Operating Income per Diluted Share of $2.13, Up 69% from Prior Year
Quarter
Return on Equity and Operating Return on Equity of 14.6% and 14.2%,
Respectively
-
Net and operating income of $925 million and $816 million increased
from $499 million and $495 million, respectively, in the prior year
quarter.
-
Increase driven by lower catastrophe losses as well as continued
improvement in underlying underwriting margins in all segments.
-
Net and operating income benefited $122 million after-tax from
favorable tax and legal settlements. In addition, net income benefited
$109 million after-tax from net realized investment gains.
-
Written rate gains continued to exceed expected loss cost trends in
all segments.
-
Repurchased 3.6 million shares for $300 million in the quarter.
-
Adjusted book value per share (excludes after-tax net unrealized
investment gains) of $62.12, up 5% from year-end 2012. Book value per
share of $66.65, down 1% due to the impact of the increase in interest
rates on net unrealized investment gains.
NEW YORK--(BUSINESS WIRE)--
The Travelers Companies, Inc. today reported net income of $925 million,
or $2.41 per diluted share, for the quarter ended June 30, 2013,
compared to $499 million, or $1.26 per diluted share, in the prior year
quarter. Operating income in the current quarter was $816 million, or
$2.13 per diluted share, compared to $495 million, or $1.26 per diluted
share, in the prior year quarter. The increase in net and operating
income compared to the prior year quarter primarily resulted from lower
catastrophe losses, higher underlying underwriting margins (i.e.,
excluding net favorable prior year reserve development and catastrophe
losses), and favorable tax and legal settlements, partially offset by
lower net investment income and lower net favorable prior year reserve
development. Net income also benefited from higher net realized
investment gains.
Consolidated Highlights
|
|
|
|
|
|
|
|
($ in millions, except for per share amounts, and after-tax,
except for premiums & revenues)
|
| Three Months Ended June 30, |
| |
|
| Six Months Ended June 30, |
| |
| 2013 |
| 2012 |
| Change | | | | | 2013 |
| 2012 |
| Change | | |
| | | | | | | | | | | | | | | | | | |
|
Net written premiums | | $ | 5,824 | | | $ | 5,868 | | | (1 | ) | | % | | | $ | 11,421 | | | $ | 11,365 | | | - | | | % |
| | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | |
|
Total revenues | | $ | 6,674 | | | $ | 6,359 | | | 5 | | | | | | $ | 13,002 | | | $ | 12,751 | | | 2 | | | |
| | | | | | | | | | | | | | | | | | |
|
Operating income | | $ | 816 | | | $ | 495 | | | 65 | | | | | | $ | 1,703 | | | $ | 1,296 | | | 31 | | | |
per diluted share | | $ | 2.13 | | | $ | 1.26 | | | 69 | | | | | |
$
|
4.44
| | |
$
|
3.27
| | | 36 | | | |
| | | | | | | | | | | | | | | | | | |
|
Net income | | $ | 925 | | | $ | 499 | | | 85 | | | | | | $ | 1,821 | | | $ | 1,305 | | | 40 | | | |
per diluted share | | $ | 2.41 | | | $ | 1.26 | | | 91 | | | | | |
$
|
4.75
| | |
$
|
3.29
| | | 44 | | | |
| | | | | | | | | | | | | | | | | | |
|
Diluted weighted average shares outstanding | | | 379.9 | | | | 391.6 | | | (3 | ) | | | | | | 380.8 | | | | 393.5 | | | (3 | ) | | |
| | | | | | | | | | | | | | | | | | |
|
GAAP combined ratio | | | 94.3 | % | | | 100.5 | % | | (6.2 | ) | | pts | | | | 91.4 | % | | | 96.3 | % | | (4.9 | ) | | pts |
| | | | | | | | | | | | | | | | | | |
|
Underlying GAAP combined ratio | | | 91.7 | % | | | 94.5 | % | | (2.8 | ) | | pts | | | | 91.3 | % | | | 94.6 | % | | (3.3 | ) | | pts |
| | | | | | | | | | | | | | | | | | |
|
Operating return on equity | | | 14.2 | % | | | 9.0 | % | | 5.2 | | | pts | | | | 15.0 | % | | | 11.8 | % | | 3.2 | | | pts |
| | | | | | | | | | | | | | | |
|
| | | | |
Return on equity | | | 14.6 | % | | | 8.0 | % | | 6.6 | | | pts | | | | 14.4 | % | | | 10.5 | % | | 3.9 | | | pts |
| | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | Change from | | | |
| | June 30, | | December 31, | | June 30, | | | | | December 31, | | June 30, | | | |
| | 2013 | | 2012 | | 2012 | | | | | 2012 | | 2012 | |
| | |
Book value per share | | $ | 66.65 | | $ | 67.31 | | $ 64.90 | | | | |
| (1 | )% | |
| 3 | % | |
| | |
|
Adjusted book value per share | |
| 62.12 | |
| 59.09 | | 57.18 | | | | |
| 5 | | |
| 9 | | |
| | | |
| | | | | | | | | | | | | | | | | | |
|
See Glossary of Financial Measures for definitions and the
statistical supplement for additional financial data.
|
| | | | | | |
|
“Results for the quarter were very strong, with net income of $925
million and return on equity of 14.6%,” commented Jay Fishman, Chairman
and Chief Executive Officer. “Operating return on equity was 14.2% for
the quarter and 15.0% on a year-to-date basis, a significant improvement
over prior year results primarily due to lower catastrophe losses and
continued improvement in our underlying underwriting margins.
“We are very pleased with the pricing levels we achieved, which once
again exceeded expected loss cost trends in all segments, while
maintaining solid retentions. Across our commercial insurance
businesses, our ability to segment, price and select risk positions us
well to continue to improve profitability. In Personal Insurance, our
strategy of seeking price increases and improved terms and conditions
has improved profitability, but it has continued to negatively impact
premiums.
“In June, we reached an agreement to acquire The Dominion of Canada
General Insurance Company, part of our strategy of making targeted
investments in attractive markets outside the United States. The
Dominion will significantly improve Travelers’ market position and scale
in Canada, and we are very enthusiastic about this opportunity.
“Given our focus on improving profitability, the underwriting results
over recent quarters are gratifying. However, given the environment of
low interest rates and volatile weather patterns, we will continue to
seek higher margins. With improved returns as well as our strategy of
returning excess capital to shareholders, we remain well positioned to
deliver shareholder value,” concluded Mr. Fishman.
