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EX-99.1 - EX-99.1 - TRAVELERS COMPANIES, INC.a16-15017_1ex99d1.htm

Exhibit 99.2

 

The Travelers Companies, Inc.

Financial Supplement - Second Quarter 2016

 

 

Page Number

 

 

Consolidated Results

 

Financial Highlights

1

Reconciliation to Net Income and Earnings Per Share

2

Statement of Income

3

Net Income by Major Component and Combined Ratio

4

Operating Income

5

Selected Statistics - Property and Casualty Operations

6

Written and Earned Premiums - Property and Casualty Operations

7

 

 

Business and International Insurance

 

Operating Income

8

Operating Income by Major Component and Combined Ratio

9

Selected Statistics

10

Net Written Premiums

11

 

 

Bond & Specialty Insurance

 

Operating Income

12

Operating Income by Major Component and Combined Ratio

13

Selected Statistics

14

Net Written Premiums

15

 

 

Personal Insurance

 

Operating Income

16

Operating Income by Major Component and Combined Ratio

17

Selected Statistics

18

Selected Statistics - Agency Automobile

19

Selected Statistics - Agency Homeowners and Other

20

Selected Statistics - Direct to Consumer

21

 

 

Supplemental Detail

 

Interest Expense and Other

22

Consolidated Balance Sheet

23

Investment Portfolio

24

Investment Portfolio - Fixed Maturities Data

25

Investment Income

26

Net Realized and Unrealized Investment Gains (Losses)

27

Reinsurance Recoverables

28

Net Reserves for Losses and Loss Adjustment Expense

29

Asbestos and Environmental Reserves

30

Capitalization

31

Statutory Capital and Surplus to GAAP Shareholders’ Equity Reconciliation

32

Statement of Cash Flows

33

Statement of Cash Flows (continued)

34

 

 

Glossary of Financial Measures and Description of Reportable Business Segments

35

 

The information included in the Financial Supplement is unaudited.  This document should be read in conjunction with the Company’s Form 10-Q which will be filed with the Securities and Exchange Commission.

 

Index

 



 

The Travelers Companies, Inc.

Financial Highlights

($ and shares in millions, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

833

 

$

812

 

$

928

 

$

866

 

$

691

 

$

664

 

$

1,645

 

$

1,355

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.58

 

$

2.56

 

$

3.00

 

$

2.87

 

$

2.33

 

$

2.27

 

$

5.14

 

$

4.60

 

Diluted

 

$

2.55

 

$

2.53

 

$

2.97

 

$

2.83

 

$

2.30

 

$

2.24

 

$

5.08

 

$

4.55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

827

 

$

806

 

$

918

 

$

886

 

$

698

 

$

649

 

$

1,633

 

$

1,347

 

Operating income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.56

 

$

2.54

 

$

2.96

 

$

2.94

 

$

2.35

 

$

2.22

 

$

5.10

 

$

4.58

 

Diluted

 

$

2.53

 

$

2.52

 

$

2.93

 

$

2.90

 

$

2.33

 

$

2.20

 

$

5.05

 

$

4.52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on equity

 

13.4

%

13.3

%

15.4

%

14.5

%

11.6

%

10.9

%

13.3

%

11.2

%

Operating return on equity

 

14.5

%

14.2

%

16.2

%

15.8

%

12.5

%

11.6

%

14.3

%

12.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets, at period end

 

$

102,691

 

$

101,664

 

$

102,110

 

$

100,184

 

$

101,680

 

$

102,446

 

$

101,664

 

$

102,446

 

Total equity, at period end

 

$

24,847

 

$

24,121

 

$

24,033

 

$

23,598

 

$

24,166

 

$

24,714

 

$

24,121

 

$

24,714

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share, at period end

 

$

77.96

 

$

77.51

 

$

79.00

 

$

79.75

 

$

82.65

 

$

85.73

 

$

77.51

 

$

85.73

 

Less: Net unrealized investment gains, net of tax

 

6.51

 

4.42

 

4.65

 

4.36

 

6.02

 

8.12

 

4.42

 

8.12

 

Adjusted book value per share, at period end

 

$

71.45

 

$

73.09

 

$

74.35

 

$

75.39

 

$

76.63

 

$

77.61

 

$

73.09

 

$

77.61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding (basic)

 

320.8

 

314.8

 

307.6

 

299.7

 

294.2

 

290.1

 

317.7

 

292.1

 

Weighted average number of common shares outstanding and common stock equivalents (diluted)

 

324.5

 

318.0

 

311.0

 

303.3

 

297.9

 

293.6

 

321.2

 

295.6

 

Common shares outstanding at period end

 

318.7

 

311.2

 

304.2

 

295.9

 

292.4

 

288.3

 

311.2

 

288.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock dividends declared

 

$

178

 

$

194

 

$

189

 

$

183

 

$

181

 

$

197

 

$

372

 

$

378

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock repurchased:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Under Board of Directors authorization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

5.6

 

7.9

 

7.3

 

8.8

 

5.1

 

4.9

 

13.5

 

10.0

 

Cost

 

$

600

 

$

800

 

$

750

 

$

1,000

 

$

550

 

$

550

 

$

1,400

 

$

1,100

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

0.7

 

 

 

 

0.5

 

 

0.7

 

0.5

 

Cost

 

$

72

 

$

1

 

$

 

$

1

 

$

59

 

$

 

$

73

 

$

59

 

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

1



 

The Travelers Companies, Inc.

Reconciliation to Net Income and Earnings Per Share

($ and shares in millions, except earnings per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

827

 

$

806

 

$

918

 

$

886

 

$

698

 

$

649

 

$

1,633

 

$

1,347

 

Net realized investment gains (losses), after-tax

 

6

 

6

 

10

 

(20

)

(7

)

15

 

12

 

8

 

Net income

 

$

833

 

$

812

 

$

928

 

$

866

 

$

691

 

$

664

 

$

1,645

 

$

1,355

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

2.56

 

$

2.54

 

$

2.96

 

$

2.94

 

$

2.35

 

$

2.22

 

$

5.10

 

$

4.58

 

Net realized investment gains (losses), after-tax

 

0.02

 

0.02

 

0.04

 

(0.07

)

(0.02

)

0.05

 

0.04

 

0.02

 

Net income

 

$

2.58

 

$

2.56

 

$

3.00

 

$

2.87

 

$

2.33

 

$

2.27

 

$

5.14

 

$

4.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

2.53

 

$

2.52

 

$

2.93

 

$

2.90

 

$

2.33

 

$

2.20

 

$

5.05

 

$

4.52

 

Net realized investment gains (losses), after-tax

 

0.02

 

0.01

 

0.04

 

(0.07

)

(0.03

)

0.04

 

0.03

 

0.03

 

Net income

 

$

2.55

 

$

2.53

 

$

2.97

 

$

2.83

 

$

2.30

 

$

2.24

 

$

5.08

 

$

4.55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments to net income and weighted average shares for net income EPS calculations: (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

Basic and Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income, as reported

 

$

833

 

$

812

 

$

928

 

$

866

 

$

691

 

$

664

 

$

1,645

 

$

1,355

 

Participating share-based awards - allocated income

 

(6

)

(6

)

(6

)

(6

)

(5

)

(5

)

(12

)

(10

)

Net income available to common shareholders - basic and diluted

 

$

827

 

$

806

 

$

922

 

$

860

 

$

686

 

$

659

 

$

1,633

 

$

1,345

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

320.8

 

314.8

 

307.6

 

299.7

 

294.2

 

290.1

 

317.7

 

292.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

320.8

 

314.8

 

307.6

 

299.7

 

294.2

 

290.1

 

317.7

 

292.1

 

Weighted average effects of dilutive securities - stock options and performance shares

 

3.7

 

3.2

 

3.4

 

3.6

 

3.7

 

3.5

 

3.5

 

3.5

 

Diluted weighted average shares outstanding

 

324.5

 

318.0

 

311.0

 

303.3

 

297.9

 

293.6

 

321.2

 

295.6

 

 


(1)  Adjustments to net income and weighted average shares for net income EPS calculations can generally be used for the operating income EPS calculations.

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

2



 

The Travelers Companies, Inc.

Statement of Income - Consolidated

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premiums

 

$

5,888

 

$

5,931

 

$

6,032

 

$

6,023

 

$

5,981

 

$

6,067

 

$

11,819

 

$

12,048

 

Net investment income

 

592

 

632

 

614

 

541

 

544

 

549

 

1,224

 

1,093

 

Fee income

 

114

 

115

 

116

 

115

 

117

 

119

 

229

 

236

 

Net realized investment gains (losses)

 

10

 

10

 

15

 

(32

)

(9

)

19

 

20

 

10

 

Other revenues

 

25

 

22

 

21

 

31

 

53

 

31

 

47

 

84

 

Total revenues

 

6,629

 

6,710

 

6,798

 

6,678

 

6,686

 

6,785

 

13,339

 

13,471

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Claims and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Claims and claim adjustment expenses

 

3,431

 

3,547

 

3,382

 

3,363

 

3,712

 

3,762

 

6,978

 

7,474

 

Amortization of deferred acquisition costs

 

963

 

963

 

987

 

972

 

971

 

989

 

1,926

 

1,960

 

General and administrative expenses

 

995

 

1,032

 

1,028

 

1,039

 

995

 

1,054

 

2,027

 

2,049

 

Interest expense

 

92

 

92

 

94

 

95

 

91

 

93

 

184

 

184

 

Total claims and expenses

 

5,481

 

5,634

 

5,491

 

5,469

 

5,769

 

5,898

 

11,115

 

11,667

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

1,148

 

1,076

 

1,307

 

1,209

 

917

 

887

 

2,224

 

1,804

 

Income tax expense

 

315

 

264

 

379

 

343

 

226

 

223

 

579

 

449

 

Net income

 

$

833

 

$

812

 

$

928

 

$

866

 

$

691

 

$

664

 

$

1,645

 

$

1,355

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other-than-temporary impairments (OTTI)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total OTTI losses

 

$

(4

)

$

(8

)

$

(14

)

$

(28

)

$

(28

)

$

(4

)

$

(12

)

$

(32

)

OTTI losses recognized in net realized investment gains (losses)

 

$

(3

)

$

(6

)

$

(14

)

$

(29

)

$

(18

)

$

(4

)

$

(9

)

$

(22

)

OTTI gains (losses) recognized in other comprehensive income

 

$

(1

)

$

(2

)

$

 

$

1

 

$

(10

)

$

 

$

(3

)

$

(10

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective tax rate on net investment income

 

19.3

%

20.5

%

21.1

%

18.7

%

19.3

%

19.4

%

19.9

%

19.3

%

Net investment income (after-tax)

 

$

478

 

$

503

 

$

484

 

$

440

 

$

439

 

$

442

 

$

981

 

$

881

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Catastrophes, net of reinsurance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax

 

$

162

 

$

221

 

$

85

 

$

46

 

$

318

 

$

333

 

$

383

 

$

651

 

After-tax

 

$

106

 

$

143

 

$

56

 

$

33

 

$

207

 

$

222

 

$

249

 

$

429

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior year reserve development - favorable (unfavorable)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax

 

$

243

 

$

207

 

$

199

 

$

292

 

$

180

 

$

288

 

$

450

 

$

468

 

After-tax

 

$

158

 

$

133

 

$

132

 

$

194

 

$

119

 

$

192

 

$

291

 

$

311

 

 

Certain prior period amounts have been restated to conform to the 2016 presentation.

