | | | $ | 11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | |
|
GAAP combined ratio | | | | 103.0 | | % | | | | 122.9 | | % | | | | | | | |
| | | | | | | | | | | | | | |
|
Impact on GAAP combined ratio | | | | | | | | | | | | | | | |
Net favorable prior year reserve development
| | | |
(2.0
|
)
|
pts
| | | |
(1.0
|
)
|
pts
| | | | | | | |
Catastrophes, net of reinsurance
|
|
|
|
8.8
|
|
pts
|
|
|
|
24.9
|
|
pts
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | | | | |
|
Operating income of $362 million after tax increased $351 million from
the prior year quarter due to a $358 million after-tax improvement in
the underwriting loss.
The underwriting loss in the current quarter reflected a GAAP combined
ratio of 103.0 percent, as compared to 122.9 percent in the prior year
quarter. This improvement of 19.9 points in the combined ratio was
primarily due to a $445 million pre-tax decrease in catastrophe losses
(improvement of 16.1 points) and $31 million pre-tax increase in net
favorable prior year reserve development (improvement of 1.0 point). Net
favorable prior year reserve development in the current quarter
primarily resulted from better than expected loss experience in the
workers’ compensation product line for accident years 2008 and prior,
better than expected loss experience in the property product line
related to catastrophe losses incurred in 2011 and lower than expected
claim department expenses. This improvement was partially offset by a
$59 million after tax ($90 million pre tax) increase to environmental
reserves in the current quarter.
The current quarter underlying underwriting gain, which excludes net
favorable prior year reserve development and catastrophe losses,
reflected a GAAP combined ratio of 96.2 percent, as compared to 99.0
percent in the prior year quarter. This improvement of 2.8 points
primarily resulted from earned rate increases outpacing loss cost trends
as well as a lower level of large losses.
Business Insurance net written premiums of $3.026 billion in the current
quarter increased 5 percent from the prior year quarter primarily driven
by continued increases in renewal rate change. While retention rates and
new business volumes were lower than the prior year quarter, both were
improved from recent quarters and consistent with the company’s pricing
strategy. Net written premiums also benefited from continued positive
exposure change at renewal, as well as a meaningfully higher level of
positive audit premiums compared to the prior year quarter.
Select Accounts
-
Net written premiums of $721 million decreased 2 percent from the
prior year quarter.
-
Renewal premium change was positive for the thirteenth consecutive
quarter and increased from recent quarters to its highest level since
the first quarter 2004 on business from both TravelersExpressSM,
the company’s enhanced quote-to-issue agency platform and multivariate
pricing program for smaller businesses, and larger accounts served by
Select.
-
Retention rates improved slightly from the most recent quarter but
were lower than the prior year quarter primarily due to lower
retention rates in larger accounts.
-
While new business volumes from TravelersExpressSM
remained strong, overall Select new business volumes decreased from
the prior year quarter.
Commercial Accounts
-
Net written premiums of $717 million increased 9 percent from the
prior year quarter primarily due to increased renewal premium change
as well as a higher level of positive audit premiums.
-
Renewal premium change was positive for the seventh consecutive
quarter and was generally consistent with recent quarters.
-
Retention rates remained strong and increased from recent quarters.
-
New business volumes decreased from the prior year quarter.
Other Business Insurance
Includes Industry-Focused Underwriting, Target Risk Underwriting and
Specialized Distribution
-
Net written premiums of $1.364 billion increased 5 percent from the
prior year quarter primarily due to increased renewal premium change
as well as a higher level of positive audit premiums.
-
Renewal premium change was positive for the fourth consecutive quarter
and continued to increase from recent quarters.
-
Retention rates remained strong and improved slightly from recent
quarters.
-
New business volumes decreased from the prior year quarter but
improved from recent quarters.
National Accounts
-
Net written premiums of $226 million increased 20 percent from the
prior year quarter primarily due to increased renewal premium
change driven by payroll exposure growth and strong retention rates.
In addition, the re-population of workers’ compensation residual
market pools contributed to premium growth in the second quarter 2012.
Financial, Professional & International
Insurance Segment Financial Results
“Financial, Professional & International Insurance once again reported
strong results as our underlying loss ratios, which exclude catastrophe
losses and net favorable prior year reserve development, improved for
the sixth consecutive quarter,” commented MacLean. “We are very pleased
with the success of our pricing strategy and efforts to improve the
balance of risk and reward in certain lines of business. We are
particularly pleased that we have experienced accelerating rate
increases in our Management Liability business over the past six months
and are encouraged that retention rates remain high. Given our current
view of pricing and underlying loss cost trends, we expect higher
underlying underwriting margins for the remainder of the year as
compared to the first half of 2012.”
|
($ in millions)
|
|
| Three Months Ended June 30, |
| | | 2012 |
|
| 2011 |
|
| 2012 |
|
| 2011 |
| | | Pre-tax | | | After-tax |
| | | | | | | | | | | | | | |
|
Underwriting gain | | | $ |
| 151 | | | | | $ |
| 120 | | | | | $ |
| 99 | | | | | $ |
| 78 | |
Underwriting gain includes: | | | | | | | | | | | | | | | |
Net favorable prior year reserve development | | | | | 96 | | | | | | | 96 | | | | | | | 66 | | | | | | | 64 | |
Catastrophes, net of reinsurance | | | | | (4 | ) | | | | | | (14 | ) | | | | | | (3 | ) | | | | | | (10 | ) |
| | | | | | | | | | | | | | |
|
Net investment income | | | | | 99 | | | | | | | 105 | | | | | | | 79 | | | | | | | 82 | |
| | | | | | | | | | | | | | |
|
Other | | | | | 5 | | | | | | | 6 | | | | | | | 4 | | | | | | | 4 | |
| | |
| | | |
| | | |
| | | |
|
Operating income | | | $ |
| 255 |
| | | | $ |
| 231 |
| | | | $ |
| 182 |
| | | | $ |
| 164 |
|
|
| | | | | | | | | | | | | | |
|
GAAP combined ratio | | | | | 80.0 | | % | | | | | 84.8 | | % | | | | | | | |
| | | | | | | | | | | | | | |
|
Impact on GAAP combined ratio | | | | | | | | | | | | | | | |
Net favorable prior year reserve development
| | | | |
(12.5
|
)
|
pts
| | | | |
(11.7
|
)
|
pts
| | | | | | | |
Catastrophes, net of reinsurance
|
|
|
|
|
0.4
|
|
pts
|
|
|
|
|
1.7
|
|
pts
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | | | | | | |
|
Operating income of $182 million after tax increased $18 million from
the prior year quarter due to a $21 million after-tax increase in the
underwriting gain.