Consolidated Results
|
($ in millions and pre-tax, unless noted otherwise)
|
| |
| |
| |
| |
| |
| |
|
| |
| |
| |
| |
| |
| |
| | Three Months Ended June 30, | | | | | Six Months Ended June 30, | | |
| | 2013 | | | | 2012 | | | | Change | | | | | 2013 | | | | 2012 | | | | Change | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Underwriting gain (loss): | | $ | 281 | | | | | $ | (62 | ) | | | | $ | 343 | | | | | | $ | 883 | | | | | $ | 331 | | | | | $ | 552 | | | |
Underwriting gain (loss) includes: | | | | | | | | | | | | | | | | | | | | | | | | | |
Net favorable prior year reserve development | | | 192 | | | | | | 221 | | | | | | (29 | ) | | | | | | 423 | | | | | | 525 | | | | | | (102 | ) | | |
Catastrophes, net of reinsurance | | | (340 | ) | | | | | (549 | ) | | | | | 209 | | | | | | | (439 | ) | | | | | (717 | ) | | | | | 278 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Net investment income | | | 687 | | | | | | 738 | | | | | | (51 | ) | | | | | | 1,357 | | | | | | 1,478 | | | | | | (121 | ) | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Other, including interest expense | |
| 42 |
| | | |
| (72 | ) | | | |
| 114 |
| | | | |
| (20 | ) | | | |
| (138 | ) | | | |
| 118 |
| | |
Operating income before income taxes | | | 1,010 | | | | | | 604 | | | | | | 406 | | | | | | | 2,220 | | | | | | 1,671 | | | | | | 549 | | | |
Income tax expense | |
| 194 |
| | | |
| 109 |
| | | |
| 85 |
| | | | |
| 517 |
| | | |
| 375 |
| | | |
| 142 |
| | |
Operating income | | | 816 | | | | | | 495 | | | | | | 321 | | | | | | | 1,703 | | | | | | 1,296 | | | | | | 407 | | | |
Net realized investment gains after income taxes | |
| 109 |
| | | |
| 4 |
| | | |
| 105 |
| | | | |
| 118 |
| | | |
| 9 |
| | | |
| 109 |
| | |
Net Income | | $ | 925 |
| | | | $ | 499 |
| | | | $ | 426 |
| | | | | $ | 1,821 |
| | | | $ | 1,305 |
| | | | $ | 516 |
| | |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
GAAP combined ratio | | | 94.3 | | | % | | | 100.5 | | | % | | | (6.2 | ) | |
pts
| | | | 91.4 | | | % | | | 96.3 | | | % | | | (4.9 | ) | |
pts
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Impact on GAAP combined ratio | | | | | | | | | | | | | | | | | | | | | | | | | |
Net favorable prior year reserve development
| | |
(3.5
|
)
| |
pts
| | |
(4.0
|
)
| |
pts
| | |
0.5
| | |
pts
| | | |
(3.8
|
)
| |
pts
| | |
(4.8
|
)
| |
pts
| | |
1.0
| | |
pts
|
Catastrophes, net of reinsurance
| | |
6.1
| | |
pts
| | |
10.0
| | |
pts
| | |
(3.9
|
)
| |
pts
| | | |
3.9
| | |
pts
| | |
6.5
| | |
pts
| | |
(2.6
|
)
| |
pts
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Underlying GAAP combined ratio | | | 91.7 | | | % | | | 94.5 | | | % | | | (2.8 | ) | |
pts
| | | | 91.3 | | | % | | | 94.6 | | | % | | | (3.3 | ) | |
pts
|
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Net written premiums | | | | | | | | | | | | | | | | | | | | | | | | | |
Business Insurance | |
$
|
3,068
| | | | |
$
|
3,026
| | | | | |
1
| | | % | | |
$
|
6,328
| | | | |
$
|
6,126
| | | | | |
3
| | | % |
Financial, Professional & International Insurance | | |
849
| | | | | |
840
| | | | | |
1
| | | | | | |
1,496
| | | | | |
1,444
| | | | | |
4
| | | |
Personal Insurance | |
|
1,907
|
| | | |
|
2,002
|
| | | | |
(5
|
)
| | | | |
|
3,597
|
| | | |
|
3,795
|
| | | | |
(5
|
)
| | |
Total | | $ | 5,824 |
| | | | $ | 5,868 |
| | | | | (1 | ) | | % | | | $ | 11,421 |
| | | | $ | 11,365 |
| | | | | - | | | % |
|
|
Second Quarter 2013 Results
(All
comparisons vs. second quarter 2012, unless noted otherwise)
Net income of $925 million after-tax increased $426 million or 85% due
to higher operating income and higher net realized investment gains
after-tax. Operating income of $816 million after-tax increased $321
million or 65%, primarily reflecting improved underwriting results
driven by lower catastrophes losses and higher underlying underwriting
margins, as well as a $63 million benefit resulting from the resolution
of prior year tax matters and a $59 million after-tax ($91 million
pre-tax) gain from the settlement of a legal proceeding. These
improvements were partially offset by lower net investment income and
lower net favorable prior year reserve development.
Underwriting results
-
The GAAP combined ratio improved 6.2 points to 94.3% due to lower
catastrophes losses (3.9 points) and higher underlying underwriting
margins (2.8 points), partially offset by lower net favorable prior
year reserve development (0.5 points).
-
Net favorable prior year reserve development occurred in all segments.
Catastrophe losses resulted from wind and hail storms in several
regions of the United States as well as flooding in Alberta, Canada.
-
The underlying GAAP combined ratio improved 2.8 points to 91.7%,
primarily resulting from earned rate increases exceeding loss cost
trends in each segment.
Net investment income of $687 million decreased primarily due to lower
reinvestment rates in the fixed income portfolio and lower private
equity returns in the non-fixed income portfolio.
Net realized investment gains of $109 million after-tax ($167 million
pre-tax) included an $87 million after-tax ($134 million pre-tax) gain
related to a short position in U.S. Treasury futures contracts. The
company closed this position by the end of the quarter.
Net written premiums of $5.824 billion decreased 1% as lower net written
premiums in Personal Insurance were significantly offset by higher net
written premiums in Business Insurance and Financial, Professional &
International Insurance.
Year-to-Date 2013 Results
(All
comparisons vs. year-to-date 2012, unless noted otherwise)
Net and operating income of $1.821 billion and $1.703 billion increased
$516 million and $407 million, respectively, primarily reflecting the
same factors discussed above for the second quarter.
Underwriting results
-
The GAAP combined ratio improved 4.9 points to 91.4% due to higher
underlying underwriting margins (3.3 points) and lower catastrophe
losses (2.6 points), partially offset by lower net favorable prior
year reserve development (1.0 point).
-
Net favorable prior year reserve development occurred in all segments.
Catastrophe losses included the second quarter 2013 events discussed
above, as well as tornadoes and hail storms in the Southeastern United
States in the first quarter 2013.
-
The underlying GAAP combined ratio improved 3.3 points to 91.3%,
primarily resulting from earned rate increases exceeding loss cost
trends in each segment.
Net investment income decreased and net realized investment gains
increased primarily reflecting the same factors discussed above for the
second quarter.
Net written premiums of $11.421 billion were generally consistent with
the prior year period as higher net written premiums in Business
Insurance and Financial, Professional & International Insurance were
offset by lower net written premiums in Personal Insurance.
Shareholders’ Equity
Shareholders’ equity of $24.890 billion decreased 3% from the end of
first quarter 2013 and 2% from the end of the prior year primarily due
to the impact of the increase in interest rates on net unrealized
investment gains. Included in shareholders’ equity were after-tax net
unrealized investment gains of $1.692 billion, compared to $2.864
billion at the end of first quarter 2013 and $3.103 billion at the end
of the prior year. The company repurchased 3.6 million shares during the
quarter and 7.3 million shares year-to-date under its existing share
repurchase authorization at a total cost of $300 million and $600
million, respectively, leaving $1.559 billion of capacity under that
authorization for future share repurchases. Statutory surplus was
$20.672 billion, and the ratio of debt-to-capital (excluding after-tax
net unrealized investment gains) was 20.1%, well within its target range
of 15% and 25%.
The Board of Directors declared a quarterly dividend of $0.50 per share.
This dividend is payable September 30, 2013, to shareholders of record
as of the close of business on September 10, 2013.