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

3



 

The Travelers Companies, Inc.

Net Income by Major Component and Combined Ratio - Consolidated

($ in millions, net of tax)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Underwriting gain

 

$

395

 

$

353

 

$

486

 

$

491

 

$

289

 

$

248

 

$

748

 

$

537

 

Net investment income

 

478

 

503

 

484

 

440

 

439

 

442

 

981

 

881

 

Other income (expense), including interest expense

 

(46

)

(50

)

(52

)

(45

)

(30

)

(41

)

(96

)

(71

)

Operating income

 

827

 

806

 

918

 

886

 

698

 

649

 

1,633

 

1,347

 

Net realized investment gains (losses)

 

6

 

6

 

10

 

(20

)

(7

)

15

 

12

 

8

 

Net income

 

$

833

 

$

812

 

$

928

 

$

866

 

$

691

 

$

664

 

$

1,645

 

$

1,355

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Combined ratio (1) (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss and loss adjustment expense ratio

 

57.4

%

58.9

%

55.2

%

55.0

%

61.1

%

61.1

%

58.2

%

61.1

%

Underwriting expense ratio

 

31.5

%

31.9

%

31.7

%

31.6

%

31.2

%

32.0

%

31.7

%

31.6

%

Combined ratio

 

88.9

%

90.8

%

86.9

%

86.6

%

92.3

%

93.1

%

89.9

%

92.7

%

Combined ratio excluding incremental impact of direct to consumer initiative

 

88.5

%

90.3

%

86.4

%

86.1

%

92.0

%

92.7

%

89.4

%

92.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of catastrophes on combined ratio

 

2.7

%

3.7

%

1.4

%

0.8

%

5.3

%

5.5

%

3.3

%

5.4

%

Impact of prior year reserve development on combined ratio

 

-4.1

%

-3.5

%

-3.3

%

-4.9

%

-3.0

%

-4.7

%

-3.8

%

-3.9

%

 


(1)  Before policyholder dividends.

(2)  Billing and policy fees and other, which are a component of other revenues, are allocated as a reduction of underwriting expenses.  In addition, fee income is allocated as a reduction of losses and loss adjustment expenses and underwriting expenses as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

Billing and policy fees and other

 

$

23

 

$

22

 

$

20

 

$

22

 

$

22

 

$

22

 

$

45

 

$

44

 

Fee income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss and loss adjustment expenses

 

$

42

 

$

43

 

$

44

 

$

41

 

$

44

 

$

45

 

$

85

 

$

89

 

Underwriting expenses

 

72

 

72

 

72

 

74

 

73

 

74

 

144

 

147

 

Total fee income

 

$

114

 

$

115

 

$

116

 

$

115

 

$

117

 

$

119

 

$

229

 

$

236

 

 

Certain prior period amounts have been restated to conform to the 2016 presentation.

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

4



 

The Travelers Companies, Inc.

Operating Income - Consolidated

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premiums

 

$

5,888

 

$

5,931

 

$

6,032

 

$

6,023

 

$

5,981

 

$

6,067

 

$

11,819

 

$

12,048

 

Net investment income

 

592

 

632

 

614

 

541

 

544

 

549

 

1,224

 

1,093

 

Fee income

 

114

 

115

 

116

 

115

 

117

 

119

 

229

 

236

 

Other revenues

 

25

 

22

 

21

 

31

 

53

 

31

 

47

 

84

 

Total revenues

 

6,619

 

6,700

 

6,783

 

6,710

 

6,695

 

6,766

 

13,319

 

13,461

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Claims and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Claims and claim adjustment expenses

 

3,431

 

3,547

 

3,382

 

3,363

 

3,712

 

3,762

 

6,978

 

7,474

 

Amortization of deferred acquisition costs

 

963

 

963

 

987

 

972

 

971

 

989

 

1,926

 

1,960

 

General and administrative expenses

 

995

 

1,032

 

1,028

 

1,039

 

995

 

1,054

 

2,027

 

2,049

 

Interest expense

 

92

 

92

 

94

 

95

 

91

 

93

 

184

 

184

 

Total claims and expenses

 

5,481

 

5,634

 

5,491

 

5,469

 

5,769

 

5,898

 

11,115

 

11,667

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income before income taxes

 

1,138

 

1,066

 

1,292

 

1,241

 

926

 

868

 

2,204

 

1,794

 

Income tax expense

 

311

 

260

 

374

 

355

 

228

 

219

 

571

 

447

 

Operating income

 

$

827

 

$

806

 

$

918

 

$

886

 

$

698

 

$

649

 

$

1,633

 

$

1,347

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective tax rate on net investment income

 

19.3

%

20.5

%

21.1

%

18.7

%

19.3

%

19.4

%

19.9

%

19.3

%

Net investment income (after-tax)

 

$

478

 

$

503

 

$

484

 

$

440

 

$

439

 

$

442

 

$

981

 

$

881

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Catastrophes, net of reinsurance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax

 

$

162

 

$

221

 

$

85

 

$

46

 

$

318

 

$

333

 

$

383

 

$

651

 

After-tax

 

$

106

 

$

143

 

$

56

 

$

33

 

$

207

 

$

222

 

$

249

 

$

429

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior year reserve development - favorable (unfavorable)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax

 

$

243

 

$

207

 

$

199

 

$

292

 

$

180

 

$

288

 

$

450

 

$

468

 

After-tax

 

$

158

 

$

133

 

$

132

 

$

194

 

$

119

 

$

192

 

$

291

 

$

311

 

 

Certain prior period amounts have been restated to conform to the 2016 presentation.

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

5


 


 

The Travelers Companies, Inc.

Selected Statistics - Property and Casualty Operations

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

Statutory underwriting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross written premiums

 

$

6,474

 

$

6,542

 

$

6,618

 

$

6,148

 

$

6,712

 

$

6,688

 

$

13,016

 

$

13,400

 

Net written premiums

 

$

5,897

 

$

6,169

 

$

6,191

 

$

5,864

 

$

6,166

 

$

6,345

 

$

12,066

 

$

12,511

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earned premiums

 

$

5,888

 

$

5,931

 

$

6,032

 

$

6,023

 

$

5,981

 

$

6,067

 

$

11,819

 

$

12,048

 

Losses and loss adjustment expenses

 

3,379

 

3,495

 

3,333

 

3,307

 

3,663

 

3,709

 

6,874

 

7,372

 

Underwriting expenses

 

1,890

 

1,949

 

1,947

 

1,867

 

1,932

 

2,009

 

3,839

 

3,941

 

Statutory underwriting gain

 

619

 

487

 

752

 

849

 

386

 

349

 

1,106

 

735

 

Policyholder dividends

 

9

 

10

 

10

 

12

 

10

 

11

 

19

 

21

 

Statutory underwriting gain after policyholder dividends

 

$

610

 

$

477

 

$

742

 

$

837

 

$

376

 

$

338

 

$

1,087

 

$

714

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other statutory statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reserves for losses and loss adjustment expenses

 

$

40,296

 

$

40,273

 

$

40,091

 

$

39,782

 

$

40,224

 

$

39,797

 

$

40,273

 

$

39,797

 

Increase (decrease) in reserves

 

$

(711

)

$

(23

)

$

(182

)

$

(309

)

$

442

 

$

(427

)

$

(734

)

$

15

 

Statutory capital and surplus

 

$

20,944

 

$

20,851

 

$

20,822

 

$

20,567

 

$

20,569

 

$

20,634

 

$

20,851

 

$

20,634

 

Net written premiums/surplus (1)

 

1.14:1

 

1.15:1

 

1.16:1

 

1.17:1

 

1.19:1

 

1.19:1

 

1.15:1

 

1.19:1

 

 


(1)  Based on 12 months of rolling net written premiums.

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

6



 

The Travelers Companies, Inc.

Written and Earned Premiums - Property and Casualty Operations

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

Written premiums

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

$

6,474

 

$

6,542

 

$

6,618

 

$

6,148

 

$

6,712

 

$

6,688

 

$

13,016

 

$

13,400

 

Ceded

 

(577

)

(373

)

(427

)

(284

)

(546

)

(343

)

(950

)

(889

)

Net

 

$

5,897

 

$

6,169

 

$

6,191

 

$

5,864

 

$

6,166

 

$

6,345

 

$

12,066

 

$

12,511

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earned premiums

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

$

6,308

 

$

6,356

 

$

6,447

 

$

6,443

 

$

6,381

 

$

6,487

 

$

12,664

 

$

12,868

 

Ceded

 

(420

)

(425

)

(415

)

(420

)

(400

)

(420

)

(845

)

(820

)

Net

 

$

5,888

 

$

5,931

 

$

6,032

 

$

6,023

 

$

5,981

 

$

6,067

 

$

11,819

 

$

12,048

 

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

7


 


 

The Travelers Companies, Inc.

Operating Income - Business and International Insurance

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premiums

 

$

3,620

 

$

3,609

 

$

3,653

 

$

3,639

 

$

3,599

 

$

3,631

 

$

7,229

 

$

7,230

 

Net investment income

 

454

 

487

 

471

 

412

 

415

 

420

 

941

 

835

 

Fee income

 

111

 

111

 

112

 

111

 

114

 

115

 

222

 

229

 

Other revenues

 

8

 

5

 

5

 

5

 

33

 

8

 

13

 

41

 

Total revenues

 

4,193

 

4,212

 

4,241

 

4,167

 

4,161

 

4,174

 

8,405

 

8,335

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Claims and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Claims and claim adjustment expenses

 

2,265

 

2,238

 

2,229

 

2,127

 

2,299

 

2,385

 

4,503

 

4,684

 

Amortization of deferred acquisition costs

 

584

 

578

 

589

 

578

 

579

 

588

 

1,162

 

1,167

 

General and administrative expenses

 

654

 

674

 

675

 

683

 

663

 

696

 

1,328

 

1,359

 

Total claims and expenses

 

3,503

 

3,490

 

3,493

 

3,388

 

3,541

 

3,669

 

6,993

 

7,210

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income before income taxes

 

690

 

722

 

748

 

779

 

620

 

505

 

1,412

 

1,125

 

Income tax expense

 

175

 

179

 

202

 

213

 

144

 

112

 

354

 

256

 

Operating income

 

$

515

 

$

543

 

$

546

 

$

566

 

$

476

 

$

393

 

$

1,058

 

$

869

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective tax rate on net investment income

 

19.4

%

20.7

%

21.5

%

18.9

%

19.4

%

19.5

%

20.0

%

19.5

%

Net investment income (after-tax)

 

$

366

 

$

386

 

$

371

 

$

334

 

$

335

 

$

337

 

$

752

 

$

672

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Catastrophes, net of reinsurance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax

 

$

99

 

$

108

 

$

39

 

$

1

 

$

148

 

$

212

 

$

207

 

$

360

 

After-tax

 

$

65

 

$

70

 

$

25

 

$

4

 

$

97

 

$

143

 

$

135

 

$

240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior year reserve development - favorable (unfavorable)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax

 

$

77

 

$

103

 

$

49

 

$

176

 

$

93

 

$

138

 

$

180

 

$

231

 

After-tax

 

$

50

 

$

65

 

$

35

 

$

118

 

$

63

 

$

94

 

$

115

 

$

157

 

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

8



 

The Travelers Companies, Inc.