The underwriting gain in the current quarter reflected a GAAP combined
ratio of 80.0 percent, as compared to 84.8 percent in the prior year
quarter. This improvement of 4.8 points in the combined ratio was partly
due to a $10 million pre-tax decrease in catastrophe losses (improvement
of 1.3 points). While net favorable prior year reserve development of
$96 million pre tax was consistent with the prior year quarter, the
favorable impact on the GAAP combined ratio in the current quarter was
0.8 points greater than the prior year quarter due to lower earned
premiums. Net favorable prior year reserve development in the current
quarter primarily resulted from better than expected loss experience in
both Bond & Financial Products and International across multiple lines
of business and accident years.
The current quarter underlying underwriting gain, which excludes net
favorable prior year reserve development and catastrophe losses,
reflected a GAAP combined ratio of 92.1 percent, as compared to 94.8
percent in the prior year quarter. This improvement of 2.7 points
primarily resulted from earned rate increases outpacing loss cost trends
as well as a lower level of large losses and non-catastrophe
weather-related losses within International, partially offset by an
increase in the expense ratio primarily as a result of lower earned
premiums.
Financial, Professional & International Insurance net written premiums
of $840 million decreased 4 percent from the prior year quarter.
Retention rates, renewal premium changes and new business volumes, as
discussed below, exclude the surety line of business as surety products
are generally sold on a non-recurring, project-specific basis.
Bond & Financial Products
-
Net written premiums of $524 million decreased 2 percent from the
prior year quarter primarily due to the timing of certain reinsurance
transactions and lower business volumes in construction surety
reflecting the continued slowdown in construction spending, partially
offset by growth in Management Liability business volume.
-
Renewal premium change remained positive and increased for the third
consecutive quarter primarily due to positive renewal rate change and
higher insured exposures.
-
Retention rates remained very strong and generally consistent with
recent quarters.
-
New business volumes increased modestly from the prior year quarter.
International
-
Net written premiums of $316 million decreased 9 percent from the
prior year quarter. Adjusting for the impact of changes in foreign
exchange rates, net written premiums decreased 6 percent from the
prior year quarter primarily due to the company’s exit from the
personal insurance business in Ireland.
-
Renewal premium change was positive due to the impact of continued
positive renewal rate change.
-
Retention rates were down slightly from the most recent quarter but
were significantly improved from the prior year quarter.
-
New business volumes decreased from the prior year quarter.
Personal Insurance Segment Financial Results
“In Personal Insurance, we are very pleased with the pricing gains that
we continue to achieve in both Auto and Homeowners, as well as the
acceleration of these pricing gains in the quarter,” commented MacLean.
“However, weather-related losses in Homeowners and loss trends in Auto,
primarily severity, remain at levels that necessitate further action.
Accordingly, we will continue to seek improved pricing, terms and
conditions in order to improve returns.”
|
|
|
|
($ in millions)
|
|
| Three Months Ended June 30, |
| | | 2012 |
|
| 2011 |
|
| 2012 |
|
| 2011 |
| | | Pre-tax | | | After-tax |
| | | | | | | | | | | | | | |
|
Underwriting loss | | | $ |
| (113 | ) | | | | $ |
| (879 | ) | | | | $ |
| (75 | ) | | | | $ |
| (573 | ) |
Underwriting loss includes: | | | | | | | | | | | | | | | |
Net favorable prior year reserve development | | | | | 67 | | | | | | | 45 | | | | | | | 43 | | | | | | | 29 | |
Catastrophes, net of reinsurance | | | | | (293 | ) | | | | | | (957 | ) | | | | | | (190 | ) | | | | | | (622 | ) |
| | | | | | | | | | | | | | |
|
Net investment income | | | | | 103 | | | | | | | 112 | | | | | | | 82 | | | | | | | 91 | |
| | | | | | | | | | | | | | |
|
Other | | | | | 16 | | | | | | | 18 | | | | | | | 10 | | | | | | | 11 | |
| | |
| | | |
| | | |
| | | |
|
Operating income (loss) | | | $ |
| 6 |
| | | | $ |
| (749 | ) | | | | $ |
| 17 |
| | | | $ |
| (471 | ) |
|
| | | | | | | | | | | | | | |
|
GAAP combined ratio | | | | | 104.8 | | % | | | | | 145.5 | | % | | | | | | | |
| | | | | | | | | | | | | | |
|
GAAP combined ratio excluding incremental impact
| | | | | | | | | | | | | | | | | | | | | |
of direct to consumer initiative
| | | | |
102.9
| |
%
| | | | |
143.2
| |
%
| | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
Impact on GAAP combined ratio | | | | | | | | | | | | | | | |
Net favorable prior year reserve development
| | | | |
(3.5
|
)
|
pts
| | | | |
(2.4
|
)
|
pts
| | | | | | | |
Catastrophes, net of reinsurance
|
|
|
|
|
15.3
|
|
pts
|
|
|
|
|
50.7
|
|
pts
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | | | | | | |
|
Operating income of $17 million after tax increased $488 million from
the prior year quarter due to a $498 million after-tax improvement in
the underwriting loss.
The underwriting loss in the current quarter reflected a GAAP combined
ratio of 104.8 percent, as compared to 145.5 percent in the prior year
quarter. This improvement of 40.7 points in the combined ratio was
driven by a $664 million pre-tax decrease in catastrophe losses
(improvement of 35.4 points) and a $22 million pre-tax increase in net
favorable prior year reserve development (improvement of 1.1 points).
The net favorable prior year reserve development in the current quarter
primarily resulted from better than expected loss experience in
Homeowners & Other related to catastrophe losses incurred in 2011 and in
the umbrella product line for accident years 2007 to 2011.
The current quarter underlying underwriting gain, which excludes net
favorable prior year reserve development and catastrophe losses,
reflected a GAAP combined ratio of 93.0 percent, as compared to 97.2
percent in the prior year quarter. This improvement of 4.2 points was
primarily due to a lower level of non-catastrophe weather-related losses
and fire-related losses.
Personal Insurance net written premiums of $2.002 billion decreased 3
percent from the prior year quarter primarily due to lower new business
volumes in both Automobile and Homeowners & Other.
Agency Automobile and Agency Homeowners & Other, as discussed below,
represent business sold through agents, brokers and other intermediaries
and exclude direct to consumer.
Agency Automobile
-
Net written premiums of $899 million decreased 5 percent from the
prior year quarter primarily as a result of lower new business levels.
-
Policies in force decreased 3 percent from the prior year quarter.
-
Renewal premium change remained positive and increased from recent
quarters.
-
Retention rates remained strong but down slightly from recent quarters.
-
New business volumes were lower than the prior year quarter.