Business Insurance Segment Financial Results
|
($ in millions and pre-tax, unless noted otherwise)
|
| |
| |
| |
| |
| |
| |
|
| |
| |
| |
| |
| |
| |
| | Three Months Ended June 30, | | | | | Six Months Ended June 30, | | |
| | 2013 | | | | 2012 | | | | Change | | | | | 2013 | | | | 2012 | | | | Change | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Underwriting gain (loss) | | $ | 100 | | | | | $ | (100 | ) | | | | $ | 200 | | | | | | $ | 398 | | | | | $ | 184 | | | | | $ | 214 | | | |
Underwriting gain (loss) includes: | | | | | | | | | | | | | | | | | | | | | | | | | |
Net favorable prior year reserve development | | | 55 | | | | | | 58 | | | | | | (3 | ) | | | | | | 168 | | | | | | 306 | | | | | | (138 | ) | | |
Catastrophes, net of reinsurance | | | (148 | ) | | | | | (252 | ) | | | | | 104 | | | | | | | (183 | ) | | | | | (305 | ) | | | | | 122 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Net investment income | | | 502 | | | | | | 536 | | | | | | (34 | ) | | | | | | 989 | | | | | | 1,068 | | | | | | (79 | ) | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Other | | | 114 | | | | | | 8 | | | | | | 106 | | | | | | | 127 | | | | | | 22 | | | | | | 105 | | | |
| |
| | | |
| | | |
| | | | |
| | | |
| | | |
| | |
Operating income before income taxes | | | 716 | | | | | | 444 | | | | | | 272 | | | | | | | 1,514 | | | | | | 1,274 | | | | | | 240 | | | |
Income tax expense | |
| 137 |
| | | |
| 82 |
| | | |
| 55 |
| | | | |
| 345 |
| | | |
| 300 |
| | | |
| 45 |
| | |
Operating income | | $ | 579 |
| | | | $ | 362 |
| | | | $ | 217 |
| | | | | $ | 1,169 |
| | | | $ | 974 |
| | | | $ | 195 |
| | |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
GAAP combined ratio | | | 96.2 | | | % | | | 103.0 | | | % | | | (6.8 | ) | |
pts
| | | | 92.9 | | | % | | | 96.3 | | | % | | | (3.4 | ) | |
pts
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Impact on GAAP combined ratio | | | | | | | | | | | | | | | | | | | | | | | | | |
Net favorable prior year reserve development
| | |
(1.8
|
)
| |
pts
| | |
(2.0
|
)
| |
pts
| | |
0.2
| | |
pts
| | | |
(2.8
|
)
| |
pts
| | |
(5.3
|
)
| |
pts
| | |
2.5
| | |
pts
|
Catastrophes, net of reinsurance
| | |
4.9
| | |
pts
| | |
8.8
| | |
pts
| | |
(3.9
|
)
| |
pts
| | | |
3.1
| | |
pts
| | |
5.3
| | |
pts
| | |
(2.2
|
)
| |
pts
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Underlying GAAP combined ratio | | | 93.1 | | | % | | | 96.2 | | | % | | | (3.1 | ) | |
pts
| | | | 92.6 | | | % | | | 96.3 | | | % | | | (3.7 | ) | |
pts
|
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Net written premiums by market | | | | | | | | | | | | | | | | | | | | | | | | | |
Select Accounts
| |
$
|
709
| | | | |
$
|
721
| | | | | |
(2
|
)
| | % | | |
$
|
1,433
| | | | |
$
|
1,439
| | | | | |
-
| | | % |
Commercial Accounts
| | |
732
| | | | | |
717
| | | | | |
2
| | | | | | |
1,640
| | | | | |
1,578
| | | | | |
4
| | | |
National Accounts
| | |
242
| | | | | |
226
| | | | | |
7
| | | | | | |
519
| | | | | |
461
| | | | | |
13
| | | |
Industry-Focused Underwriting
| | |
653
| | | | | |
636
| | | | | |
3
| | | | | | |
1,352
| | | | | |
1,284
| | | | | |
5
| | | |
Target Risk Underwriting
| | |
500
| | | | | |
486
| | | | | |
3
| | | | | | |
948
| | | | | |
915
| | | | | |
4
| | | |
Specialized Distribution
| | |
232
| | | | | |
242
| | | | | |
(4
|
)
| | | | | |
436
| | | | | |
450
| | | | | |
(3
|
)
| | |
Other
| |
|
-
|
| | | |
|
(2
|
)
| | | | |
NM
| | | | | |
|
-
|
| | | |
|
(1
|
)
| | | | |
NM
| | | |
Total | | $ | 3,068 |
| | | | $ | 3,026 |
| | | | | 1 | | | % | | | $ | 6,328 |
| | | | $ | 6,126 |
| | | | | 3 | | | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
NM = Not Meaningful
|
|
Second Quarter 2013 Results
(All
comparisons vs. second quarter 2012, unless noted otherwise)
Operating income of $579 million after-tax increased $217 million or
60%, primarily reflecting improved underwriting results driven by lower
catastrophe losses and higher underlying underwriting margins, as well
as a $59 million after-tax ($91 million pre-tax) gain from the
settlement of a legal proceeding and a $43 million benefit resulting
from the resolution of prior year tax matters. These improvements were
partially offset by lower net investment income and lower net favorable
prior year reserve development.
Underwriting results
-
The GAAP combined ratio improved 6.8 points to 96.2% due to lower
catastrophe losses (3.9 points) and higher underlying underwriting
margins (3.1 points), partially offset by lower net favorable prior
year development (0.2 points).
-
Net favorable prior year reserve development resulted from better than
expected loss experience related to the excess coverages of the
general liability product line for accident years 2004 through 2009.
These improvements were partially offset by a $42 million after-tax
($65 million pre-tax) increase to environmental reserves.
-
The underlying GAAP combined ratio improved 3.1 points to 93.1%,
primarily resulting from earned rate increases exceeding loss trends.
Business Insurance net written premiums of $3.068 billion increased 1%
primarily driven by continued increases in renewal rate change.
Retention rates remained strong and generally consistent with recent
quarters. New business volumes decreased modestly from the prior year
quarter. Net written premiums also benefited from positive exposure
change at renewal.
Year-to-Date 2013 Results
(All
comparisons vs. year-to-date 2012, unless noted otherwise)
Operating income of $1.169 billion after-tax increased $195 million or
20%, primarily reflecting the same factors discussed above for the
second quarter.
Underwriting results
-
The GAAP combined ratio improved 3.4 points to 92.9% due to higher
underlying underwriting results (3.7 points), and lower catastrophe
losses (2.2 points), partially offset by lower net favorable prior
year development (2.5 points).
-
Net favorable prior year reserve development was primarily driven by
the same factors as above for the second quarter as well as better
than expected loss experience related to the property product line.
Also included in net favorable prior year reserve development was a
$42 million pre-tax ($27 million after-tax) charge that was
precipitated by legislation in New York enacted in the first quarter
2013 related to the New York Fund for Reopened Cases for workers’
compensation.
-
The underlying GAAP combined ratio improved 3.7 points to 92.6%,
primarily resulting from earned rate increases exceeding loss trends.
Business Insurance net written premiums of $6.328 billion increased 3%
driven by continued increases in renewal rate change. Retention rates
remained strong and new business volumes increased modestly. Net written
premiums also benefited from positive exposure change at renewal.