Operating Income by Major Component and Combined Ratio - Business and International Insurance

($ in millions, net of tax)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Underwriting gain

 

$

142

 

$

155

 

$

172

 

$

227

 

$

121

 

$

48

 

$

297

 

$

169

 

Net investment income

 

366

 

386

 

371

 

334

 

335

 

337

 

752

 

672

 

Other income (expense)

 

7

 

2

 

3

 

5

 

20

 

8

 

9

 

28

 

Operating income

 

$

515

 

$

543

 

$

546

 

$

566

 

$

476

 

$

393

 

$

1,058

 

$

869

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Combined ratio (1) (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss and loss adjustment expense ratio

 

61.2

%

60.6

%

59.6

%

57.0

%

62.4

%

64.2

%

60.9

%

63.3

%

Underwriting expense ratio

 

32.1

%

32.6

%

32.6

%

32.6

%

32.4

%

33.3

%

32.4

%

32.9

%

Combined ratio

 

93.3

%

93.2

%

92.2

%

89.6

%

94.8

%

97.5

%

93.3

%

96.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of catastrophes on combined ratio

 

2.7

%

2.9

%

1.1

%

0.0

%

4.1

%

5.8

%

2.9

%

5.0

%

Impact of prior year reserve development on combined ratio

 

-2.1

%

-2.8

%

-1.4

%

-4.8

%

-2.6

%

-3.8

%

-2.5

%

-3.2

%

 


(1)  Before policyholder dividends.

(2)  Billing and policy fees and other, which are a component of other revenues, are allocated as a reduction of underwriting expenses.  In addition, fee income is allocated as a reduction of losses and loss adjustment expenses and underwriting expenses as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

Billing and policy fees and other

 

$

7

 

$

6

 

$

4

 

$

6

 

$

6

 

$

6

 

$

13

 

$

12

 

 

Fee income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss and loss adjustment expenses

 

$

42

 

$

43

 

$

44

 

$

41

 

$

44

 

$

45

 

$

85

 

$

89

 

 

Underwriting expenses

 

69

 

68

 

68

 

70

 

70

 

70

 

137

 

140

 

 

Total fee income

 

$

111

 

$

111

 

$

112

 

$

111

 

$

114

 

$

115

 

$

222

 

$

229

 

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

9



 

The Travelers Companies, Inc.

Selected Statistics - Business and International Insurance

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statutory underwriting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross written premiums

 

$

4,276

 

$

4,027

 

$

3,981

 

$

3,783

 

$

4,366

 

$

3,997

 

$

8,303

 

$

8,363

 

Net written premiums

 

$

3,797

 

$

3,679

 

$

3,590

 

$

3,517

 

$

3,914

 

$

3,680

 

$

7,476

 

$

7,594

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earned premiums

 

$

3,620

 

$

3,609

 

$

3,653

 

$

3,639

 

$

3,599

 

$

3,631

 

$

7,229

 

$

7,230

 

Losses and loss adjustment expenses

 

2,216

 

2,187

 

2,182

 

2,073

 

2,252

 

2,334

 

4,403

 

4,586

 

Underwriting expenses

 

1,206

 

1,192

 

1,178

 

1,151

 

1,236

 

1,231

 

2,398

 

2,467

 

Statutory underwriting gain

 

198

 

230

 

293

 

415

 

111

 

66

 

428

 

177

 

Policyholder dividends

 

7

 

8

 

7

 

9

 

8

 

9

 

15

 

17

 

Statutory underwriting gain after policyholder dividends

 

$

191

 

$

222

 

$

286

 

$

406

 

$

103

 

$

57

 

$

413

 

$

160

 

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

10



 

The Travelers Companies, Inc.

Net Written Premiums - Business and International Insurance

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net written premiums by market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Select Accounts

 

$

722

 

$

709

 

$

654

 

$

631

 

$

724

 

$

709

 

$

1,431

 

$

1,433

 

Middle Market

 

1,726

 

1,451

 

1,597

 

1,528

 

1,829

 

1,494

 

3,177

 

3,323

 

National Accounts

 

299

 

228

 

254

 

267

 

320

 

234

 

527

 

554

 

First Party

 

340

 

452

 

411

 

361

 

358

 

466

 

792

 

824

 

Specialized Distribution

 

268

 

300

 

277

 

266

 

286

 

302

 

568

 

588

 

Total Domestic

 

3,355

 

3,140

 

3,193

 

3,053

 

3,517

 

3,205

 

6,495

 

6,722

 

International

 

442

 

539

 

397

 

464

 

397

 

475

 

981

 

872

 

Total

 

$

3,797

 

$

3,679

 

$

3,590

 

$

3,517

 

$

3,914

 

$

3,680

 

$

7,476

 

$

7,594

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net written premiums by product line

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Workers’ compensation

 

$

1,142

 

$

906

 

$

957

 

$

910

 

$

1,198

 

$

916

 

$

2,048

 

$

2,114

 

Commercial automobile

 

502

 

487

 

494

 

475

 

544

 

517

 

989

 

1,061

 

Commercial property

 

391

 

507

 

451

 

411

 

406

 

520

 

898

 

926

 

General liability

 

491

 

469

 

489

 

475

 

537

 

471

 

960

 

1,008

 

Commercial multi-peril

 

822

 

765

 

780

 

779

 

829

 

777

 

1,587

 

1,606

 

International

 

442

 

539

 

397

 

464

 

397

 

475

 

981

 

872

 

Other

 

7

 

6

 

22

 

3

 

3

 

4

 

13

 

7

 

Total

 

$

3,797

 

$

3,679

 

$

3,590

 

$

3,517

 

$

3,914

 

$

3,680

 

$

7,476

 

$

7,594

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

National Accounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions to claim volume under administration (1)

 

$

761

 

$

536

 

$

558

 

$

667

 

$

797

 

$

545

 

$

1,297

 

$

1,342

 

Written fees

 

$

114

 

$

92

 

$

91

 

$

88

 

$

115

 

$

91

 

$

206

 

$

206

 

 

Certain prior period amounts have been restated to conform to the 2016 presentation.

 


(1)  Includes new and renewal business.

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

11


 


 

The Travelers Companies, Inc.

Operating Income - Bond & Specialty Insurance

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premiums

 

$

504

 

$

524

 

$

539

 

$

518

 

$

508

 

$

518

 

$

1,028

 

$

1,026

 

Net investment income

 

56

 

57

 

56

 

54

 

52

 

51

 

113

 

103

 

Other revenues

 

5

 

5

 

4

 

8

 

3

 

6

 

10

 

9

 

Total revenues

 

565

 

586

 

599

 

580

 

563

 

575

 

1,151

 

1,138

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Claims and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Claims and claim adjustment expenses

 

192

 

192

 

113

 

146

 

164

 

80

 

384

 

244

 

Amortization of deferred acquisition costs

 

94

 

97

 

104

 

98

 

96

 

98

 

191

 

194

 

General and administrative expenses

 

100

 

99

 

93

 

97

 

94

 

96

 

199

 

190

 

Total claims and expenses

 

386

 

388

 

310

 

341

 

354

 

274

 

774

 

628

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income before income taxes

 

179

 

198

 

289

 

239

 

209

 

301

 

377

 

510

 

Income tax expense

 

55

 

47

 

93

 

77

 

65

 

99

 

102

 

164

 

Operating income

 

$

124

 

$

151

 

$

196

 

$

162

 

$

144

 

$

202

 

$

275

 

$

346

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective tax rate on net investment income

 

18.3

%

18.6

%

18.6

%

17.6

%

18.1

%

18.1

%

18.4

%

18.1

%

Net investment income (after-tax)

 

$

46

 

$

47

 

$

45

 

$

44

 

$

42

 

$

42

 

$

93

 

$

84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Catastrophes, net of reinsurance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax

 

$

1

 

$

1

 

$

1

 

$

 

$

1

 

$

3

 

$

2

 

$

4

 

After-tax

 

$

 

$

1

 

$

1

 

$

 

$

 

$

2

 

$

1

 

$

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior year reserve development - favorable (unfavorable)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax

 

$

35

 

$

40

 

$

103

 

$

80

 

$

60

 

$

150

 

$

75

 

$

210

 

After-tax

 

$

23

 

$

26

 

$

67

 

$

52

 

$

39

 

$

98

 

$

49

 

$

137

 

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

12


 


 

The Travelers Companies, Inc.

Operating Income by Major Component and Combined Ratio - Bond & Specialty Insurance

($ in millions, net of tax)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Underwriting gain

 

$

75

 

$

101

 

$

148

 

$

113

 

$

100

 

$

156

 

$

176

 

$

256

 

Net investment income

 

46

 

47

 

45

 

44

 

42

 

42

 

93

 

84

 

Other income (expense)

 

3

 

3

 

3

 

5

 

2

 

4

 

6

 

6

 

Operating income

 

$

124

 

$

151

 

$

196

 

$

162

 

$

144

 

$

202

 

$

275

 

$

346

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Combined ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss and loss adjustment expense ratio

 

37.6

%

36.3

%

20.6

%

27.6

%

31.9

%

15.0

%

36.9

%

23.4

%

Underwriting expense ratio

 

38.5

%

37.4

%

36.5

%

37.5

%

37.4

%

37.4

%

38.0

%

37.4

%

Combined ratio

 

76.1

%

73.7

%

57.1

%

65.1

%

69.3

%

52.4

%

74.9

%

60.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of catastrophes on combined ratio

 

0.1

%

0.3

%

0.1

%

0.0

%

0.1

%

0.6

%

0.2

%

0.4

%

Impact of prior year reserve development on combined ratio

 

-6.9

%

-7.7

%

-19.1

%

-15.6

%

-11.9

%

-29.1

%

-7.3

%

-20.6

%

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

13



 

The Travelers Companies, Inc.

Selected Statistics - Bond & Specialty Insurance

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statutory underwriting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross written premiums

 

$

522

 

$

537

 

$

580

 

$

514

 

$

536

 

$

549

 

$

1,059

 

$

1,085

 

Net written premiums

 

$

478

 

$

534

 

$

565

 

$

504

 

$

492

 

$

536

 

$

1,012

 

$

1,028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earned premiums

 

$

504

 

$

524

 

$

539

 

$

518

 

$

508

 

$

518

 

$

1,028

 

$

1,026

 

Losses and loss adjustment expenses

 

189

 

191

 

111

 

143

 

162

 

78

 

380

 

240

 

Underwriting expenses

 

196

 

199

 

202

 

188

 

195

 

198

 

395

 

393

 

Statutory underwriting gain

 

119

 

134

 

226

 

187

 

151

 

242

 

253

 

393

 

Policyholder dividends

 

2

 

2

 

3

 

3

 

2

 

2

 

4

 

4

 

Statutory underwriting gain after policyholder dividends

 

$

117

 

$

132

 

$

223

 

$

184

 

$

149

 

$

240

 

$

249

 

$

389

 

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

14



 

The Travelers Companies, Inc.