Agency Homeowners & Other
-
Net written premiums of $1.064 billion decreased 1 percent from the
prior year quarter.
-
Policies in force decreased 2 percent from the prior year quarter.
-
Renewal premium change remained positive and continued to increase
from recent quarters.
-
Retention rates remained very strong and generally consistent with
recent quarters.
-
New business volumes were lower than the prior year quarter.
|
Year-to-Date 2012 Consolidated Financial
Results |
|
($ in millions)
|
|
| Six Months Ended June 30, |
| | | 2012 |
|
| 2011 |
| 2012 |
|
| 2011 |
| | | Pre-tax | | After-tax |
| | | | | | | | | | | | | |
|
Underwriting gain (loss) | | | $ |
| 331 | | | | | $ |
| (1,164 | ) | | | $ |
| 201 | | | | | $ |
| (675 | ) |
Underwriting gain (loss) includes: | | | | | | | | | | | | | | |
Net favorable prior year reserve development | | | | | 525 | | | | | | | 405 | | | | | | 347 | | | | | | | 266 | |
Catastrophes, net of reinsurance | | | | | (717 | ) | | | | | | (1,854 | ) | | | | | (466 | ) | | | | | | (1,207 | ) |
Resolution of prior year tax matters | | | | | | | | | | | | | | | | 100 | |
| | | | | | | | | | | | | |
|
Net investment income | | | | | 1,478 | | | | | | | 1,537 | | | | | | 1,182 | | | | | | | 1,228 | |
| | | | | | | | | | | | | |
|
Other, including interest expense | | | | | (138 | ) | | | | | | (170 | ) | | | | | (87 | ) | | | | | | (104 | ) |
Other also includes: | | | | | | | | | | | | | | |
Resolution of prior year tax matters | | | | | | | | | | | | | | | |
4
| |
| | |
| | | |
| | |
| | | |
|
Operating income | | | | | 1,671 | | | | | | | 203 | | | | | | 1,296 | | | | | | | 449 | |
Net realized investment gains | | |
|
| 14 |
| | | |
|
| 39 |
| | |
|
| 9 |
| | | |
|
| 26 |
|
Income before income taxes | | | $ |
| 1,685 |
| | | | $ |
| 242 |
| | | | | | | |
Net income | | | | | | | | | | $ |
| 1,305 |
| | | | $ |
| 475 |
|
|
| | | | | | | | | | | | | |
|
GAAP combined ratio | | | | | 96.3 | | % | | | | | 110.1 | | % | | | | | | |
| | | | | | | | | | | | | |
|
GAAP combined ratio excluding incremental impact
| | | | | | | | | | | | | | |
of direct to consumer initiative
| | | | |
95.6
| |
%
| | | | |
109.1
| |
%
| | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
|
Impact on GAAP combined ratio | | | | | | | | | | | | | | |
Net favorable prior year reserve development
| | | | |
(4.8
|
)
|
pts
| | | | |
(3.7
|
)
|
pts
| | | | | | |
Catastrophes, net of reinsurance
|
|
|
|
|
6.5
|
|
pts
|
|
|
|
|
17.1
|
|
pts
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | | | | | |
|
Operating income of $1.296 billion after tax increased $847 million from
the prior year period primarily due to an $876 million after-tax
increase in underwriting results, partially offset by a $46 million
after-tax decrease in net investment income.
The underwriting gain in the current period reflected a GAAP combined
ratio of 96.3 percent, as compared to 110.1 percent in the prior year
period. This improvement of 13.8 points in the combined ratio was
primarily due to a $1.137 billion pre-tax decrease in catastrophe losses
(improvement of 10.6 points) and $120 million pre-tax increase in net
favorable prior year reserve development (improvement of 1.1 points).
The current period underlying underwriting gain, which excludes net
favorable prior year reserve development and catastrophe losses,
reflected a GAAP combined ratio of 94.6 percent, as compared to 96.7
percent in the prior year period. This improvement of 2.1 points
primarily resulted from earned rate increases outpacing loss cost trends
as well as a lower level of large losses and non-catastrophe
weather-related losses.
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
Thursday, July 19, 2012. Prior to the webcast, a slide presentation
pertaining to the quarterly earnings will be available on the company's
website. Following the live event, an audio playback of the webcast and
the slide presentation will be available on the company's website.
To view the slides or to listen to the webcast or the playback, visit
the "Webcasts & Presentations" section of the Travelers investor
relations website at http://investor.travelers.com.
About Travelers
The Travelers Companies, Inc. (NYSE: TRV) is
a leading provider of property casualty insurance for auto,
home
and business.
The company’s diverse business lines offer its customers a wide range of
coverage sold primarily through independent agents and brokers. A
component of the Dow Jones Industrial Average, Travelers has more than
30,000 employees and operations in the United States and selected
International markets. For more information, visit www.travelers.com.
From time to time, Travelers may use its website as a channel of
distribution of material company information. Financial and other
material information regarding the company is routinely posted on and
accessible at http://investor.travelers.com.
In addition, you may automatically receive email alerts and other
information about Travelers by enrolling your email by visiting the
“Email Alert Service” section at http://investor.travelers.com.
Travelers has organized its businesses into the following reportable
business segments:
Business Insurance: The Business Insurance segment offers a broad
array of property and casualty insurance and insurance-related services
to its clients primarily in the United States. Business Insurance is
organized into the following six groups, which collectively comprise
Business Insurance Core operations: Select Accounts; Commercial
Accounts; National Accounts; Industry-Focused Underwriting including
Construction, Technology, Public Sector Services, Oil & Gas and
Agribusiness; Target Risk Underwriting including National Property,
Inland Marine, Ocean Marine, Excess Casualty, Boiler & Machinery and
Global Partner Services; and Specialized Distribution including
Northland and National Programs. Business Insurance also includes the
Special Liability Group (which manages the company’s asbestos and
environmental liabilities) and the assumed reinsurance and certain
international and other runoff operations, which collectively are
referred to as Business Insurance Other.
Financial, Professional & International Insurance: The
Financial, Professional & International Insurance segment includes
surety and financial liability coverages, which primarily use
credit-based underwriting processes, as well as property and casualty
products that are primarily marketed on a domestic basis in the United
Kingdom, Canada and the Republic of Ireland, and on an international
basis through Lloyd’s. The businesses in Financial, Professional &
International Insurance are Bond & Financial Products and International.
Personal Insurance: The Personal Insurance segment writes a broad
range of property and casualty insurance covering individuals’ personal
risks. The primary products of automobile and homeowners insurance are
complemented by a broad suite of related coverages.