Financial, Professional & International
Insurance Segment Financial Results
|
($ in millions and pre-tax, unless noted otherwise)
|
| |
| |
| |
| |
| |
| |
|
| |
| |
| |
| |
| |
| |
| | Three Months Ended June 30, | | | | | Six Months Ended June 30, | | |
| | 2013 | | | | 2012 | | | | Change | | | | | 2013 | | | | 2012 | | | | Change | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Underwriting gain | | $ | 100 | | | | | $ | 151 | | | | | $ | (51 | ) | | | | | $ | 228 | | | | | $ | 239 | | | | | $ | (11 | ) | | |
Underwriting gain includes: | | | | | | | | | | | | | | | | | | | | | | | | | |
Net favorable prior year reserve development | | | 72 | | | | | | 96 | | | | | | (24 | ) | | | | | | 130 | | | | | | 142 | | | | | | (12 | ) | | |
Catastrophes, net of reinsurance | | | (46 | ) | | | | | (4 | ) | | | | | (42 | ) | | | | | | (46 | ) | | | | | (4 | ) | | | | | (42 | ) | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Net investment income | | | 91 | | | | | | 99 | | | | | | (8 | ) | | | | | | 183 | | | | | | 203 | | | | | | (20 | ) | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Other | | | 5 | | | | | | 5 | | | | | | - | | | | | | | 10 | | | | | | 13 | | | | | | (3 | ) | | |
| |
| | | |
| | | |
| | | | |
| | | |
| | | |
| | |
Operating income before income taxes | | | 196 | | | | | | 255 | | | | | | (59 | ) | | | | | | 421 | | | | | | 455 | | | | | | (34 | ) | | |
Income tax expense | |
| 42 |
| | | |
| 73 |
| | | |
| (31 | ) | | | | |
| 104 |
| | | |
| 124 |
| | | |
| (20 | ) | | |
Operating income | | $ | 154 |
| | | | $ | 182 |
| | | | $ | (28 | ) | | | | | $ | 317 |
| | | | $ | 331 |
| | | | $ | (14 | ) | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
GAAP combined ratio | | | 86.3 | | | % | | | 80.0 | | | % | | | 6.3 | | |
pts
| | | | 84.3 | | | % | | | 83.8 | | | % | | | 0.5 | | |
pts
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Impact on GAAP combined ratio | | | | | | | | | | | | | | | | | | | | | | | | | |
Net favorable prior year reserve development
| | |
(9.7
|
)
| |
pts
| | |
(12.5
|
)
| |
pts
| | |
2.8
| | |
pts
| | | |
(8.8
|
)
| |
pts
| | |
(9.4
|
)
| |
pts
| | |
0.6
| | |
pts
|
Catastrophes, net of reinsurance
| | |
6.1
| | |
pts
| | |
0.4
| | |
pts
| | |
5.7
| | |
pts
| | | |
3.1
| | |
pts
| | |
0.2
| | |
pts
| | |
2.9
| | |
pts
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Underlying GAAP combined ratio | | | 89.9 | | | % | | | 92.1 | | | % | | | (2.2 | ) | |
pts
| | | | 90.0 | | | % | | | 93.0 | | | % | | | (3.0 | ) | |
pts
|
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Net written premiums by market | | | | | | | | | | | | | | | | | | | | | | | | | |
Bond & Financial Products
| |
$
|
531
| | | | |
$
|
524
| | | | | |
1
| | | % | | |
$
|
926
| | | | |
$
|
881
| | | | | |
5
| | | % |
International
| |
|
318
|
| | | |
|
316
|
| | | | |
1
| | | | | |
|
570
|
| | | |
|
563
|
| | | | |
1
| | | |
Total | | $ | 849 |
| | | | $ | 840 |
| | | | | 1 | | | % | | | $ | 1,496 |
| | | | $ | 1,444 |
| | | | | 4 | | | % |
|
|
Second Quarter 2013 Results
(All
comparisons vs. second quarter 2012, unless noted otherwise)
Operating income of $154 million after-tax decreased $28 million or 15%
primarily reflecting lower underwriting results driven by higher
catastrophe losses and lower net favorable prior year reserve
development, as well as lower net investment income. These declines were
partially offset by higher underlying underwriting margins and a $15
million benefit resulting from the resolution of prior year tax matters.
Underwriting results
-
The GAAP combined ratio deteriorated 6.3 points to 86.3% due to higher
catastrophe losses (5.7 points) and lower net favorable prior year
reserve development (2.8 points), partially offset by higher
underlying underwriting margins (2.2 points).
-
Net favorable prior year reserve development primarily resulted from
better than expected loss experience in the surety business for
various accident years within Bond & Financial Products. Catastrophe
losses primarily resulted from flooding in Alberta, Canada.
-
The underlying GAAP combined ratio improved 2.2 points to 89.9%,
primarily resulting from earned rate increases exceeding loss trends,
as well as a lower level of large losses within International,
partially offset by an increase in the expense ratio driven by legal
expenses related to the recently announced agreement to acquire The
Dominion of Canada General Insurance Company and lower earned premiums.
Financial, Professional & International Insurance net written premiums
of $849 million increased 1%, primarily driven by Bond & Financial
Products reflecting higher volumes in construction surety and renewal
rate increases in management liability.
Year-to-Date 2013 Results
(All
comparisons vs. year-to-date 2012, unless noted otherwise)
Operating income of $317 million after-tax decreased $14 million or 4%,
primarily reflecting the same factors discussed above for the second
quarter.
Underwriting results
-
The GAAP combined ratio deteriorated 0.5 points to 84.3% due to higher
catastrophe losses (2.9 points) and lower net favorable prior year
development (0.6 points), largely offset by higher underlying
underwriting margins (3.0 points).
-
Net favorable prior year reserve development was primarily driven by
the same factors as above for the second quarter as well as better
than expected loss experience in several lines of business within
International. Catastrophe losses were driven by the same factors as
above for the second quarter.
-
The underlying GAAP combined ratio improved 3.0 points to 90.0%,
primarily resulting from earned rate increases exceeding loss trends,
as well as a lower level of large losses within International.
Financial, Professional & International Insurance net written premiums
of $1.496 billion increased 4%, primarily driven by the same factors
discussed above for the second quarter, as well as lower reinsurance
costs (resulting from price decreases and slightly higher retention
levels).