Net Written Premiums - Bond & Specialty Insurance

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net written premiums by product line

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fidelity & surety

 

$

206

 

$

259

 

$

267

 

$

220

 

$

219

 

$

255

 

$

465

 

$

474

 

General liability

 

226

 

236

 

247

 

243

 

227

 

240

 

462

 

467

 

Other

 

46

 

39

 

51

 

41

 

46

 

41

 

85

 

87

 

Total

 

$

478

 

$

534

 

$

565

 

$

504

 

$

492

 

$

536

 

$

1,012

 

$

1,028

 

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

15


 


 

The Travelers Companies, Inc.

Operating Income - Personal Insurance

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premiums

 

$

1,764

 

$

1,798

 

$

1,840

 

$

1,866

 

$

1,874

 

$

1,918

 

$

3,562

 

$

3,792

 

Net investment income

 

82

 

88

 

87

 

75

 

77

 

78

 

170

 

155

 

Fee income

 

3

 

4

 

4

 

4

 

3

 

4

 

7

 

7

 

Other revenues

 

12

 

12

 

9

 

15

 

14

 

14

 

24

 

28

 

Total revenues

 

1,861

 

1,902

 

1,940

 

1,960

 

1,968

 

2,014

 

3,763

 

3,982

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Claims and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Claims and claim adjustment expenses

 

974

 

1,117

 

1,040

 

1,090

 

1,249

 

1,297

 

2,091

 

2,546

 

Amortization of deferred acquisition costs

 

285

 

288

 

294

 

296

 

296

 

303

 

573

 

599

 

General and administrative expenses

 

234

 

252

 

252

 

250

 

230

 

255

 

486

 

485

 

Total claims and expenses

 

1,493

 

1,657

 

1,586

 

1,636

 

1,775

 

1,855

 

3,150

 

3,630

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income before income taxes

 

368

 

245

 

354

 

324

 

193

 

159

 

613

 

352

 

Income tax expense

 

116

 

71

 

113

 

102

 

54

 

43

 

187

 

97

 

Operating income

 

$

252

 

$

174

 

$

241

 

$

222

 

$

139

 

$

116

 

$

426

 

$

255

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective tax rate on net investment income

 

19.6

%

20.8

%

20.9

%

18.5

%

19.5

%

19.7

%

20.2

%

19.6

%

Net investment income (after-tax)

 

$

66

 

$

70

 

$

68

 

$

62

 

$

62

 

$

63

 

$

136

 

$

125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Catastrophes, net of reinsurance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax

 

$

62

 

$

112

 

$

45

 

$

45

 

$

169

 

$

118

 

$

174

 

$

287

 

After-tax

 

$

41

 

$

72

 

$

30

 

$

29

 

$

110

 

$

77

 

$

113

 

$

187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior year reserve development - favorable (unfavorable)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax

 

$

131

 

$

64

 

$

47

 

$

36

 

$

27

 

$

 

$

195

 

$

27

 

After-tax

 

$

85

 

$

42

 

$

30

 

$

24

 

$

17

 

$

 

$

127

 

$

17

 

 

Certain prior period amounts have been restated to conform to the 2016 presentation.

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

16


 


 

The Travelers Companies, Inc.

Operating Income by Major Component and Combined Ratio - Personal Insurance

($ in millions, net of tax)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Underwriting gain

 

$

178

 

$

97

 

$

166

 

$

151

 

$

68

 

$

44

 

$

275

 

$

112

 

Net investment income

 

66

 

70

 

68

 

62

 

62

 

63

 

136

 

125

 

Other income (expense)

 

8

 

7

 

7

 

9

 

9

 

9

 

15

 

18

 

Operating income

 

$

252

 

$

174

 

$

241

 

$

222

 

$

139

 

$

116

 

$

426

 

$

255

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Combined ratio (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss and loss adjustment expense ratio

 

55.2

%

62.2

%

56.5

%

58.5

%

66.7

%

67.6

%

58.7

%

67.1

%

Underwriting expense ratio

 

28.3

%

28.9

%

28.6

%

28.2

%

27.0

%

28.1

%

28.6

%

27.6

%

Combined ratio

 

83.5

%

91.1

%

85.1

%

86.7

%

93.7

%

95.7

%

87.3

%

94.7

%

Combined ratio excluding incremental impact of direct to consumer initiative

 

81.8

%

89.4

%

83.2

%

85.0

%

92.8

%

94.6

%

85.6

%

93.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of catastrophes on combined ratio

 

3.5

%

6.2

%

2.5

%

2.4

%

9.0

%

6.2

%

4.9

%

7.6

%

Impact of prior year reserve development on combined ratio

 

-7.5

%

-3.5

%

-2.6

%

-1.9

%

-1.4

%

0.0

%

-5.5

%

-0.7

%

 


(1)  Billing and policy fees and other, which are a component of other revenues, and fee income are allocated as a reduction of underwriting expenses.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

Billing and policy fees and other

 

$

16

 

$

16

 

$

16

 

$

16

 

$

16

 

$

16

 

$

32

 

$

32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee income

 

$

3

 

$

4

 

$

4

 

$

4

 

$

3

 

$

4

 

$

7

 

$

7

 

 

Certain prior period amounts have been restated to conform to the 2016 presentation.

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

17



 

The Travelers Companies, Inc.

Selected Statistics - Personal Insurance

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statutory underwriting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross written premiums

 

$

1,676

 

$

1,978

 

$

2,057

 

$

1,851

 

$

1,810

 

$

2,142

 

$

3,654

 

$

3,952

 

Net written premiums

 

$

1,622

 

$

1,956

 

$

2,036

 

$

1,843

 

$

1,760

 

$

2,129

 

$

3,578

 

$

3,889

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earned premiums

 

$

1,764

 

$

1,798

 

$

1,840

 

$

1,866

 

$

1,874

 

$

1,918

 

$

3,562

 

$

3,792

 

Losses and loss adjustment expenses

 

974

 

1,117

 

1,040

 

1,091

 

1,249

 

1,297

 

2,091

 

2,546

 

Underwriting expenses

 

488

 

558

 

567

 

528

 

501

 

580

 

1,046

 

1,081

 

Statutory underwriting gain

 

$

302

 

$

123

 

$

233

 

$

247

 

$

124

 

$

41

 

$

425

 

$

165

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Policies in force (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automobile

 

2,125

 

2,166

 

2,224

 

2,283

 

2,346

 

2,417

 

2,166

 

2,417

 

Homeowners and other

 

4,107

 

4,121

 

4,145

 

4,158

 

4,188

 

4,244

 

4,121

 

4,244

 

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

18


 


 

The Travelers Companies, Inc.

Selected Statistics - Personal Insurance (Agency Automobile) (1)

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statutory underwriting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross written premiums

 

$

828

 

$

893

 

$

938

 

$

892

 

$

939

 

$

1,022

 

$

1,721

 

$

1,961

 

Net written premiums

 

$

822

 

$

890

 

$

934

 

$

888

 

$

932

 

$

1,018

 

$

1,712

 

$

1,950

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earned premiums

 

$

802

 

$

827

 

$

854

 

$

878

 

$

891

 

$

925

 

$

1,629

 

$

1,816

 

Losses and loss adjustment expenses

 

516

 

582

 

585

 

640

 

626

 

703

 

1,098

 

1,329

 

Underwriting expenses

 

215

 

230

 

234

 

227

 

234

 

252

 

445

 

486

 

Statutory underwriting gain (loss)

 

$

71

 

$

15

 

$

35

 

$

11

 

$

31

 

$

(30

)

$

86

 

$

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Combined ratio (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss and loss adjustment expense ratio

 

64.4

%

70.4

%

68.5

%

73.0

%

70.3

%

75.9

%

67.4

%

73.2

%

Underwriting expense ratio

 

25.8

%

26.1

%

25.4

%

25.1

%

24.9

%

25.4

%

26.0

%

25.1

%

Combined ratio

 

90.2

%

96.5

%

93.9

%

98.1

%

95.2

%

101.3

%

93.4

%

98.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of catastrophes on combined ratio

 

0.0

%

2.1

%

0.1

%

0.1

%

2.0

%

2.7

%

1.1

%

2.4

%

Impact of prior year reserve development on combined ratio

 

-2.8

%

-2.5

%

-2.4

%

-2.2

%

-0.8

%

0.0

%

-2.7

%

-0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Catastrophe losses, net of reinsurance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax

 

$

 

$

18

 

$

 

$

1

 

$

19

 

$

24

 

$

18

 

$

43

 

After-tax

 

$

 

$

12

 

$

 

$

 

$

12

 

$

16

 

$

12

 

$

28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior year reserve development - favorable (unfavorable)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax

 

$

22

 

$

21

 

$

21

 

$

20

 

$

7

 

$

 

$

43

 

$

7

 

After-tax

 

$

15

 

$

14

 

$

13

 

$

13

 

$

4

 

$

 

$

29

 

$

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Policies in force (in thousands)

 

2,021

 

2,057

 

2,106

 

2,157

 

2,212

 

2,275

 

 

 

 

 

Change from prior year quarter

 

1.8

%

3.8

%

5.8

%

7.9

%

9.5

%

10.6

%

 

 

 

 

Change from prior quarter

 

1.1

%

1.8

%

2.4

%

2.4

%

2.5

%

2.8

%

 

 

 

 

 


(1)  Represents Automobile policies sold through agents, brokers and other intermediaries, and excludes direct to consumer.

 

(2)  Billing and policy fees and other, which are a component of other revenues, and fee income are allocated as a reduction of underwriting expenses.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

Billing and policy fees and other

 

$

9

 

$

8

 

$

8

 

$

9

 

$

9

 

$

9

 

$

17

 

$

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee income

 

$

2

 

$

2

 

$

2

 

$

2

 

$

2

 

$

2

 

$

4

 

$

4

 

 

Certain prior period amounts have been restated to conform to the 2016 presentation.

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

19



 

The Travelers Companies, Inc.