Forward-Looking 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 company’s share repurchase plans,
expected margin improvement, future pension plan contributions and the
potential impact of investment markets and other economic conditions on
the company’s 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, return on equity, and expected
current returns and combined ratios);
-
the sufficiency of the company’s asbestos and other reserves;
-
the impact of emerging claims issues as well as other insurance and
non-insurance litigation;
-
the cost and availability of reinsurance coverage;
-
catastrophe losses;
-
the impact of investment, economic and underwriting market conditions;
and
-
strategic initiatives.
The company cautions investors that such statements are subject to risks
and uncertainties, many of which are difficult to predict and generally
beyond the company’s 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 company’s
results of operations, its financial position and/or liquidity, and
could adversely impact the company’s ratings, the company’s ability to
raise capital and the availability and cost of reinsurance;
-
during or following a period of financial market disruption or
economic downturn, the company’s business could be materially and
adversely affected;
-
if actual claims exceed the company’s claims and claim adjustment
expense reserves, or if changes in the estimated level of claims and
claim adjustment expense reserves are necessary, the company’s
financial results could be materially and adversely affected;
-
the company’s investment portfolio may suffer reduced returns or
material realized or unrealized losses;
-
the company’s business could be harmed because of its potential
exposure to asbestos and environmental claims and related litigation;
-
the company is exposed to, and may face adverse developments
involving, mass tort claims such as those relating to exposure to
potentially harmful products or substances;
-
the effects of emerging claim and coverage issues on the company’s
business are uncertain;
-
the intense competition that the company faces could harm its ability
to maintain or increase its business volumes, its pricing levels
and/or its profitability;
-
the company may not be able to collect all amounts due to it from
reinsurers, and reinsurance coverage may not be available to the
company in the future at commercially reasonable rates or at all;
-
the company is exposed to credit risk in certain of its business
operations;
-
within the United States, the company’s businesses are heavily
regulated by the states in which it conducts business, including
licensing and supervision, and changes in regulation may reduce the
company’s profitability and limit its growth;
-
changes in federal regulation could impose significant burdens on the
company and otherwise adversely impact its results;
-
a downgrade in the company’s claims-paying and financial strength
ratings could adversely impact the company’s business volumes,
adversely impact the company’s ability to access the capital markets
and increase the company’s borrowing costs;
-
the inability of the company’s insurance subsidiaries to pay dividends
to the company’s holding company in sufficient amounts would harm the
company’s ability to meet its obligations, pay future shareholder
dividends or make future share repurchases;
-
disruptions to the company’s relationships with its independent agents
and brokers could adversely affect the company;
-
the company’s efforts to develop new products or expand in targeted
markets may not be successful and may create enhanced risks;
-
any net deferred tax asset could be adversely affected by a reduction
in the U.S. Federal corporate income tax rate;
-
the company may be adversely affected if its pricing and capital
models provide materially different indications than actual results;
-
the company is subject to a number of risks associated with its
business outside the United States;
-
new regulations outside of the U.S., including in the European Union,
could adversely impact the company’s results of operations and limit
its growth;
-
the company’s business success and profitability depend, in part, on
effective information technology systems and on continuing to develop
and implement improvements in technology;
-
if the company experiences difficulties with technology, data security
and/or outsourcing relationships, the company’s ability to conduct its
business could be negatively impacted;
-
acquisitions and integration of acquired businesses may result in
operating difficulties and other unintended consequences;
-
changes to existing accounting standards may adversely impact the
company’s reported results;
-
the company could be adversely affected if its controls designed to
ensure compliance with guidelines, policies and legal and regulatory
standards are not effective;
-
the company’s businesses may be adversely affected if it is unable to
hire and retain qualified employees;
-
loss of or significant restriction on the use of credit scoring in the
pricing and underwriting of Personal Insurance products could reduce
the company’s future profitability; and
-
the company’s repurchase plans depend on a variety of factors,
including the company’s financial position, earnings, common share
price, catastrophe losses, funding of the company’s qualified pension
plan, capital requirements of the company’s operating subsidiaries,
legal requirements, regulatory constraints, other investment
opportunities (including mergers and acquisitions), market conditions
and other factors.
Our forward-looking statements speak only as of the date of this press
release or as of the date they are made, and we undertake no obligation
to update forward-looking statements. For a more detailed discussion of
these factors, see the information under the captions "Risk Factors" and
“Management’s Discussion and Analysis of Financial Condition and Results
of Operations” in our most recent annual report on Form 10-K and our
quarterly report on Form 10-Q filed with the Securities and Exchange
Commission.
GLOSSARY OF FINANCIAL MEASURES AND RECONCILIATIONS OF NON-GAAP
MEASURES TO GAAP MEASURES
The following measures are used by the company’s 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 company’s 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 company’s periodic results of
operations and how management evaluates the company’s financial
performance. Internally, the company's 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
company’s management.
RECONCILIATION OF OPERATING INCOME (LOSS) AND CERTAIN OTHER NON-GAAP
MEASURES TO NET INCOME (LOSS)
Operating income (loss) is net income (loss) excluding the
after-tax impact of net realized investment gains (losses) and
discontinued operations. Management uses operating income (loss) to
analyze each segment’s 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.