Personal Insurance Segment Financial Results
|
($ in millions and pre-tax, unless noted otherwise)
|
| |
| |
| |
| |
| |
| |
|
| |
| |
| |
| |
| |
| |
| | Three Months Ended June 30, | | | | | Six Months Ended June 30, | | |
| | 2013 | | | | 2012 | | | | Change | | | | | 2013 | | | | 2012 | | | | Change | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Underwriting gain (loss) | | $ | 81 | | | | | $ | (113 | ) | | | | $ | 194 | | | | | | $ | 257 | | | | | $ | (92 | ) | | | | $ | 349 | | | |
Underwriting gain (loss) includes: | | | | | | | | | | | | | | | | | | | | | | | | | |
Net favorable prior year reserve development | | | 65 | | | | | | 67 | | | | | | (2 | ) | | | | | | 125 | | | | | | 77 | | | | | | 48 | | | |
Catastrophes, net of reinsurance | | | (146 | ) | | | | | (293 | ) | | | | | 147 | | | | | | | (210 | ) | | | | | (408 | ) | | | | | 198 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Net investment income | | | 94 | | | | | | 103 | | | | | | (9 | ) | | | | | | 185 | | | | | | 207 | | | | | | (22 | ) | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Other | | | 15 | | | | | | 16 | | | | | | (1 | ) | | | | | | 33 | | | | | | 35 | | | | | | (2 | ) | | |
| |
| | | |
| | | |
| | | | |
| | | |
| | | |
| | |
Operating income before income taxes | | | 190 | | | | | | 6 | | | | | | 184 | | | | | | | 475 | | | | | | 150 | | | | | | 325 | | | |
Income tax expense (benefit) | |
| 48 |
| | | |
| (11 | ) | | | |
| 59 |
| | | | |
| 136 |
| | | |
| 25 |
| | | |
| 111 |
| | |
Operating income | | $ | 142 |
| | | | $ | 17 |
| | | | $ | 125 |
| | | | | $ | 339 |
| | | | $ | 125 |
| | | | $ | 214 |
| | |
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
GAAP combined ratio | | | 94.5 | | | % | | | 104.8 | | | % | | | (10.3 | ) | |
pts
| | | | 91.9 | | | % | | | 101.3 | | | % | | | (9.4 | ) | |
pts
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Impact on GAAP combined ratio | | | | | | | | | | | | | | | | | | | | | | | | | |
Net favorable prior year reserve development
| | |
(3.5
|
)
| |
pts
| | |
(3.5
|
)
| |
pts
| | |
-
| | |
pts
| | | |
(3.4
|
)
| |
pts
| | |
(2.1
|
)
| |
pts
| | |
(1.3
|
)
| |
pts
|
Catastrophes, net of reinsurance
| | |
8.0
| | |
pts
| | |
15.3
| | |
pts
| | |
(7.3
|
)
| |
pts
| | | |
5.7
| | |
pts
| | |
10.7
| | |
pts
| | |
(5.0
|
)
| |
pts
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Underlying GAAP combined ratio | | | 90.0 | | | % | | | 93.0 | | | % | | | (3.0 | ) | |
pts
| | | | 89.6 | | | % | | | 92.7 | | | % | | | (3.1 | ) | |
pts
|
|
| | | | | | | | | | | | | | | | | | | | | | | | |
|
Net written premiums | | | | | | | | | | | | | | | | | | | | | | | | | |
Agency Automobile1 | |
$
|
834
| | | | |
$
|
899
| | | | | |
(7
|
)
| | % | | |
$
|
1,665
| | | | |
$
|
1,799
| | | | | |
(7
|
)
| | % |
Agency Homeowners & Other1 | | |
1,033
| | | | | |
1,064
| | | | | |
(3
|
)
| | | | | |
1,853
| | | | | |
1,919
| | | | | |
(3
|
)
| | |
Direct to Consumer
| |
|
40
|
| | | |
|
39
|
| | | | |
3
| | | | | |
|
79
|
| | | |
|
77
|
| | | | |
3
| | | |
Total | | $ | 1,907 |
| | | | $ | 2,002 |
| | | | | (5 | ) | | % | | | $ | 3,597 |
| | | | $ | 3,795 |
| | | | | (5 | ) | | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
1 Represents business sold through agents, brokers and
other intermediaries and excludes direct to consumer
|
|
Second Quarter 2013 Results
(All
comparisons vs. second quarter 2012, unless noted otherwise)
Operating income of $142 million after-tax increased $125 million,
primarily reflecting improved underwriting results driven by lower
catastrophe losses and higher underlying underwriting margins, as well
as a $5 million benefit resulting from the resolution of prior year tax
matters. These improvements were slightly offset by lower net investment
income.
Underwriting results
-
The GAAP combined ratio improved 10.3 points to 94.5% due to lower
catastrophe losses (7.3 points) and higher underlying underwriting
margins (3.0 points).
-
Net favorable prior year reserve development primarily resulted from
better than expected loss experience in Homeowners & Other for
accident year 2012 for both catastrophe and non-catastrophe
weather-related losses and other non-weather-related losses.
-
The underlying GAAP combined ratio improved 3.0 points to 90.0%
primarily resulting from earned rate increases exceeding loss cost
trends in both Automobile and Homeowners & Other, as well as lower
non-catastrophe weather-related losses.
Personal Insurance net written premiums of $1.907 billion decreased 5%
primarily due to lower new business volumes in both Automobile and
Homeowners & Other, largely as a result of the company’s pricing
strategy, increasing deductibles and other profitability improvement
initiatives. Renewal premium change and retention rates in both
Automobile and Homeowners & Other remained strong and generally
consistent with recent quarters.
Year-to-Date 2013 Results
(All
comparisons vs. year-to-date 2012, unless noted otherwise)
Operating results of $339 million increased $214 million after-tax,
primarily reflecting the same factors discussed above for the second
quarter, as well as an increase in net favorable prior year reserve
development.
Underwriting results
-
The GAAP combined ratio improved 9.4 points to 91.9% due to lower
catastrophe losses (5.0 points), higher underlying underwriting
margins (3.1 points) and higher net favorable prior year reserve
development (1.3 points).
-
Net favorable prior year reserve development was primarily driven by
the same factors as above for the second quarter, as well as net
favorable development in the first quarter of 2013 in the Homeowners &
Other product line for accident year 2011 for both non-catastrophe
weather-related losses and catastrophe losses.
-
The underlying GAAP combined ratio improved 3.1 points to 89.6%,
primarily resulting from earned rate increases exceeding loss cost
trends and lower non-catastrophe weather-related losses.
Personal Insurance net written premiums of $3.597 billion decreased 5%,
primarily due to the same factors discussed above for the second quarter.
Financial Supplement and Conference Call
The information in
this press release should be read in conjunction with a financial
supplement that is available on our website at www.travelers.com.
Travelers management will discuss the contents of this release and other
relevant topics via webcast at 9 a.m. Eastern (8 a.m. Central) on
Tuesday, July 23, 2013. 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 and/or social media
outlets, such as Facebook and Twitter, as distribution channels of
material company information. Financial and other important information
regarding the company is routinely accessible through and posted on our
website at http://investor.travelers.com,
our Facebook page at https://www.facebook.com/travelers
and our Twitter account (@TRV_Insurance) at https://twitter.com/TRV_Insurance.
In addition, you may automatically receive email alerts and other
information about Travelers when you enroll your email address by
visiting the “Email Alert Service” section at http://investor.travelers.com.
Travelers has organized its businesses into the following reportable
business segments:
Business Insurance: The Business Insurance segment offers a broad
array of property and casualty insurance and insurance-related services
to its clients primarily in the United States. Business Insurance is
organized into the following six groups, which collectively comprise
Business Insurance Core operations: Select Accounts; Commercial
Accounts; National Accounts; Industry-Focused Underwriting including
Construction, Technology, Public Sector Services, Oil & Gas and
Agribusiness; Target Risk Underwriting including National Property,
Inland Marine, Ocean Marine, Excess Casualty, Boiler & Machinery and
Global Partner Services; and Specialized Distribution including
Northland and National Programs. Business Insurance also includes the
Special Liability Group (which manages the company’s asbestos and
environmental liabilities) and the assumed reinsurance and certain other
runoff operations, which collectively are referred to as Business
Insurance Other.
Financial, Professional & International Insurance: The
Financial, Professional & International Insurance segment includes
surety and financial liability coverages, which primarily use
credit-based underwriting processes, as well as property and casualty
products that are primarily marketed on a domestic basis in the United
Kingdom, Canada and the Republic of Ireland, and on an international
basis through 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, loss costs, 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;
-
strategic initiatives, including initiatives to improve profitability
and competitiveness; and
-
the potential closing date and impact of its merger and acquisition
transactions, including the acquisition of The Dominion of Canada
General Insurance Company (The Dominion), and the financing plans
related to such transactions.