Selected Statistics - Personal Insurance (Agency Homeowners and Other) (1)

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statutory underwriting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross written premiums

 

$

795

 

$

1,029

 

$

1,052

 

$

897

 

$

803

 

$

1,045

 

$

1,824

 

$

1,848

 

Net written premiums

 

$

748

 

$

1,010

 

$

1,035

 

$

894

 

$

760

 

$

1,036

 

$

1,758

 

$

1,796

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earned premiums

 

$

914

 

$

920

 

$

930

 

$

929

 

$

920

 

$

926

 

$

1,834

 

$

1,846

 

Losses and loss adjustment expenses

 

425

 

498

 

414

 

407

 

578

 

541

 

923

 

1,119

 

Underwriting expenses

 

236

 

289

 

291

 

263

 

236

 

297

 

525

 

533

 

Statutory underwriting gain

 

$

253

 

$

133

 

$

225

 

$

259

 

$

106

 

$

88

 

$

386

 

$

194

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Combined ratio (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss and loss adjustment expense ratio

 

46.5

%

54.2

%

44.6

%

43.8

%

62.8

%

58.4

%

50.3

%

60.6

%

Underwriting expense ratio

 

27.9

%

28.8

%

28.8

%

28.8

%

27.6

%

29.5

%

28.4

%

28.6

%

Combined ratio

 

74.4

%

83.0

%

73.4

%

72.6

%

90.4

%

87.9

%

78.7

%

89.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of catastrophes on combined ratio

 

6.7

%

10.1

%

4.7

%

4.7

%

16.0

%

9.7

%

8.4

%

12.9

%

Impact of prior year reserve development on combined ratio

 

-11.8

%

-4.6

%

-2.8

%

-1.6

%

-1.8

%

0.0

%

-8.2

%

-0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Catastrophe losses, net of reinsurance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax

 

$

61

 

$

93

 

$

43

 

$

44

 

$

147

 

$

91

 

$

154

 

$

238

 

After-tax

 

$

40

 

$

60

 

$

28

 

$

29

 

$

96

 

$

59

 

$

100

 

$

155

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior year reserve development - favorable (unfavorable)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax

 

$

108

 

$

43

 

$

26

 

$

15

 

$

17

 

$

 

$

151

 

$

17

 

After-tax

 

$

70

 

$

28

 

$

17

 

$

10

 

$

11

 

$

 

$

98

 

$

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Policies in force (in thousands)

 

4,008

 

4,017

 

4,034

 

4,042

 

4,068

 

4,117

 

 

 

 

 

Change from prior year quarter

 

-3.3

%

-2.3

%

-0.9

%

0.2

%

1.5

%

2.5

%

 

 

 

 

Change from prior quarter

 

-0.6

%

0.2

%

0.4

%

0.2

%

0.6

%

1.2

%

 

 

 

 

 


(1)  Represents Homeowners and Other Lines sold through agents, brokers and other intermediaries, and excludes direct to consumer.

 

(2)  Billing and policy fees and other, which are a component of other revenues, and fee income are allocated as a reduction of underwriting expenses.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

Billing and policy fees and other

 

$

7

 

$

7

 

$

7

 

$

6

 

$

7

 

$

6

 

$

14

 

$

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee income

 

$

1

 

$

2

 

$

2

 

$

2

 

$

2

 

$

2

 

$

3

 

$

4

 

 

Certain prior period amounts have been restated to conform to the 2016 presentation.

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

20



 

The Travelers Companies, Inc.

Selected Statistics - Direct to Consumer (1)

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net written premiums

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automobile

 

$

38

 

$

38

 

$

47

 

$

43

 

$

51

 

$

53

 

$

76

 

$

104

 

Homeowners and other

 

14

 

18

 

20

 

18

 

17

 

22

 

32

 

39

 

Total net written premiums

 

$

52

 

$

56

 

$

67

 

$

61

 

$

68

 

$

75

 

$

108

 

$

143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premiums

 

$

48

 

$

51

 

$

56

 

$

59

 

$

63

 

$

67

 

$

99

 

$

130

 

Other revenues

 

 

1

 

 

1

 

 

1

 

1

 

1

 

Total revenues

 

48

 

52

 

56

 

60

 

63

 

68

 

100

 

131

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Claims and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Claims and claim adjustment expenses

 

32

 

39

 

39

 

45

 

45

 

53

 

71

 

98

 

Amortization of deferred acquisition costs

 

1

 

1

 

2

 

1

 

1

 

2

 

2

 

3

 

General and administrative expenses

 

37

 

38

 

41

 

37

 

30

 

30

 

75

 

60

 

Total claims and expenses

 

70

 

78

 

82

 

83

 

76

 

85

 

148

 

161

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss before income taxes

 

(22

)

(26

)

(26

)

(23

)

(13

)

(17

)

(48

)

(30

)

Income taxes

 

(8

)

(9

)

(9

)

(8

)

(5

)

(5

)

(17

)

(10

)

Operating loss

 

$

(14

)

$

(17

)

$

(17

)

$

(15

)

$

(8

)

$

(12

)

$

(31

)

$

(20

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Policies in force (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automobile

 

104

 

109

 

118

 

126

 

134

 

142

 

 

 

 

 

Homeowners and other

 

99

 

104

 

111

 

116

 

120

 

127

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Catastrophes, net of reinsurance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax

 

$

1

 

$

1

 

$

2

 

$

 

$

3

 

$

3

 

$

2

 

$

6

 

After-tax

 

$

1

 

$

 

$

2

 

$

 

$

2

 

$

2

 

$

1

 

$

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior year reserve development - favorable (unfavorable)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax

 

$

1

 

$

 

$

 

$

1

 

$

3

 

$

 

$

1

 

$

3

 

After-tax

 

$

 

$

 

$

 

$

1

 

$

2

 

$

 

$

 

$

2

 

 


(1)  Represents incremental premiums, other revenues and claims and expenses of Direct to Consumer business activities included in Personal Insurance operating income.

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

21



 

The Travelers Companies, Inc.

Interest Expense and Other

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other revenues

 

$

 

$

 

$

3

 

$

3

 

$

3

 

$

3

 

$

 

$

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Claims and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

92

 

92

 

94

 

95

 

91

 

93

 

184

 

184

 

General and administrative expenses

 

7

 

7

 

8

 

9

 

8

 

7

 

14

 

15

 

Total claims and expenses

 

99

 

99

 

102

 

104

 

99

 

100

 

198

 

199

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss before income tax benefit

 

(99

)

(99

)

(99

)

(101

)

(96

)

(97

)

(198

)

(193

)

Income taxes

 

(35

)

(37

)

(34

)

(37

)

(35

)

(35

)

(72

)

(70

)

Operating loss

 

$

(64

)

$

(62

)

$

(65

)

$

(64

)

$

(61

)

$

(62

)

$

(126

)

$

(123

)

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

22



 

The Travelers Companies, Inc.

Consolidated Balance Sheet

(in millions)

 

 

 

June 30,

 

December 31,

 

 

 

2016

 

2015

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Fixed maturities, available for sale, at fair value (amortized cost $59,975 and $58,878)

 

$

63,311

 

$

60,658

 

Equity securities, available for sale, at fair value (cost $525 and $528)

 

752

 

705

 

Real estate investments

 

929

 

989

 

Short-term securities

 

3,988

 

4,671

 

Other investments

 

3,490

 

3,447

 

Total investments

 

72,470

 

70,470

 

 

 

 

 

 

 

Cash

 

265

 

380

 

Investment income accrued

 

627

 

642

 

Premiums receivable

 

7,014

 

6,437

 

Reinsurance recoverables

 

8,603

 

8,910

 

Ceded unearned premiums

 

726

 

656

 

Deferred acquisition costs

 

1,954

 

1,849

 

Deferred taxes

 

 

296

 

Contractholder receivables

 

4,541

 

4,374

 

Goodwill

 

3,588

 

3,573

 

Other intangible assets

 

274

 

279

 

Other assets

 

2,384

 

2,318

 

Total assets

 

$

102,446

 

$

100,184

 

 

 

 

June 30,

 

December 31,

 

 

 

2016

 

2015

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Claims and claim adjustment expense reserves

 

$

47,953

 

$

48,295

 

Unearned premium reserves

 

12,520

 

11,971

 

Contractholder payables

 

4,541

 

4,374

 

Payables for reinsurance premiums

 

401

 

296

 

Deferred taxes

 

370

 

 

Debt

 

6,436

 

6,344

 

Other liabilities

 

5,511

 

5,306

 

Total liabilities

 

77,732

 

76,586

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

Common stock (1,750.0 shares authorized; 288.3 and 295.9 shares issued and outstanding)

 

22,349

 

22,172

 

Retained earnings

 

30,921

 

29,945

 

Accumulated other comprehensive income (loss)

 

965

 

(157

)

Treasury stock, at cost (478.1 and 467.6 shares)

 

(29,521

)

(28,362

)

Total shareholders’ equity

 

24,714

 

23,598

 

Total liabilities and shareholders’ equity

 

$

102,446

 

$

100,184

 

 

23



 

The Travelers Companies, Inc.

Investment Portfolio

(at carrying value, $ in millions)

 

 

 

June 30,

 

Pre-tax Book

 

December 31,

 

Pre-tax Book

 

 

 

2016

 

Yield (1)

 

2015

 

Yield (1)

 

Investment portfolio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable fixed maturities (including redeemable preferred stock)

 

$

29,998

 

3.23

%

$

29,612

 

3.30

%

Tax-exempt fixed maturities

 

33,313

 

3.44

%

31,046

 

3.58

%

Total fixed maturities

 

63,311

 

3.34

%

60,658

 

3.44

%

 

 

 

 

 

 

 

 

 

 

Non-redeemable preferred stocks

 

155

 

5.70

%

162

 

5.73

%

Public common stocks

 

597

 

 

 

543

 

 

 

Total equity securities

 

752

 

 

 

705

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate investments

 

929

 

 

 

989

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term securities

 

3,988

 

0.57

%

4,671

 

0.37

%

 

 

 

 

 

 

 

 

 

 

Private equities

 

2,021

 

 

 

2,056

 

 

 

Hedge funds

 

395

 

 

 

416

 

 

 

Real estate partnerships

 

659

 

 

 

626

 

 

 

Other investments

 

415

 

 

 

349

 

 

 

Total other investments

 

3,490

 

 

 

3,447

 

 

 

 

 

 

 

 

 

 

 

 

 

Total investments

 

$

72,470

 

 

 

$

70,470

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized investment gains, net of tax, included in shareholders’ equity

 

$

2,341

 

 

 

$

1,289

 

 

 

 

 

 

 

(1)  Yields are provided for those investments with an embedded book yield.

 

24



 

The Travelers Companies, Inc.

Investment Portfolio - Fixed Maturities Data

(at carrying value, $ in millions)

 

 

 

June 30,

 

December 31,

 

 

 

2016

 

2015

 

Fixed maturities

 

 

 

 

 

U.S. Treasury securities and obligations of U.S. Government corporations and agencies

 

$

2,073

 

$

2,194

 

Obligations of states and political subdivisions:

 

 

 

 

 

Pre-refunded

 

5,724

 

6,060

 

All other

 

27,908

 

25,351

 

Total

 

33,632

 

31,411

 

Debt securities issued by foreign governments

 

1,801

 

1,873

 

Mortgage-backed securities - principally obligations of U.S. Government agencies

 

1,833

 

1,981

 

Corporates (including redeemable preferreds)

 

23,972

 

23,199

 

Total fixed maturities

 

$

63,311

 

$

60,658

 

 

Fixed Maturities

Quality Characteristics (1)

 

 

 

June 30, 2016

 

 

 

Amount

 

% of Total

 

Quality Ratings

 

 

 

 

 

Aaa

 

$

26,123

 

41.3

%

Aa

 

19,193

 

30.3

 

A

 

9,130

 

14.4

 

Baa

 

7,099

 

11.2

 

Total investment grade

 

61,545

 

97.2

 

Ba

 

1,036

 

1.7

 

B

 

457

 

0.7

 

Caa and lower

 

273

 

0.4

 

Total below investment grade

 

1,766

 

2.8

 

Total fixed maturities

 

$

63,311

 

100.0

%

Average weighted quality

 

Aa2, AA

 

 

 

Average duration of fixed maturities and short-term securities, net of securities lending activities and net receivables and payables on investment sales and purchases

 

3.9

 

 

 

 


(1)  Rated using external rating agencies or by Travelers when a public rating does not exist.  Below investment grade assets refer to securities rated “Ba” or below.