Reconciliation of Operating Income (Loss) less Preferred Dividends
and Net Income (Loss) less Preferred Dividends to Net Income (Loss)
|
|
|
| |
|
| |
|
| |
|
| |
| | | Three Months Ended | | | Six Months Ended |
| | | June 30, | | | June 30, |
($ in millions, after-tax)
|
|
| 2012 |
|
| 2011 |
|
| 2012 |
|
| 2011 |
| | | | | | | | | | | |
|
Operating income (loss), less preferred dividends | | | $ |
| 495 | | | $ |
| (377 | ) | | | $ |
| 1,296 | | | $ |
| 448 |
Preferred dividends
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
1
|
Operating income (loss) | | | | | 495 | | | | | (377 | ) | | | | | 1,296 | | | | | 449 |
Net realized investment gains
|
|
|
|
|
4
|
|
|
|
|
13
|
|
|
|
|
|
9
|
|
|
|
|
26
|
Net income (loss) |
|
| $ |
| 499 |
|
| $ |
| (364 | ) |
|
| $ |
| 1,305 |
|
| $ |
| 475 |
| | | | | | | | | | | |
|
Net income (loss), less preferred dividends | | | $ | | 499 | | | $ | | (364 | ) | | | $ | | 1,305 | | | $ | | 474 |
Preferred dividends
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
1
|
Net income (loss) |
|
| $ |
| 499 |
|
| $ |
| (364 | ) |
|
| $ |
| 1,305 |
|
| $ |
| 475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | | | | | | |
|
|
|
|
| Twelve Months Ended December 31, |
($ in millions, after-tax)
|
|
| 2011 |
|
| 2010 |
|
| 2009 |
|
| 2008 |
|
| 2007 |
|
| 2006 |
|
| 2005 |
| | | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Operating income, less preferred dividends
| | |
$
|
|
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 | | | | | 1,390 | | | | | 3,043 | | | | | 3,600 | | | | | 3,195 | | | | | | 4,500 | | | | | 4,200 | | | | | 2,026 | |
Net realized investment gains (losses)
|
|
|
|
|
36
|
|
|
|
|
173
|
|
|
|
|
22
|
|
|
|
|
(271
|
)
|
|
|
|
|
101
|
|
|
|
|
8
|
|
|
|
|
35
|
|
Income from continuing operations | | | | | 1,426 | | | | | 3,216 | | | | | 3,622 | | | | | 2,924 | | | | | | 4,601 | | | | | 4,208 | | | | | 2,061 | |
Discontinued operations
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(439
|
)
|
Net income |
|
| $ |
| 1,426 |
|
| $ |
| 3,216 |
|
| $ |
| 3,622 |
|
| $ |
| 2,924 |
|
|
| $ |
| 4,601 |
|
| $ |
| 4,208 |
|
| $ |
| 1,622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Reconciliation of Operating Earnings (Loss) per Share to Net Income
(Loss) per Share on a Basic and Diluted Basis
|
|
|
| Three Months Ended |
|
| Six Months Ended |
| | | June 30, | | | June 30, |
|
|
| 2012 |
|
| 2011 |
|
| 2012 |
|
| 2011 |
| | | |
|
| | | | |
|
| |
Basic earnings per share | | | | | | | | | | | | |
Operating income (loss) | | | $ |
| 1.27 | | | $ |
| (0.91 | ) | | | $ |
| 3.30 | | | $ |
| 1.05 |
Net realized investment gains
|
|
|
|
|
-
|
|
|
|
|
0.03
|
|
|
|
|
|
0.02
|
|
|
|
|
0.06
|
Net income (loss) |
|
| $ |
| 1.27 |
|
| $ |
| (0.88 | ) |
|
| $ |
| 3.32 |
|
| $ |
| 1.11 |
| | | | | | | | | | | |
|
Diluted earnings per share | | | | | | | | | | | | |
Operating income (loss) | | | $ | | 1.26 | | | $ | | (0.91 | ) | | | $ | | 3.27 | | | $ | | 1.04 |
Net realized investment gains
|
|
|
|
|
-
|
|
|
|
|
0.03
|
|
|
|
|
|
0.02
|
|
|
|
|
0.06
|
Net income (loss) |
|
| $ |
| 1.26 |
|
| $ |
| (0.88 | ) |
|
| $ |
| 3.29 |
|
| $ |
| 1.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | | | | | | |
|
Reconciliation of Operating Income (Loss) by Segment to Total
Operating Income (Loss)
|
|
|
| Three Months Ended |
|
| Six Months Ended |
| | | June 30, | | | June 30, |
($ in millions, after-tax)
|
|
| 2012 |
|
| 2011 |
|
| 2012 |
|
| 2011 |
| | | |
|
| | | | |
|
| |
Business Insurance | | |
$
|
|
362
| | | |
$
|
|
11
| | | |
$
|
|
974
| | | |
$
|
|
615
| |
Financial, Professional & International Insurance | | | | |
182
| | | | | |
164
| | | | | |
331
| | | | | |
284
| |
Personal Insurance |
|
|
|
|
17
|
|
|
|
|
|
(471
|
)
|
|
|
|
|
125
|
|
|
|
|
|
(301
|
)
|
Total segment operating income (loss)
| | | | |
561
| | | | | |
(296
|
)
| | | | |
1,430
| | | | | |
598
| |
Interest Expense and Other
|
|
|
|
|
(66
|
)
|
|
|
|
|
(81
|
)
|
|
|
|
|
(134
|
)
|
|
|
|
|
(149
|
)
|
Total operating income (loss) |
|
| $ |
| 495 |
|
|
| $ |
| (377 | ) |
|
| $ |
| 1,296 |
|
|
| $ |
| 449 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
|
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 quarter’s net realized investment gains (losses),
net of tax.
Reconciliation of Adjusted Shareholders’ Equity to Shareholders’
Equity
|
|
| |
| | | |
| |
| |
| |
| |
| |
| | As of June 30, | | | | | | | | | | | |
($ in millions)
|
| 2012 |
| 2011 |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | |
|
Adjusted shareholders' equity | | $ |
| 22,060 | | $ |
| 22,760 | | | | | | | | | | | | |
Net unrealized investment gains, net of tax
| | | |
2,980
| | | |
2,222
| | | | | | | | | | | | |
Net realized investment gains, net of tax
|
|
|
|
9
|
|
|
|
26
|
| | | | | | | | | | | |
Shareholders' equity |
| $ |
| 25,049 |
| $ |
| 25,008 |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | |
|
| | As of December 31, |
($ in millions)
|
| 2011 |
| 2010 |
| 2009 |
| 2008 |
| 2007 |
| 2006 |
| 2005 |
| 2004 |
| | | | | | | | | | | | | | | |
|
Adjusted shareholders' equity | | $ | | 21,570 | | $ | | 23,375 | | $ |
| 25,458 | | $ |
| 25,647 | | | $ |
| 25,783 | | $ |
| 24,545 | | $ |
| 22,227 | | | $ |
| 20,087 | |
Net unrealized investment gains (losses), net of tax
| | | |
2,871
| | | |
1,859
| | | |
1,856
| | | |
(146
|
)
| | | |
620
| | | |
453
| | | |
327
| | | | |
866
| |
Net realized investment gains (losses), net of tax
| | | |
36
| | | |
173
| | | |
22
| | | |
(271
|
)
| | | |
101
| | | |
8
| | | |
35
| | | | |
(28
|
)
|
Preferred stock
| | | |
-
| | | |
68
| | | |
79
| | | |
89
| | | | |
112
| | | |
129
| | | |
153
| | | | |
188
| |
Discontinued operations
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(439
|
)
|
|
|
|
88
|
|
Shareholders' equity |
| $ |
| 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 (loss)
less preferred dividends to average shareholders’ equity for the periods