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 and profitability;
-
the company may not be able to collect all amounts due to it from
reinsurers, and reinsurance coverage may not be available to the
company in the future at commercially reasonable rates or at all;
-
the company is exposed to credit risk in certain of its business
operations;
-
within the United States, the 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;
-
changes in U.S. tax laws or in the tax laws of other jurisdictions in
which the company operates could adversely impact the company;
-
the company may be adversely affected if its pricing and capital
models provide materially different indications than actual results;
-
the 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;
-
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;
-
acquisitions and integration of acquired businesses, including the
company’s planned acquisition of The Dominion, 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 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;
-
the company’s repurchase plans depend on a variety of factors,
including the company’s financial position, earnings, share price,
catastrophe losses, maintaining capital levels commensurate with the
company’s desired ratings from independent rating agencies, funding of
the company’s qualified pension plan, capital requirements of the
company’s operating subsidiaries, legal requirements, regulatory
constraints, other investment opportunities (including mergers and
acquisitions and related financings), market conditions and other
factors;
-
the company may not achieve the anticipated benefits of its
transactions or its strategic initiatives, including in Personal
Insurance, or complete a transaction that is subject to closing
conditions; and
-
conditions in the capital markets may not be suitable for the company
to incur additional indebtedness and/or to issue preferred stock to
finance its merger and acquisition transactions, including the
acquisition of The Dominion.
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 (SEC).
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 AND CERTAIN OTHER NON-GAAP
MEASURES TO NET INCOME
Operating income is net income excluding the after-tax impact of
net realized investment gains and discontinued operations. Management
uses operating income 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 per share is operating
income on a per common share basis.
Reconciliation of Operating Income less Preferred Dividends to Net
Income
|
|
|
|
| | |
| | |
|
|
| | |
| | |
| | | | Three Months Ended | | | | Six Months Ended |
| | | | June 30, | | | | June 30, |
($ in millions, pre-tax)
|
|
|
| 2013 |
| 2012 |
|
|
| 2013 |
| 2012 |
| | | | | | | | | | | | | | | |
|
Operating income | | | | $ | 1,010 | | | $ | 604 | | | | | $ | 2,220 | | | $ | 1,671 | |
Net realized investment gains
|
|
|
|
|
167
|
|
|
|
4
|
|
|
|
|
|
177
|
|
|
|
14
|
|
Net income |
|
|
| $ | 1,177 |
|
| $ | 608 |
|
|
|
| $ | 2,397 |
|
| $ | 1,685 |
|
|
|
| | | | | | | | | | | | | | | |
|
| | | | Three Months Ended | | | | Six Months Ended |
| | | | June 30, | | | | June 30, |
($ in millions, after-tax)
|
|
|
| 2013 |
| 2012 |
|
|
| 2013 |
| 2012 |
| | | | | | | | | | | | | | | |
|
Operating income | | | | $ | 816 | | | $ | 495 | | | | | $ | 1,703 | | | $ | 1,296 | |
Net realized investment gains
|
|
|
|
|
109
|
|
|
|
4
|
|
|
|
|
|
118
|
|
|
|
9
|
|
Net income |
|
|
| $ | 925 |
|
| $ | 499 |
|
|
|
| $ | 1,821 |
|
| $ | 1,305 |
|
|
|
|
| |
| | Twelve Months Ended December 31, |
($ in millions, after-tax)
|
| 2012 |
| 2011 |
| 2010 |
| 2009 |
| 2008 |
| 2007 |
| 2006 |
| 2005 |
| | | |
| | |
| | |
| | |
| |
| | |
| | |
| |
Operating income, less preferred dividends
| |
$
|
2,441
| | |
$
|
1,389
| | |
$
|
3,040
| | |
$
|
3,597
| | |
$
|
3,191
| | |
$
|
4,496
| | |
$
|
4,195
| | |
$
|
2,020
| |
Preferred dividends
|
|
|
-
|
|
|
|
1
|
|
|
|
3
|
|
|
|
3
|
|
|
|
4
|
|
|
|
4
|
|
|
|
5
|
|
|
|
6
|
|
Operating income | | | 2,441 | | | | 1,390 | | | | 3,043 | | | | 3,600 | | | | 3,195 | | | | 4,500 | | | | 4,200 | | | | 2,026 | |
Net realized investment gains (losses)
|
|
|
32
|
|
|
|
36
|
|
|
|
173
|
|
|
|
22
|
|
|
|
(271
|
)
|
|
|
101
|
|
|
|
8
|
|
|
|
35
|
|
Income from continuing operations | | | 2,473 | | | | 1,426 | | | | 3,216 | | | | 3,622 | | | | 2,924 | | | | 4,601 | | | | 4,208 | | | | 2,061 | |
Discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(439
|
)
|
Net income |
| $ | 2,473 |
|
| $ | 1,426 |
|
| $ | 3,216 |
|
| $ | 3,622 |
|
| $ | 2,924 |
|
| $ | 4,601 |
|
| $ | 4,208 |
|
| $ | 1,622 |
|
|
|
Reconciliation of Operating Earnings per Share to Net Income per
Share on a Basic and Diluted Basis
|
|
|
| | |
|
| | |
|
| | |
|
| | |
| | | Three Months Ended | | | Six Months Ended |
| | | June 30, | | | June 30, |
|
|
| 2013 |
|
| 2012 |
|
| 2013 |
|
| 2012 |
| | | | | | | | | | | | | | | |
|
Basic earnings per share | | | | | | | | | | | | | | | | |
Operating income | | | $ | 2.15 | | | | $ | 1.27 | | | | $ | 4.49 | | | | $ | 3.30 | |
Net realized investment gains
|
|
|
|
0.29
|
|
|
|
|
-
|
|
|
|
|
0.31
|
|
|
|
|
0.02
|
|
Net income |
|
| $ | 2.44 |
|
|
| $ | 1.27 |
|
|
| $ | 4.80 |
|
|
| $ | 3.32 |
|
| | | | | | | | | | | | | | | |
|
Diluted earnings per share | | | | | | | | | | | | | | | | |
Operating income | | | $ | 2.13 | | | | $ | 1.26 | | | | $ | 4.44 | | | | $ | 3.27 | |
Net realized investment gains
|
|
|
|
0.28
|
|
|
|
|
-
|
|
|
|
|
0.31
|
|
|
|
|
0.02
|
|
Net income |
|
| $ | 2.41 |
|
|
| $ | 1.26 |
|
|
| $ | 4.75 |
|
|
| $ | 3.29 |
|
|
|
Reconciliation of Operating Income by Segment to Total Operating
Income
|
|
|
| |
|
| |
|
| |
|
| |
| | | Three Months Ended | | | Six Months Ended |
| | | June 30, | | | June 30, |
($ in millions, after-tax)
|
|
| 2013 |
|
| 2012 |
|
| 2013 |
|
| 2012 |
| | | | | | | | | | | |
|
Business Insurance | | |
$
|
579
| | | |
$
|
362
| | | |
$
|
1,169
| | | |
$
|
974
| |
Financial, Professional & International Insurance | | | |
154
| | | | |
182
| | | | |
317
| | | | |
331
| |
Personal Insurance |
|
|
|
142
|
|
|
|
|
17
|
|
|
|
|
339
|
|
|
|
|
125
|
|
Total segment operating income
| | | |
875
| | | | |
561
| | | | |
1,825
| | | | |
1,430
| |
Interest Expense and Other
|
|
|
|
(59
|
)
|
|
|
|