 

25



 

The Travelers Companies, Inc.

Investment Income

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross investment income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed maturities

 

$

531

 

$

526

 

$

516

 

$

518

 

$

503

 

$

497

 

$

1,057

 

$

1,000

 

Short-term securities

 

2

 

3

 

3

 

4

 

6

 

7

 

5

 

13

 

Other

 

69

 

113

 

105

 

30

 

44

 

53

 

182

 

97

 

 

 

602

 

642

 

624

 

552

 

553

 

557

 

1,244

 

1,110

 

Investment expenses

 

10

 

10

 

10

 

11

 

9

 

8

 

20

 

17

 

Net investment income, pre-tax

 

592

 

632

 

614

 

541

 

544

 

549

 

1,224

 

1,093

 

Income taxes

 

114

 

129

 

130

 

101

 

105

 

107

 

243

 

212

 

Net investment income, after-tax

 

$

478

 

$

503

 

$

484

 

$

440

 

$

439

 

$

442

 

$

981

 

$

881

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective tax rate

 

19.3

%

20.5

%

21.1

%

18.7

%

19.3

%

19.4

%

19.9

%

19.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average invested assets (1)

 

$

70,722

 

$

70,291

 

$

70,569

 

$

70,756

 

$

69,926

 

$

70,033

 

$

70,548

 

$

69,989

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average yield pre-tax (1)

 

3.3

%

3.6

%

3.5

%

3.1

%

3.1

%

3.1

%

3.5

%

3.1

%

Average yield after-tax

 

2.7

%

2.9

%

2.7

%

2.5

%

2.5

%

2.5

%

2.8

%

2.5

%

 


(1)  Excludes net unrealized investment gains, and is adjusted for cash, receivables for investment sales, payables on investment purchases and accrued investment income.

 

26



 

The Travelers Companies, Inc.
Net Realized and Unrealized Investment Gains (Losses)
($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized investment gains (losses)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed maturities

 

$

17

 

$

14

 

$

30

 

$

7

 

$

4

 

$

21

 

$

31

 

$

25

 

Equity securities

 

 

(1

)

(10

)

(20

)

(5

)

2

 

(1

)

(3

)

Other (1) 

 

(7

)

(3

)

(5

)

(19

)

(8

)

(4

)

(10

)

(12

)

Realized investment gains (losses) before tax

 

10

 

10

 

15

 

(32

)

(9

)

19

 

20

 

10

 

Related taxes

 

4

 

4

 

5

 

(12

)

(2

)

4

 

8

 

2

 

Net realized investment gains (losses)

 

$

6

 

$

6

 

$

10

 

$

(20

)

$

(7

)

$

15

 

$

12

 

$

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross investment gains (1)

 

$

71

 

$

102

 

$

108

 

$

96

 

$

120

 

$

150

 

$

173

 

$

270

 

Gross investment losses before impairments (1)

 

(58

)

(86

)

(79

)

(99

)

(111

)

(127

)

(144

)

(238

)

Net investment gains (losses) before impairments

 

13

 

16

 

29

 

(3

)

9

 

23

 

29

 

32

 

Other-than-temporary impairment losses

 

(3

)

(6

)

(14

)

(29

)

(18

)

(4

)

(9

)

(22

)

Net realized investment gains (losses) before tax

 

10

 

10

 

15

 

(32

)

(9

)

19

 

20

 

10

 

Related taxes

 

4

 

4

 

5

 

(12

)

(2

)

4

 

8

 

2

 

Net realized investment gains (losses)

 

$

6

 

$

6

 

$

10

 

$

(20

)

$

(7

)

$

15

 

$

12

 

$

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

June 30,

 

September 30,

 

December 31,

 

March 31,

 

June 30,

 

 

 

 

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized investment gains, net of tax, by asset type

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed maturities

 

$

2,853

 

$

1,830

 

$

1,983

 

$

1,780

 

$

2,495

 

$

3,336

 

 

 

 

 

Equity securities & other

 

319

 

274

 

183

 

194

 

198

 

249

 

 

 

 

 

Unrealized investment gains before tax

 

3,172

 

2,104

 

2,166

 

1,974

 

2,693

 

3,585

 

 

 

 

 

Related taxes

 

1,096

 

728

 

752

 

685

 

934

 

1,244

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, end of period

 

$

2,076

 

$

1,376

 

$

1,414

 

$

1,289

 

$

1,759

 

$

2,341

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


(1)  Includes the following gross investment gains and gross investment losses related to U.S. Treasury futures, which are settled daily:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross investment Treasury future gains

 

$

44

 

$

56

 

$

47

 

$

44

 

$

30

 

$

31

 

$

100

 

$

61

 

 

Gross investment Treasury future losses

 

$

54

 

$

47

 

$

61

 

$

34

 

$

49

 

$

42

 

$

101

 

$

91

 

 

The Company entered into these arrangements as part of its strategy to manage the duration of its fixed maturity portfolio. In a changing interest rate environment, the change in the value of the futures contracts can be expected to partially offset changes in the value of the fixed maturity portfolio.

 

27



 

The Travelers Companies, Inc.
Reinsurance Recoverables
($ in millions)

 

 

 

June 30,

 

December 31,

 

 

 

2016

 

2015

 

Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses

 

$

3,530

 

$

3,848

 

Allowance for uncollectible reinsurance

 

(151

)

(157

)

Net reinsurance recoverables (i)

 

3,379

 

3,691

 

Mandatory pools and associations (ii) 

 

2,026

 

2,015

 

Structured settlements (iii)

 

3,198

 

3,204

 

Total reinsurance recoverables

 

$

8,603

 

$

8,910

 

 


(i)  The Company’s top five reinsurer groups, including retroactive reinsurance, included in net reinsurance recoverables is as follows:

 

 

 

A.M. Best Rating of Group’s

 

June 30,

 

Reinsurer

 

Predominant Reinsurer

 

2016

 

Swiss Re Group

 

A+ second highest of 16 ratings

 

$

420

 

Munich Re Group

 

A+ second highest of 16 ratings

 

385

 

Berkshire Hathaway

 

A++ highest of 16 ratings

 

226

 

Sompo Japan Nipponkoa Group

 

A+ second highest of 16 ratings

 

223

 

XL Capital Group

 

A third highest of 16 ratings

 

149

 

 

The gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses represent the current and estimated future amounts due from reinsurers on known and incurred but not reported claims. The ceded reserves are estimated in a manner consistent with the underlying direct and assumed reserves. Although this total comprises recoverables due from nearly one thousand different reinsurance entities, about half is attributable to 10 reinsurer groups.

 

The net reinsurance recoverables reflect an allowance for uncollectible reinsurance that is based upon the Company’s ongoing review of amounts outstanding, reinsurer solvency, the Company’s experience, current economic conditions, and other relevant factors. Of the total net recoverables due from reinsurers at June 30, 2016, after deducting mandatory pools and associations and structured settlement balances, $2.7 billion, or 80%, were rated by A.M. Best Company. Of the total rated by A.M. Best Company, 99% were rated A- or better. The remaining 20% of net recoverables from reinsurers were comprised of the following: 5% related to the Company’s participation in voluntary pools, 12% related to recoverables from captive insurance companies and 3% were balances from other companies not rated by A.M. Best Company. In addition, $1.1 billion of the net recoverables were collateralized by letters of credit, funds held or trust agreements at June 30, 2016.

 

(ii)  The mandatory pools and associations represent various involuntary assigned risk pools that the Company is required to participate in. These pools principally involve workers’ compensation and automobile insurance, which provide various insurance coverages to insureds that otherwise are unable to purchase coverage in the open market. The costs of these mandatory pools in most states are usually charged back to the participating members in proportion to voluntary writings of related business in that state. In the event that a member of the pool becomes insolvent, the remaining members assume an additional pro rata share of the pool’s liabilities. Recoverables due from the National Flood Insurance Program are included with mandatory pools.

 

(iii)  Included in reinsurance recoverables are certain amounts related to structured settlements, which comprise annuities purchased from various life insurance companies to settle certain personal physical injury claims, of which workers’ compensation claims comprise a significant portion.  In cases where the Company did not receive a release from the claimant, the amount due from the life insurance company related to the structured settlement is included in the Company’s consolidated balance sheet as a liability and as a reinsurance recoverable, as the Company retains the contingent liability to pay the claimant in the event that the life insurance company fails to make the required annuity payments. The Company would be required to make such payments, to the extent the purchased annuities are not covered by state guaranty associations.

 

The Company’s top five groups by structured settlement is as follows:

 

 

 

A.M. Best Rating of Group’s

 

June 30,

 

Group

 

Predominant Insurer

 

2016

 

Fidelity and Guaranty Life (1) 

 

B++ fifth highest of 16 ratings

 

$

892

 

Metlife (2)

 

A+ second highest of 16 ratings

 

398

 

Genworth Financial Group

 

B++ fifth highest of 16 ratings

 

379

 

John Hancock Group

 

A+ second highest of 16 ratings

 

302

 

Symetra Financial Corporation

 

A third highest of 16 ratings

 

271

 

 

 


(1)  Fidelity and Guaranty Life (FGL) has entered into a definitive merger agreement with Anbang Insurance Group Co., Ltd. whereby Anbang will acquire all of the outstanding shares of FGL. Regulatory approvals are still in progress.  A.M. Best’s ratings of FGL were placed under review with developing implications following the announcement of the merger agreement.  The Company does not have any structured settlements with Anbang.

 

(2)  MetLife Inc. has announced a plan to pursue the separation of a substantial portion of its U.S. Retail segment. MetLife is currently evaluating structural alternatives for such a separation, including a public offering of shares in an independent, publicly-traded company, a spin-off, or a sale. A.M. Best’s ratings of MetLife Inc. and its subsidiaries were placed under review with developing implications following the announcement of this plan.