presented. Operating return on equity is the ratio of annualized
operating income (loss) less preferred dividends to adjusted average
shareholders’ equity for the periods presented. In the opinion of the
company’s 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 |
|
| Six Months Ended |
| | | June 30, | | | June 30, |
($ in millions, after-tax)
|
|
| 2012 |
|
| 2011 |
|
| 2012 |
|
| 2011 |
| | | |
|
| | | | |
|
| |
Annualized operating income (loss), less preferred dividends
| | |
$
|
|
1,982
| | | |
$
|
|
(1,511
|
)
| | |
$
|
|
2,592
| | | |
$
|
|
896
| |
Adjusted average shareholders' equity
| | | | |
22,050
| | | | | |
23,073
| | | | | |
21,934
| | | | | |
23,263
| |
Operating return on equity | | | | | 9.0 | % | | | | | (6.6 | %) | | | | | 11.8 | % | | | | | 3.9 | % |
| | | | | | | | | | | |
|
Annualized net income (loss), less preferred dividends
| | |
$
| |
1,993
| | | |
$
| |
(1,460
|
)
| | |
$
| |
2,609
| | | |
$
| |
947
| |
Average shareholders' equity
|
|
|
|
|
24,961
|
|
|
|
|
|
25,093
|
|
|
|
|
|
24,818
|
|
|
|
|
|
25,193
|
|
Return on equity |
|
|
|
| 8.0 | % |
|
|
|
| (5.8 | %) |
|
|
|
| 10.5 | % |
|
|
|
| 3.8 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
|
Average annual operating return on equity over a period is the
ratio of:
a) the sum of operating income (loss) 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 June 30, 2012
|
|
|
| Six Months Ended |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| | | June 30, | | | Twelve Months Ended December 31, |
($ in millions)
|
|
| 2012 |
|
| 2011 | | | 2011 |
|
| 2010 |
|
| 2009 |
|
| 2008 |
|
| 2007 |
|
| 2006 |
|
| 2005 |
| | | |
|
| | | | | | | | | | | | | | | | | | | | | | |
Operating income, less preferred dividends
| | |
$
|
1,296
| | | |
$
|
448
| | | |
$
|
1,389
| | | |
$
|
3,040
| | | |
$
|
3,597
| | | |
$
|
3,191
| | | |
$
|
4,496
| | | |
$
|
4,195
| | | |
$
|
2,020
| |
Operating income, less preferred dividends - annualized
| | | |
2,592
| | | | |
896
| | | | | | | | | | | | | | | | | | | | | | |
Adjusted average shareholders' equity
| | | |
21,934
| | | | |
23,263
| | | | |
22,806
| | | | |
24,285
| | | | |
25,777
| | | | |
25,668
| | | | |
25,350
| | | | |
23,381
| | | | |
21,118
| |
Operating return on equity
|
|
|
|
11.8
|
%
|
|
|
|
3.9
|
%
|
|
|
|
6.1
|
%
|
|
|
|
12.5
|
%
|
|
|
|
14.0
|
%
|
|
|
|
12.4
|
%
|
|
|
|
17.7
|
%
|
|
|
|
17.9
|
%
|
|
|
|
9.6
|
%
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Average annual operating return on equity for the
period January 1, 2005 through June 30, 2012 | | | | 12.9 | % | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
|
RECONCILIATION OF PRE-TAX UNDERWRITING GAIN EXCLUDING CERTAIN ITEMS
TO NET INCOME (LOSS)
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 company’s 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 segment’s business
performance and as a tool in making business decisions. Pre-taxunderwriting
gain, excluding the impact of catastrophes and net favorable prior year
loss reserve development, is the underwriting gain (loss) adjusted
to exclude claims, claim adjustment expenses, and 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
company's management, this measure is meaningful to users of the
financial statements to understand the company's 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 (loss).
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
(loss) 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
company's management, a discussion of the impact of catastrophes is
meaningful to users of the financial statements to understand the
company’s 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 company's 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 (Loss)
|
|
|
|
|
|
|
|
|
| Three Months Ended |
|
| Six Months Ended |
| | | June 30, |
| | June 30, |
($ in millions, after-tax except as noted)
|
|
| 2012 |
|
| 2011 |
|
| 2012 |
|
| 2011 |
| | | |
|
| | | | |
|
| |
Pre-tax underwriting gain excluding the impact of catastrophes
| | | |
| | | | | |
| | | | | |
| | | | | |
| | |
and net favorable prior year loss reserve development
| | |
$
| |
266
| | | |
$
| |
89
| | | |
$
| |
523
| | | |
$
| |
285
| |
Pre-tax impact of catastrophes
| | | | |
(549
|
)
| | | | |
(1,668
|
)
| | | | |
(717
|
)
| | | | |
(1,854
|
)
|
Pre-tax impact of net favorable prior year loss reserve development
|
|
|
|
|
221
|
|
|
|
|
|
168
|
|
|
|
|
|
525
|
|
|
|
|
|
405
|
|
Pre-tax underwriting gain (loss)
| | | | |
(62
|
)
| | | | |
(1,411
|
)
| | | | |
331
| | | | | |
(1,164
|
)
|
Income tax expense (benefit) on underwriting results
|
|
|
|
|
(15
|
)
|
|
|
|
|
(487
|
)
|
|
|
|
|
130
|
|
|
|
|
|
(489
|
)
|
Underwriting gain (loss)
| | | | |
(47
|
)
| | | | |
(924
|
)
| | | | |
201
| | | | | |
(675
|
)
|
Net investment income
| | | | |
589
| | | | | |
606
| | | | | |
1,182
| | | | | |
1,228
| |
Other, including interest expense
|
|
|
|
|
(47
|
)
|
|
|
|
|
(59
|
)
|
|
|
|
|
(87
|
)
|
|
|
|
|
(104
|
)
|
Operating income (loss) | | | | | 495 | | | | | | (377 | ) | | | | | 1,296 | | | | | | 449 | |
Net realized investment gains
|
|
|
|
|
4
|
|
|
|
|
|
13
|
|
|
|
|
|
9
|
|
|
|
|
|
26
|
|
Net income (loss) |
|
| $ |
| 499 |
|
|
| $ |
| (364 | ) |
|
| $ |
| 1,305 |
|
|
| $ |
| 475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
|
Reconciliation of Net Income per Diluted Share Excluding the Impact
of Catastrophes to Net Income per Diluted Share
|
|
|
| |
| | | Three Months |
| | | Ended |
|
|
| June 30, 2012 |
| | |
|
Net income per diluted share, excluding
| | | |
|
| | |
the impact of catastrophes
| | |
$
| | |
2.16
| |
| | | |
Impact of catastrophes
| | | | | |
(0.90
|
)
|
|
|
|
|
Net income per diluted share
|
|
|
$
|
|
|
1.26
|
|
|
|
|
|
|
|
|
|
| | | | | | |
|
ADJUSTMENT TO THE GAAP COMBINED RATIO FOR THE INCREMENTAL IMPACT OF
THE DIRECT TO CONSUMER INITIATIVE
GAAP combined ratio is the sum of the loss and loss adjustment
expense ratio (loss and LAE ratio) and the underwriting expense ratio.