(66
|
)
|
|
|
|
(122
|
)
|
|
|
|
(134
|
)
|
Total operating income |
|
| $ | 816 |
|
|
| $ | 495 |
|
|
| $ | 1,703 |
|
|
| $ | 1,296 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | | | | | |
|
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)
|
|
|
| 2013 |
|
| 2012 |
| | | | | |
|
| | |
Adjusted shareholders' equity | | | | $ | 23,080 | | | | $ | 22,060 | |
Net unrealized investment gains, net of tax
| | | | |
1,692
| | | | |
2,980
| |
Net realized investment gains, net of tax
|
|
|
|
|
118
|
|
|
|
|
9
|
|
Shareholders' equity |
|
|
| $ | 24,890 |
|
|
| $ | 25,049 |
|
| | | | | | | | | | |
|
|
| As of December 31, |
($ in millions)
|
| 2012 |
| 2011 |
| 2010 |
| 2009 |
| 2008 |
| 2007 |
| 2006 |
| 2005 |
| 2004 |
| | | |
| | |
| | |
| | |
| |
| | |
| | |
| |
| |
Adjusted shareholders' equity | | $ | 22,270 | | | $ | 21,570 | | | $ | 23,375 | | | $ | 25,458 | | | $ | 25,647 | | | $ | 25,783 | | | $ | 24,545 | | | $ | 22,227 | | | $ | 20,087 | |
Net unrealized investment gains (losses), net of tax
| | |
3,103
| | | |
2,871
| | | |
1,859
| | | |
1,856
| | | |
(146
|
)
| | |
620
| | | |
453
| | | |
327
| | | |
866
| |
Net realized investment gains (losses), net of tax
| | |
32
| | | |
36
| | | |
173
| | | |
22
| | | |
(271
|
)
| | |
101
| | | |
8
| | | |
35
| | | |
(28
|
)
|
Preferred stock
| | |
-
| | | |
-
| | | |
68
| | | |
79
| | | |
89
| | | |
112
| | | |
129
| | | |
153
| | | |
188
| |
Discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(439
|
)
|
|
|
88
|
|
Shareholders' equity |
| $ | 25,405 |
|
| $ | 24,477 |
|
| $ | 25,475 |
|
| $ | 27,415 |
|
| $ | 25,319 |
|
| $ | 26,616 |
|
| $ | 25,135 |
|
| $ | 22,303 |
|
| $ | 21,201 |
|
|
|
Return on equity is the ratio of annualized net income less
preferred dividends to average shareholders’ equity for the periods
presented. Operating return on equity is the ratio of annualized
operating income less preferred dividends to adjusted average
shareholders’ equity for the periods presented. In the opinion of the
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)
|
| 2013 |
| 2012 |
| 2013 |
| 2012 |
| | | | | | | |
|
Annualized operating income
| |
$
|
3,261
| | |
$
|
1,982
| | |
$
|
3,406
| | |
$
|
2,592
| |
Adjusted average shareholders' equity
|
|
|
22,910
|
|
|
|
22,050
|
|
|
|
22,711
|
|
|
|
21,934
|
|
Operating return on equity |
|
| 14.2 | % |
|
| 9.0 | % |
|
| 15.0 | % |
|
| 11.8 | % |
| | | | | | | |
|
Annualized net income
| |
$
|
3,697
| | |
$
|
1,993
| | |
$
|
3,641
| | |
$
|
2,609
| |
Average shareholders' equity
|
|
|
25,243
|
|
|
|
24,961
|
|
|
|
25,372
|
|
|
|
24,818
|
|
Return on equity |
|
| 14.6 | % |
|
| 8.0 | % |
|
| 14.4 | % |
|
| 10.5 | % |
|
|
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 June 30, 2013
|
|
| |
| |
|
| |
| |
| |
| |
| |
| |
| |
| |
| | Six Months Ended | | | | | | | | | | | | | | | | | |
| | June 30, | | | Twelve Months Ended December 31, |
($ in millions)
|
| 2013 |
| 2012 | | | 2012 |
| 2011 |
| 2010 |
| 2009 |
| 2008 |
| 2007 |
| 2006 |
| 2005 |
| | | | | | | | | | | | | | | | | | | | |
|
Operating income, less preferred dividends
| |
$
|
1,703
| | |
$
|
1,296
| | | |
$
|
2,441
| | |
$
|
1,389
| | |
$
|
3,040
| | |
$
|
3,597
| | |
$
|
3,191
| | |
$
|
4,496
| | |
$
|
4,195
| | |
$
|
2,020
| |
Annualized operating income
| | |
3,406
| | | |
2,592
| | | | | | | | | | | | | | | | | | |
Adjusted average shareholders' equity
| | |
22,711
| | | |
21,934
| | | | |
22,158
| | | |
22,806
| | | |
24,285
| | | |
25,777
| | | |
25,668
| | | |
25,350
| | | |
23,381
| | | |
21,118
| |
Operating return on equity
|
|
|
15.0
|
%
|
|
|
11.8
|
%
|
|
|
|
11.0
|
%
|
|
|
6.1
|
%
|
|
|
12.5
|
%
|
|
|
14.0
|
%
|
|
|
12.4
|
%
|
|
|
17.7
|
%
|
|
|
17.9
|
%
|
|
|
9.6
|
%
|
| | | | | | | | | | | | | | | | | | | | |
|
Average annual operating return on equity for the period
January 1, 2005 through June 30, 2013 | | | 12.9% | | | | | | | | | | | | | | | | | | | |
|
|
RECONCILIATION OF PRE-TAX UNDERWRITING GAIN EXCLUDING CERTAIN ITEMS
TO NET INCOME
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 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
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
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
|
|
| |
| |
| |
| |
| | Three Months Ended | | Six Months Ended |
| | June 30, | | June 30, |
($ in millions, after-tax except as noted)
|
| 2013 |
| 2012 |
| 2013 |
| 2012 |
| | | | | | | |
|
| | | | | | | | |
Pre-tax underwriting gain excluding the impact of catastrophes and
net favorable prior year loss reserve development
| |
$
|
429
| |
|
$
|
266
| | |
$
|
899
| | |
$
|
523
| |
Pre-tax impact of catastrophes
| | |
(340
|
)
| | |
(549
|
)
| | |
(439
|
)
| | |
(717
|
)
|
Pre-tax impact of net favorable prior year loss reserve development
|
|
|
192
|
|
|
|
221
|
|
|
|
423
|
|
|
|
525
|
|
Pre-tax underwriting gain (loss)
| | |
281
| | | |
(62
|
)
| | |
883
| | | |
331
| |
Income tax expense (benefit) on underwriting results
|
|
|
46
|
|
|
|
(15
|
)
|
|
|
263
|
|
|
|
130
|
|
Underwriting gain (loss)
| | |
235
| | | |
(47
|
)
| | |
620
| | | |
201
| |
Net investment income
| | |
551
| | | |
589
| | | |
1,093
| | | |
1,182
| |
Other, including interest expense
|
|
|
30
|
|
|
|
(47
|
)
|
|
|
(10
|
)
|
|
|
(87
|
)
|
Operating income | | | 816 | | | | 495 | | | | 1,703 | | | | 1,296 | |
Net realized investment gains
|
|
|
109
|
|
|
|
4
|
|
|
|
118
|
|
|
|
9
|
|
Net income |
| $ | 925 |
|
| $ | 499 |
|
| $ | 1,821 |
|
| $ | 1,305 |
|
|
|
GAAP COMBINED RATIO AND ADJUSTMENTS FOR UNDERLYING GAAP COMBINED RATIO
GAAP combined ratio is the sum of the loss and loss adjustment
expense ratio (loss and LAE ratio) and the underwriting expense ratio.
For GAAP, the loss and LAE ratio is the ratio of incurred losses and
loss adjustment expenses reduced by an allocation of fee income to net
earned premiums. The underwriting expense ratio is the ratio of
underwriting expenses incurred reduced by an allocation of fee income,
and billing and policy fees and other to net earned premiums. A GAAP
combined ratio under 100% generally indicates an underwriting profit. A
GAAP combined ratio over 100% generally indicates an underwriting loss.
The GAAP combined ratio is an operating statistic that includes GAAP
measures in the numerator and the denominator.