 

28



 

The Travelers Companies, Inc.
Net Reserves for Losses and Loss Adjustment Expense
($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

Statutory Reserves for Losses and Loss Adjustment Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business and International Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

$

34,568

 

$

33,924

 

$

33,905

 

$

33,856

 

$

33,669

 

$

34,002

 

$

34,568

 

$

33,669

 

Incurred

 

2,216

 

2,187

 

2,182

 

2,073

 

2,252

 

2,334

 

4,403

 

4,586

 

Paid

 

(2,616

)

(2,291

)

(2,075

)

(2,173

)

(2,020

)

(2,642

)

(4,907

)

(4,662

)

Foreign exchange and other

 

(244

)

85

 

(156

)

(87

)

101

 

(62

)

(159

)

39

 

End of period

 

$

33,924

 

$

33,905

 

$

33,856

 

$

33,669

 

$

34,002

 

$

33,632

 

$

33,905

 

$

33,632

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bond & Specialty Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

$

3,239

 

$

3,228

 

$

3,212

 

$

3,142

 

$

3,030

 

$

3,020

 

$

3,239

 

$

3,030

 

Incurred

 

189

 

191

 

111

 

143

 

162

 

78

 

380

 

240

 

Paid

 

(200

)

(207

)

(181

)

(255

)

(172

)

(168

)

(407

)

(340

)

Foreign exchange and other

 

 

 

 

 

 

(3

)

 

(3

)

End of period

 

$

3,228

 

$

3,212

 

$

3,142

 

$

3,030

 

$

3,020

 

$

2,927

 

$

3,212

 

$

2,927

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personal Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

$

3,200

 

$

3,144

 

$

3,156

 

$

3,093

 

$

3,083

 

$

3,202

 

$

3,200

 

$

3,083

 

Incurred

 

974

 

1,117

 

1,040

 

1,091

 

1,249

 

1,297

 

2,091

 

2,546

 

Paid

 

(1,030

)

(1,105

)

(1,103

)

(1,101

)

(1,130

)

(1,261

)

(2,135

)

(2,391

)

End of period

 

$

3,144

 

$

3,156

 

$

3,093

 

$

3,083

 

$

3,202

 

$

3,238

 

$

3,156

 

$

3,238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

$

41,007

 

$

40,296

 

$

40,273

 

$

40,091

 

$

39,782

 

$

40,224

 

$

41,007

 

$

39,782

 

Incurred

 

3,379

 

3,495

 

3,333

 

3,307

 

3,663

 

3,709

 

6,874

 

7,372

 

Paid

 

(3,846

)

(3,603

)

(3,359

)

(3,529

)

(3,322

)

(4,071

)

(7,449

)

(7,393

)

Foreign exchange and other

 

(244

)

85

 

(156

)

(87

)

101

 

(65

)

(159

)

36

 

End of period

 

$

40,296

 

$

40,273

 

$

40,091

 

$

39,782

 

$

40,224

 

$

39,797

 

$

40,273

 

$

39,797

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior Year Reserve Development: Unfavorable (Favorable)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business and International Insurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asbestos

 

$

 

$

 

$

224

 

$

 

$

 

$

 

$

 

$

 

Environmental

 

 

72

 

 

 

 

82

 

72

 

82

 

All other

 

(77

)

(175

)

(273

)

(176

)

(93

)

(220

)

(252

)

(313

)

Total Business and International Insurance (1)

 

(77

)

(103

)

(49

)

(176

)

(93

)

(138

)

(180

)

(231

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bond & Specialty Insurance

 

(35

)

(40

)

(103

)

(80

)

(60

)

(150

)

(75

)

(210

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personal Insurance

 

(131

)

(64

)

(47

)

(36

)

(27

)

 

(195

)

(27

)

Total

 

$

(243

)

$

(207

)

$

(199

)

$

(292

)

$

(180

)

$

(288

)

$

(450

)

$

(468

)

 


(1)  Excludes accretion of discount.

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

29



 

The Travelers Companies, Inc.
Asbestos and Environmental Reserves
($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asbestos reserves

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning reserves:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

$

2,520

 

$

1,959

 

$

1,856

 

$

2,086

 

$

1,989

 

$

1,937

 

$

2,520

 

$

1,989

 

Ceded

 

(163

)

(123

)

(122

)

(190

)

(179

)

(164

)

(163

)

(179

)

Net

 

2,357

 

1,836

 

1,734

 

1,896

 

1,810

 

1,773

 

2,357

 

1,810

 

Incurred losses and loss expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

 

 

313

 

 

 

 

 

 

Ceded

 

 

 

(89

)

 

 

 

 

 

Paid loss and loss expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

560

 

104

 

83

 

96

 

52

 

619

 

664

 

671

 

Ceded

 

(40

)

(1

)

(22

)

(10

)

(15

)

(81

)

(41

)

(96

)

Foreign exchange and other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

(1

)

1

 

 

(1

)

 

(1

)

 

(1

)

Ceded

 

 

 

(1

)

1

 

 

 

 

 

Ending reserves:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

1,959

 

1,856

 

2,086

 

1,989

 

1,937

 

1,317

 

1,856

 

1,317

 

Ceded

 

(123

)

(122

)

(190

)

(179

)

(164

)

(83

)

(122

)

(83

)

Net

 

$

1,836

 

$

1,734

 

$

1,896

 

$

1,810

 

$

1,773

 

$

1,234

 

$

1,734

 

$

1,234

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Environmental reserves

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning reserves:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

$

353

 

$

341

 

$

406

 

$

393

 

$

375

 

$

366

 

$

353

 

$

375

 

Ceded

 

(7

)

(6

)

(15

)

(15

)

(14

)

(14

)

(7

)

(14

)

Net

 

346

 

335

 

391

 

378

 

361

 

352

 

346

 

361

 

Incurred losses and loss expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

 

81

 

 

 

 

87

 

81

 

87

 

Ceded

 

 

(9

)

 

 

 

(5

)

(9

)

(5

)

Paid loss and loss expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

11

 

15

 

13

 

17

 

10

 

14

 

26

 

24

 

Ceded

 

(1

)

 

 

 

 

(1

)

(1

)

(1

)

Foreign exchange and other:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

(1

)

(1

)

 

(1

)

1

 

 

(2

)

1

 

Ceded

 

 

 

 

1

 

 

 

 

 

Ending reserves:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

341

 

406

 

393

 

375

 

366

 

439

 

406

 

439

 

Ceded

 

(6

)

(15

)

(15

)

(14

)

(14

)

(18

)

(15

)

(18

)

Net

 

$

335

 

$

391

 

$

378

 

$

361

 

$

352

 

$

421

 

$

391

 

$

421

 

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

30



 

The Travelers Companies, Inc.
Capitalization
($ in millions)

GRAPHIC

 

 

 

June 30,

 

December 31,

 

 

 

2016

 

2015

 

Debt

 

 

 

 

 

 

 

 

 

 

 

Short-term debt

 

 

 

 

 

Commercial paper

 

$

100

 

$

100

 

6.25% Senior notes due June 20, 2016

 

 

400

 

Total short-term debt

 

100

 

500

 

 

 

 

 

 

 

Long-term debt

 

 

 

 

 

5.75% Senior notes due December 15, 2017 (1)

 

450

 

450

 

5.80% Senior notes due May 15, 2018 (1)

 

500

 

500

 

5.90% Senior notes due June 2, 2019 (1)

 

500

 

500

 

3.90% Senior notes due November 1, 2020 (1)

 

500

 

500

 

7.75% Senior notes due April 15, 2026

 

200

 

200

 

7.625% Junior subordinated debentures due December 15, 2027

 

125

 

125

 

6.375% Senior notes due March 15, 2033 (1)

 

500

 

500

 

6.75% Senior notes due June 20, 2036 (1)

 

400

 

400

 

6.25% Senior notes due June 15, 2037 (1)

 

800

 

800

 

5.35% Senior notes due November 1, 2040 (1)

 

750

 

750

 

4.60% Senior notes due August 1, 2043 (1)

 

500

 

500

 

4.30% Senior notes due August 25, 2045 (1)

 

400

 

400

 

8.50% Junior subordinated debentures due December 15, 2045

 

56

 

56

 

3.75% Senior notes due May 15, 2046 (1)

 

500

 

 

8.312% Junior subordinated debentures due July 1, 2046

 

73

 

73

 

6.25% Fixed-to-floating rate junior subordinated debentures due March 15, 2067 (1)

 

107

 

107

 

Total long-term debt

 

6,361

 

5,861

 

Unamortized fair value adjustment

 

48

 

49

 

Unamortized debt issuance costs

 

(73

)

(66

)

 

 

6,336

 

5,844

 

Total debt

 

6,436

 

6,344

 

 

 

 

 

 

 

Common equity (excluding net unrealized investment gains, net of tax)

 

22,373

 

22,309

 

 

 

 

 

 

 

Total capital (excluding net unrealized investment gains, net of tax)

 

$

28,809

 

$

28,653

 

 

 

 

 

 

 

Total debt to capital (excluding net unrealized investment gains, net of tax)

 

22.3

%

22.1

%

 


(1)  Redeemable anytime with “make-whole” premium.

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

31



 

The Travelers Companies, Inc.
Statutory Capital and Surplus to GAAP Shareholders’ Equity Reconciliation
($ in millions)

GRAPHIC

 

 

 

June 30,

 

December 31,

 

 

 

2016 (1)

 

2015

 

 

 

 

 

 

 

Statutory capital and surplus

 

$

20,634

 

$

20,567

 

 

 

 

 

 

 

GAAP adjustments

 

 

 

 

 

 

 

 

 

 

 

Goodwill and intangible assets

 

3,697

 

3,687

 

 

 

 

 

 

 

Investments

 

3,811

 

2,258

 

 

 

 

 

 

 

Noninsurance companies

 

(4,647

)

(4,688

)

 

 

 

 

 

 

Deferred acquisition costs

 

1,954

 

1,849

 

 

 

 

 

 

 

Deferred federal income tax

 

(1,886

)

(1,269

)

 

 

 

 

 

 

Current federal income tax

 

(21

)

(23

)

 

 

 

 

 

 

Reinsurance recoverables

 

109

 

109

 

 

 

 

 

 

 

Furniture, equipment & software

 

678

 

672

 

 

 

 

 

 

 

Agents balances

 

167

 

153

 

 

 

 

 

 

 

Other

 

218

 

283

 

 

 

 

 

 

 

Total GAAP adjustments

 

4,080

 

3,031

 

 

 

 

 

 

 

GAAP shareholders’ equity

 

$

24,714

 

$

23,598

 

 


(1) Estimated and Preliminary

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 35.