For GAAP, the loss and LAE ratio is the ratio of incurred losses and
loss adjustment expenses reduced by an allocation of fee income to net
earned premiums. The underwriting expense ratio is the ratio of
underwriting expenses incurred reduced by an allocation of fee income,
and billing and policy fees to net earned premiums. A GAAP combined
ratio under 100% generally indicates an underwriting profit. A GAAP
combined ratio over 100% generally indicates an underwriting loss. The
GAAP combined ratio is an operating statistic that includes GAAP
measures in the numerator and the denominator.
Calculation of the GAAP Combined Ratio
|
|
|
| Three Months Ended |
|
| Six Months Ended |
| | | June 30, |
| | June 30, |
($ in millions, pre-tax)
|
|
| 2012 |
|
| 2011 |
|
| 2012 |
|
| 2011 |
| | | |
|
| | | | |
|
| |
Loss and loss adjustment expense ratio | | | | | | | | | | | | |
Claims and claim adjustment expenses
| | |
$
|
|
3,786
| | | |
$
|
|
5,141
| | | |
$
|
|
7,150
| | | |
$
|
8,523
| |
Less:
| | | | | | | | | | | | |
Policyholder dividends
| | | | |
11
| | | | | |
8
| | | | | |
23
| | | | |
18
| |
Allocated fee income
|
|
|
|
|
11
|
|
|
|
|
|
34
|
|
|
|
|
|
46
|
|
|
|
|
67
|
|
Loss ratio numerator |
|
| $ |
| 3,764 |
|
|
| $ |
| 5,099 |
|
|
| $ |
| 7,081 |
|
|
| $ | 8,438 |
|
| | | | | | | | | | | |
|
Underwriting expense ratio | | | | | | | | | | | | |
Amortization of deferred acquisition costs
| | |
$
| |
976
| | | |
$
| |
970
| | | |
$
| |
1,947
| | | |
$
|
1,918
| |
General and administrative expenses
| | | | |
893
| | | | | |
907
| | | | | |
1,777
| | | | |
1,790
| |
Less:
| | | | | | | | | | | | |
G&A included in Interest Expense and Other
| | | | |
5
| | | | | |
30
| | | | | |
12
| | | | |
45
| |
Allocated fee income
| | | | |
48
| | | | | |
40
| | | | | |
95
| | | | |
81
| |
Billing and policy fees
|
|
|
|
|
25
|
|
|
|
|
|
25
|
|
|
|
|
|
52
|
|
|
|
|
51
|
|
Expense ratio numerator |
|
| $ |
| 1,791 |
|
|
| $ |
| 1,782 |
|
|
| $ |
| 3,565 |
|
|
| $ | 3,531 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned premium |
|
| $ |
| 5,529 |
|
|
| $ |
| 5,503 |
|
|
| $ |
| 11,052 |
|
|
| $ | 10,874 |
|
| | | | | | | | | | | |
|
GAAP combined ratio 1 | | | | | | | | | | | | |
Loss and loss adjustment expense ratio
| | | | |
68.1
|
%
| | | | |
92.6
|
%
| | | | |
64.1
|
%
| | | |
77.6
|
%
|
Underwriting expense ratio
|
|
|
|
|
32.4
|
%
|
|
|
|
|
32.4
|
%
|
|
|
|
|
32.2
|
%
|
|
|
|
32.5
|
%
|
Combined ratio |
|
|
|
| 100.5 | % |
|
|
|
| 125.0 | % |
|
|
|
| 96.3 | % |
|
|
| 110.1 | % |
1 |
|
For purposes of computing GAAP ratios, billing and policy fees
(which are a component of other revenues) are allocated as a
reduction of underwriting expenses. In addition, fee income is
allocated as a reduction of losses and loss adjustment expenses and
underwriting expenses.
|
|
|
|
| |
|
GAAP combined ratio excluding the incremental impact of the direct to
consumer initiative is the GAAP combined ratio adjusted to exclude
the direct, variable impact of the company’s direct-to-consumer
initiative in Personal Insurance. In the opinion of the company’s
management, this is useful in an analysis of the profitability of the
company’s ongoing agency business.
Reconciliation of the Consolidated and Personal Insurance GAAP
Combined Ratios (Excluding the Incremental Impact of the Direct to
Consumer Initiative) to the Consolidated and Personal Insurance GAAP
Combined Ratios
|
|
|
|
|
|
|
|
|
| Three Months Ended |
|
| Six Months Ended |
| | | June 30, | | | June 30, |
|
|
| 2012 |
|
| 2011 |
|
| 2012 |
|
| 2011 |
| | | |
|
| | | | |
|
| |
Personal Insurance | | | | | | | | | | | | |
GAAP combined ratio excluding incremental impact
| | | | | | | | | | | | |
of direct to consumer initiative
| | |
102.9
|
%
| | |
143.2
|
%
| | |
99.3
|
%
| | |
117.5
|
%
|
Incremental impact of direct to consumer initiative
|
|
|
1.9
|
%
|
|
|
2.3
|
%
|
|
|
2.0
|
%
|
|
|
2.6
|
%
|
GAAP combined ratio |
|
| 104.8 | % |
|
| 145.5 | % |
|
| 101.3 | % |
|
| 120.1 | % |
| | | | | | | | | | | |
|
Consolidated | | | | | | | | | | | | |
GAAP combined ratio excluding incremental impact
| | | | | | | | | | | | |
of direct to consumer initiative
| | |
99.8
|
%
| | |
124.1
|
%
| | |
95.6
|
%
| | |
109.1
|
%
|
Incremental impact of direct to consumer initiative
|
|
|
0.7
|
%
|
|
|
0.9
|
%
|
|
|
0.7
|
%
|
|
|
1.0
|
%
|
GAAP combined ratio |
|
| 100.5 | % |
|
| 125.0 | % |
|
| 96.3 | % |
|
| 110.1 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | |
|
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 company's 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 company's management, this
is useful in an analysis of the results of the International market and
the FP&II segment.