Underlying GAAP combined ratio represents the GAAP combined ratio
excluding the impact of net prior year reserve development and
catastrophes. In the opinion of the company’s management, this measure
is meaningful to users of the financial statements to understand the
company’s periodic underwriting profitability and the variability of
underwriting profitability caused by the unpredictable nature of
catastrophes and loss reserve development.
Calculation of the GAAP Combined Ratio
|
|
| |
| |
| | Three Months Ended | | Six Months Ended |
| | June 30, |
| June 30, |
($ in millions, pre-tax)
|
| 2013 |
| 2012 |
| 2013 |
| 2012 |
| | |
| | | |
| |
Loss and loss adjustment expense ratio | | | | | | | | |
Claims and claim adjustment expenses
| |
$
|
3,530
| | |
$
|
3,786
| | |
$
|
6,683
| | |
$
|
7,150
| |
Less:
| | | | | | | | |
Policyholder dividends
| | |
13
| | | |
11
| | | |
23
| | | |
23
| |
Allocated fee income
|
|
|
27
|
|
|
|
11
|
|
|
|
69
|
|
|
|
46
|
|
Loss ratio numerator |
| $ | 3,490 |
|
| $ | 3,764 |
|
| $ | 6,591 |
|
| $ | 7,081 |
|
| | | | | | | |
|
Underwriting expense ratio | | | | | | | | |
Amortization of deferred acquisition costs
| |
$
|
950
| | |
$
|
976
| | |
$
|
1,898
| | |
$
|
1,947
| |
General and administrative expenses (G&A)
| | |
931
| | | |
893
| | | |
1,846
| | | |
1,777
| |
Less:
| | | | | | | | |
G&A included in Interest Expense and Other
| | |
7
| | | |
5
| | | |
11
| | | |
12
| |
Allocated fee income
| | |
55
| | | |
48
| | | |
110
| | | |
95
| |
Billing and policy fees and other
|
|
|
25
|
|
|
|
25
|
|
|
|
49
|
|
|
|
52
|
|
Expense ratio numerator |
| $ | 1,794 |
|
| $ | 1,791 |
|
| $ | 3,574 |
|
| $ | 3,565 |
|
|
|
|
|
|
|
|
|
|
Earned premium |
| $ | 5,603 |
|
| $ | 5,529 |
|
| $ | 11,120 |
|
| $ | 11,052 |
|
| | | | | | | |
|
GAAP combined ratio 1 | | | | | | | | |
Loss and loss adjustment expense ratio
| | |
62.3
|
%
| | |
68.1
|
%
| | |
59.3
|
%
| | |
64.1
|
%
|
Underwriting expense ratio
|
|
|
32.0
|
%
|
|
|
32.4
|
%
|
|
|
32.1
|
%
|
|
|
32.2
|
%
|
Combined ratio |
|
| 94.3 | % |
|
| 100.5 | % |
|
| 91.4 | % |
|
| 96.3 | % |
1 For purposes of computing GAAP ratios, billing and
policy fees and other (which are a component of other revenues)
are allocated as a reduction of underwriting expenses. In
addition, fee income is allocated as a reduction of losses and
loss adjustment expenses and underwriting expenses.
|
|
| | | | | |
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 Financial, Professional & International (FP&II) segment.
Reconciliation of the Impact of Changes in Foreign Exchange Rates on
International Net Written Premiums to International Net Written Premiums
|
|
|
| Three Months Ended |
| Six Months Ended |
| | June 30, | | June 30, |
($ in millions)
|
| 2013 |
| 2012 |
| Change |
| 2013 |
| 2012 |
| Change |
| | |
| | |
| | | |
| | |
| |
Net written premiums - holding foreign exchange rates constant
| |
$
|
322
| | |
$
|
316
| | |
2
|
%
| |
$
|
575
| | |
$
|
563
| | |
2
|
%
|
Impact of changes in foreign exchange rates
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
Net written premiums
|
|
$
|
318
|
|
|
$
|
316
|
|
|
1
|
%
|
|
$
|
570
|
|
|
$
|
563
|
|
|
1
|
%
|
|
|
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)
|
| 2013 |
| 2012 |
| Change |
| 2013 |
| 2012 |
| Change |
| | |
| | |
| | | |
| | |
| |
Net written premiums - holding foreign exchange rates constant
| |
$
|
853
| | |
$
|
840
| | |
2
|
%
| |
$
|
1,501
| | |
$
|
1,444
| | |
4
|
%
|
Impact of changes in foreign exchange rates
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
Net written premiums
|
|
$
|
849
|
|
|
$
|
840
|
|
|
1
|
%
|
|
$
|
1,496
|
|
|
$
|
1,444
|
|
|
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 Shareholders’ Equity to
Shareholders’ Equity
|
|
|
| |
| | | As of |
($ in millions, except per share amounts)
| | | June 30, |
|
| December 31, |
|
| June 30, |
|
| 2013 |
|
| 2012 |
|
| 2012 |
| | | | | | | | |
|
Tangible shareholders' equity | | | $ | 19,523 | | | | $ | 18,604 | | | | $ | 18,346 | |
Goodwill
| | | |
3,365
| | | | |
3,365
| | | | |
3,365
| |
Other intangible assets
| | | |
358
| | | | |
381
| | | | |
405
| |
Less: Impact of deferred tax on other intangible assets
|
|
|
|
(48
|
)
|
|
|
|
(48
|
)
|
|
|
|
(47
|
)
|
Adjusted shareholders' equity | | | | 23,198 | | | | | 22,302 | | | | | 22,069 | |
Net unrealized investment gains, net of tax
|
|
|
|
1,692
|
|
|
|
|
3,103
|
|
|
|
|
2,980
|
|
Shareholders' equity |
|
| $ | 24,890 |
|
|
| $ | 25,405 |
|
|
| $ | 25,049 |
|
| | | | | | | | |
|
Common shares outstanding
|
|
|
|
373.5
|
|
|
|
|
377.4
|
|
|
|
|
386.0
|
|
| | | | | | | | |
|
Tangible book value per share
| | |
$
|
52.28
| | | |
$
|
49.29
| | | |
$
|
47.53
| |
Adjusted book value per share
| | | |
62.12
| | | | |
59.09
| | | | |
57.18
| |
Book value per share
|
|
|
|
66.65
|
|
|
|
|
67.31
|
|
|
|
|
64.90
|
|
|
|
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 Capitalization
|
|
| |
| |
| |
| | As of |
| | June 30, | | December 31, | | June 30, |
($ in millions)
|
| 2013 |
| 2012 |
| 2012 |
| | | | | |
|
Debt
| |
$
|
5,852
| | |
$
|
6,350
| | |
$
|
6,349
| |
Shareholders' equity
|
|
|
24,890
|
|
|
|
25,405
|
|
|
|
25,049
|
|
Total capitalization |
|
| 30,742 |
|
|
| 31,755 |
|
|
| 31,398 |
|
Net unrealized investment gains, net of tax
|
|
|
1,692
|
|
|
|
3,103
|
|
|
|
2,980
|
|
Total capitalization excluding net unrealized gain on
investments, net of tax |
| $ | 29,050 |
|
| $ | 28,652 |
|
| $ | 28,418 |
|
| | | | | |
|
Debt-to-capital ratio
| | |
19.0
|
%
| | |
20.0
|
%
| | |
20.2
|
%
|
Debt-to-capital ratio excluding net unrealized investment gains, net
of tax
|
|
|
20.1
|
%
|
|
|
22.2
|
%
|
|
|
22.3
|
%
|
|
|
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 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 company’s most recent annual report on Form 10-K filed
with the Securities and Exchange Commission.
The Travelers Companies, Inc.
Media:
Patrick
Linehan, 917-778-6267
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.