 

32



 

The Travelers Companies, Inc.
Statement of Cash Flows
($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

833

 

$

812

 

$

928

 

$

866

 

$

691

 

$

664

 

$

1,645

 

$

1,355

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized investment (gains) losses

 

(10

)

(10

)

(15

)

32

 

9

 

(19

)

(20

)

(10

)

Depreciation and amortization

 

225

 

204

 

191

 

198

 

213

 

200

 

429

 

413

 

Deferred federal income tax expense

 

133

 

9

 

(37

)

12

 

105

 

(30

)

142

 

75

 

Amortization of deferred acquisition costs

 

963

 

963

 

987

 

972

 

971

 

989

 

1,926

 

1,960

 

Equity in income from other investments

 

(43

)

(91

)

(80

)

(4

)

(17

)

(27

)

(134

)

(44

)

Premiums receivable

 

(258

)

(228

)

186

 

115

 

(393

)

(174

)

(486

)

(567

)

Reinsurance recoverables

 

69

 

194

 

(16

)

25

 

126

 

190

 

263

 

316

 

Deferred acquisition costs

 

(987

)

(1,004

)

(1,007

)

(922

)

(1,014

)

(1,048

)

(1,991

)

(2,062

)

Claims and claim adjustment expense reserves

 

(561

)

(265

)

(48

)

(201

)

226

 

(613

)

(826

)

(387

)

Unearned premium reserves

 

185

 

177

 

180

 

(294

)

328

 

203

 

362

 

531

 

Other

 

(350

)

(85

)

530

 

(39

)

(395

)

108

 

(435

)

(287

)

Net cash provided by operating activities

 

199

 

676

 

1,799

 

760

 

850

 

443

 

875

 

1,293

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from maturities of fixed maturities

 

2,830

 

2,484

 

3,491

 

2,311

 

1,748

 

2,025

 

5,314

 

3,773

 

Proceeds from sales of investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed maturities

 

906

 

320

 

329

 

395

 

421

 

318

 

1,226

 

739

 

Equity securities

 

11

 

17

 

10

 

21

 

14

 

24

 

28

 

38

 

Real estate investments

 

7

 

3

 

5

 

16

 

69

 

 

10

 

69

 

Other investments

 

146

 

208

 

151

 

208

 

186

 

157

 

354

 

343

 

Purchases of investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed maturities

 

(3,325

)

(2,914

)

(3,733

)

(2,118

)

(2,700

)

(3,005

)

(6,239

)

(5,705

)

Equity securities

 

(8

)

(14

)

(9

)

(18

)

(12

)

(14

)

(22

)

(26

)

Real estate investments

 

(6

)

(63

)

(47

)

(7

)

(7

)

(13

)

(69

)

(20

)

Other investments

 

(168

)

(107

)

(114

)

(145

)

(162

)

(128

)

(275

)

(290

)

Net sales (purchases) of short-term securities

 

(134

)

567

 

(1,215

)

456

 

85

 

596

 

433

 

681

 

Securities transactions in course of settlement

 

305

 

(122

)

(80

)

(216

)

291

 

170

 

183

 

461

 

Acquisitions, net of cash acquired

 

 

 

 

(13

)

 

 

 

 

Other

 

(90

)

(88

)

(44

)

(82

)

(79

)

(75

)

(178

)

(154

)

Net cash provided by (used in) investing activities

 

474

 

291

 

(1,256

)

808

 

(146

)

55

 

765

 

(91

)

 

33



 

The Travelers Companies, Inc.
Statement of Cash Flows
($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2015

 

2015

 

2015

 

2015

 

2016

 

2016

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury stock acquired - share repurchase authorization

 

(600

)

(800

)

(750

)

(1,000

)

(550

)

(550

)

(1,400

)

(1,100

)

Treasury stock acquired - net employee share-based compensation

 

(71

)

(1

)

(1

)

(1

)

(59

)

 

(72

)

(59

)

Dividends paid to shareholders

 

(177

)

(192

)

(188

)

(182

)

(180

)

(195

)

(369

)

(375

)

Payment of debt

 

 

 

 

(400

)

 

(400

)

 

(400

)

Issuance of debt

 

 

 

392

 

 

 

491

 

 

491

 

Issuance of common stock - employee share options

 

90

 

27

 

25

 

41

 

64

 

65

 

117

 

129

 

Excess tax benefits from share-based payment arrangements (1)

 

27

 

4

 

11

 

13

 

 

 

31

 

 

Net cash used in financing activities

 

(731

)

(962

)

(511

)

(1,529

)

(725

)

(589

)

(1,693

)

(1,314

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

(8

)

4

 

(5

)

(3

)

2

 

(5

)

(4

)

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

(66

)

9

 

27

 

36

 

(19

)

(96

)

(57

)

(115

)

Cash at beginning of period

 

374

 

308

 

317

 

344

 

380

 

361

 

374

 

380

 

Cash at end of period

 

$

308

 

$

317

 

$

344

 

$

380

 

$

361

 

$

265

 

$

317

 

$

265

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes paid

 

$

126

 

$

471

 

$

285

 

$

325

 

$

63

 

$

404

 

$

597

 

$

467

 

Interest paid

 

$

34

 

$

149

 

$

34

 

$

148

 

$

42

 

$

138

 

$

183

 

$

180

 

 


(1)  In connection with the Company’s adoption of the new accounting standard related to Improvements to Employee Share-Based Payment Accounting in the first quarter of 2016, cash flows related to taxes on share-based payments are included in net income as an operating activity rather than being reported separately as a financing activity.

 

34



 

The Travelers Companies, Inc.
Financial Supplement - Second Quarter 2016
Glossary of Financial Measures and Description of Reportable Business Segments

 

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.

 

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 and establish financial targets on a consolidated basis.

 

Some of these measures exclude net realized investment gains (losses), net of tax, and/or net unrealized investment gains (losses), net of tax, which can be significantly impacted by both discretionary and other economic factors and are not necessarily indicative of operating trends. 

 

Other companies may calculate these measures differently, and, therefore, their measures may not be comparable to those used by the Company’s management.

 

Operating income (loss) is net income (loss) excluding the after-tax impact of net realized investment gains (losses).  Management uses operating income (loss) to analyze each 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.   

 

Average shareholders’ equity is (a) the sum of total shareholders’ equity at the beginning and end of each of the quarters for the period presented divided by (b) the number of quarters in the period presented times two.  Adjusted shareholders’ equity is shareholders’ equity excluding net unrealized investment gains (losses), net of tax, and net realized investment gains (losses), net of tax, for the period presented.  Adjusted average shareholders’ equity is (a) the sum of total adjusted shareholders’ equity at the beginning and end of each of the quarters for the period presented divided by (b) the number of quarters in the period presented times two.

 

Return on equity is the ratio of annualized net income (loss) to average shareholders’ equity for the periods presented.  Operating return on equity is the ratio of annualized operating income (loss) to adjusted average shareholders’ equity for the periods presented.  In the opinion of the Company’s management, these are important indicators of how well management creates value for its shareholders through its operating activities and its capital management. 

 

Underwriting gain (loss) is net earned premiums and fee income less claims and claim adjustment expenses and insurance-related expenses.  In the opinion of the 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. 

 

A catastrophe is a severe loss, resulting from a variety of events, including, among others, hurricanes, tornadoes and other windstorms, earthquakes, hail, wildfires, severe winter weather, floods, tsunamis and volcanic eruptions. Catastrophes can also result from a terrorist attack (including those involving nuclear, biological, chemical or radiological events), explosions, infrastructure failures or as a consequence of political instability. 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.

 

Combined ratio  For Statutory Accounting Practices (SAP), the combined ratio is the sum of the SAP loss and LAE ratio and the SAP underwriting expense ratio as defined in the statutory financial statements required by insurance regulators.  The combined ratio, as used in this financial supplement, is the equivalent of, and is calculated in the same manner as, the SAP combined ratio except that the SAP underwriting expense ratio is based on net written premium and the underwriting expense ratio as used in this financial supplement is based on net earned premiums.  For SAP, the loss and LAE ratio is the ratio of incurred losses and loss adjustment expenses less certain administrative services fee income to net earned premiums as defined in the statutory financial statements required by insurance regulators. The loss and LAE ratio as used in this financial supplement is calculated in the same manner as the SAP ratio.  For SAP, the underwriting expense ratio is the ratio of underwriting expenses incurred (including commissions paid), less certain administrative services fee income and billing and policy fees, to net written premiums as defined in the statutory financial statements required by insurance regulators. The underwriting expense ratio as used in this financial supplement, is the ratio of underwriting expenses (including the amortization of deferred acquisition costs), less certain administrative services fee income and billing and policy fees, to net earned premiums.

 

The combined ratio, loss and LAE ratio, and underwriting expense ratio are used as indicators of the Company’s underwriting discipline, efficiency in acquiring and servicing its business and overall underwriting profitability. A combined ratio under 100% generally indicates an underwriting profit. A combined ratio over 100% generally indicates an underwriting loss.

 

Other companies’ method of computing similarly titled measures may not be comparable to the Company’s method of computing these ratios.

 

Combined ratio excluding the incremental impact of the direct to consumer initiative is the combined ratio adjusted to exclude the direct, variable impact of the 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.

 

Gross written premiums reflect the direct and assumed contractually determined amounts charged to policyholders for the effective period of the contract based on the terms and conditions of the insurance contract.  Net written premiums reflect gross written premiums less premiums ceded to reinsurers.

 

Book value per share is total common shareholders’ equity divided by the number of common shares outstanding.  Adjusted book value per share is total common shareholders’ equity excluding the after-tax impact of net unrealized investment gains and losses, divided by the number of common shares outstanding. In the opinion of the Company’s management, adjusted book value per share is useful in an analysis of a property casualty company’s book value per share as it removes the effect of changing prices on invested assets, (i.e., net unrealized investment gains (losses), net of tax) which do not have an equivalent impact on unpaid claims and claim adjustment expense reserves.

 

Total capital is the sum of total shareholders’ equity and debt.  Debt-to-capital ratio excluding net unrealized gain (loss) on investments is the ratio of debt to total capital excluding the after-tax impact of net unrealized investment gains and losses.  In the opinion of the Company’s management, the debt to capital ratio is useful in an analysis of the Company’s financial leverage.

 

Statutory capital and surplus represents the excess of an insurance company’s admitted assets over its liabilities, including loss reserves, as determined in accordance with statutory accounting practices.

 

Travelers has organized its businesses into the following reportable business segments:

 

Business and International Insurance - The Business and International Insurance segment offers a broad array of property and casualty insurance and insurance related services to its clients, primarily in the United States and in Canada, as well as in the United Kingdom, the Republic of Ireland, Brazil and throughout other parts of the world as a corporate member of Lloyd’s.  Business and International Insurance is organized as follows: Select Accounts; Middle Market including Commercial Accounts, Construction, Technology, Public Sector Services, Oil & Gas, and Excess Casualty; National Accounts; First Party including National Property, Inland Marine, Ocean Marine and Boiler & Machinery; Specialized Distribution including Northland, National Programs, and Agribusiness; and International.  As of January 1, 2016, Global Partner Services, which had previously been included in Middle Market, is now being included in International.  Financial data for all periods presented has been restated to be consistent with the 2016 presentation.  Business and International 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 are collectively referred to as Business and International Insurance Other.

 

Bond & Specialty Insurance - The Bond & Specialty Insurance segment provides surety, crime, management and professional liability, and cyber risk coverages and related risk management services to a wide range of primarily domestic customers, utilizing various degrees of financially-based underwriting approaches.  The range of coverages includes performance, payment and commercial surety and fidelity bonds for construction and general commercial enterprises; management liability coverages for losses caused by the actual or alleged negligence or misconduct of directors and officers or employee dishonesty; employment practices liability coverages and fiduciary coverages for public corporations, private companies and not-for-profit organizations; professional liability coverage for actual or alleged errors and omissions committed in the course of professional conduct or practice for a variety of professionals including, among others, lawyers and design professionals; and professional and management liability, property, workers’ compensation, auto and general liability and fidelity insurance for financial institutions.    

 

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.

 

35