Reconciliation of the Impact of Changes in Foreign Exchange Rates on
International Net Written Premiums to International Net Written Premiums
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
|
| Six Months Ended |
| | | June 30, | | | June 30, |
($ in millions)
|
|
| 2012 |
|
| 2011 |
|
| Change |
|
| 2012 |
|
| 2011 |
|
| Change |
| | | |
|
| |
|
| | | | |
|
| |
|
| |
Net written premiums - holding foreign
| | |
$
|
|
324
| | | |
$
|
|
346
| | |
(6
|
)%
| | |
$
|
|
575
| | | |
$
|
|
601
| | |
(4
|
)%
|
exchange rates constant
| | | | | | | | | | | | | | | | | | |
Impact of changes in foreign exchange rates
|
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
Net written premiums
|
|
|
$
|
|
316
|
|
|
|
$
|
|
346
|
|
|
(9
|
)%
|
|
|
$
|
|
563
|
|
|
|
$
|
|
601
|
|
|
(6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Reconciliation of the Impact of Changes in Foreign Exchange Rates on
FP&II Net Written Premiums to FP&II Net Written Premiums
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
|
| Six Months Ended |
| | | June 30, | | | June 30, |
($ in millions)
|
|
| 2012 |
|
| 2011 |
|
| Change |
|
| 2012 |
|
| 2011 |
| Change |
| | | |
|
| |
|
| | | | |
|
| |
| |
Net written premiums - holding foreign
| | |
$
|
|
848
| | | |
$
|
|
879
| | |
(4
|
)%
| | |
$
|
|
1,456
| | | |
$
|
|
1,503
| |
(3
|
)%
|
exchange rates constant
| | | | | | | | | | | | | | | | | |
Impact of changes in foreign exchange rates
|
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
(12
|
)
|
|
|
|
|
|
Net written premiums
|
|
|
$
|
|
840
|
|
|
|
$
|
|
879
|
|
|
(4
|
)%
|
|
|
$
|
|
1,444
|
|
|
|
$
|
|
1,503
|
|
(4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
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
company’s management, adjusted book value is useful in an analysis of a
property casualty company’s book value as it removes the effect of
changing prices on invested assets (i.e., net unrealized investment
gains (losses), net of tax), which do not have an equivalent impact on
unpaid claims and claim adjustment expense reserves. Tangible book
value per share is adjusted book value per share excluding the
after-tax value of goodwill and other intangible assets divided by the
number of common shares outstanding. In the opinion of the company’s
management, tangible book value per share is useful in an analysis of a
property casualty company’s 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 Common Shareholders’ Equity
to Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
| |
| |
| |
| | | As of |
| | | June 30, | | December 31, | | June 30, |
($ in millions, except per share amounts)
|
|
| 2012 |
| 2011 |
| 2011 |
| | | | | | |
|
Tangible shareholders' equity | | | $ |
| 18,346 | | | $ |
| 17,856 | | | $ |
| 19,006 | |
Goodwill
| | | | |
3,365
| | | | |
3,365
| | | | |
3,365
| |
Other intangible assets
| | | | |
405
| | | | |
433
| | | | |
465
| |
Less: Impact of deferred tax on other intangible assets
|
|
|
|
|
(47
|
)
|
|
|
|
(48
|
)
|
|
|
|
(50
|
)
|
Adjusted shareholders' equity | | | | | 22,069 | | | | | 21,606 | | | | | 22,786 | |
Net unrealized investment gains, net of tax
|
|
|
|
|
2,980
|
|
|
|
|
2,871
|
|
|
|
|
2,222
|
|
Shareholders' equity |
|
| $ |
| 25,049 |
|
| $ |
| 24,477 |
|
| $ |
| 25,008 |
|
| | | | | | |
|
Common shares outstanding
|
|
|
|
|
386.0
|
|
|
|
|
392.8
|
|
|
|
|
419.5
|
|
| | | | | | |
|
Tangible book value per share
| | |
$
| |
47.53
| | |
$
| |
45.46
| | |
$
| |
45.31
| |
Adjusted book value per share
| | | | |
57.18
| | | | |
55.01
| | | | |
54.32
| |
Book value per share
|
|
|
|
|
64.90
|
|
|
|
|
62.32
|
|
|
|
|
59.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | |
|
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 company's management, the debt to capital ratio is
useful in an analysis of the company's financial leverage.
Reconciliation of Total Debt and Equity Excluding Net Unrealized
Investment Gain to Total Capital
|
|
|
| |
|
| |
|
| |
| | | As of |
| | | June 30, | | | December 31, | | | June 30, |
($ in millions)
|
|
| 2012 |
|
| 2011 |
|
| 2011 |
| | | | | | | | |
|
Debt
| | |
$
|
|
6,349
| | | |
$
|
|
6,605
| | | |
$
|
|
6,604
| |
Shareholders' equity
|
|
|
|
|
25,049
|
|
|
|
|
|
24,477
|
|
|
|
|
|
25,008
|
|
Total capitalization |
|
|
|
| 31,398 |
|
|
|
|
| 31,082 |
|
|
|
|
| 31,612 |
|
Net unrealized investment gains, net of tax
|
|
|
|
|
2,980
|
|
|
|
|
|
2,871
|
|
|
|
|
|
2,222
|
|
Total capitalization excluding net unrealized gain | | | | | | | | | | | | | | | | | | |
on investments, net of tax |
|
| $ |
| 28,418 |
|
|
| $ |
| 28,211 |
|
|
| $ |
| 29,390 |
|
| | | | | | | | |
|
Debt-to-capital ratio
| | | | |
20.2
|
%
| | | | |
21.3
|
%
| | | | |
20.9
|
%
|
Debt-to-capital ratio excluding net unrealized investment gains, net
of tax
|
|
|
|
|
22.3
|
%
|
|
|
|
|
23.4
|
%
|
|
|
|
|
22.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | | | |
|
OTHER DEFINITIONS
Gross written premiums reflect the direct and assumed
contractually determined amounts charged to policyholders for the
effective period of the contract based on the terms and conditions of
the insurance contract. Net written premiums reflect gross
written premiums less premiums ceded to reinsurers. These are GAAP
measures.
For the Business Insurance and Financial, Professional and International
Insurance segments, retention is theamount 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, renewalrate change represents
the estimated change in average premium on policies that renew,
excluding exposure changes. Exposure is the measure of risk used
in the pricing of an insurance product. The change in exposure is the
amount of change in premium on policies that renew attributable to the
change in portfolio risk. Renewal premium change represents the
estimated change in average premium on policies that renew, including
rate and exposure changes. New business volume is the amount of
written premium related to new policyholders and additional products
sold to existing policyholders. These are operating statistics, which
are subject to change based upon a number of factors, including changes
in actuarial estimates. For the Business Insurance segment, retention,
renewal premium change and new business volumes exclude National
Accounts and Business Insurance-Other.
An insurance company’s 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 cash, short-term invested assets and 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 company’s most recent annual report on Form 10-K filed
with the Securities and Exchange Commission.
The Travelers Companies, Inc.
Media:
Shane
Boyd, 917-778-6267
or
Jennifer Wislocki, 860-277-7458
or
Institutional
Investors:
Gabriella Nawi, 917-778-6844
or
Andrew
Hersom, 860-277-0902
or
Individual
Investors:
Marc Parr, 860-277-0779
Source: The Travelers Companies, Inc.