Reconciliation to Net Income (Loss) and Earnings Per Share
2
Statement of Income (Loss)
3
Net Income (Loss) by Major Component and Combined Ratio
4
Core Income (Loss)
5
Selected Statistics - Property and Casualty Operations
6
Written and Earned Premiums - Property and Casualty Operations
7
Business Insurance
Segment Income (Loss)
8
Segment Income (Loss) by Major Component and Combined Ratio
9
Selected Statistics
10
Net Written Premiums
11
Bond & Specialty Insurance
Segment Income
12
Segment Income by Major Component and Combined Ratio
13
Selected Statistics
14
Net Written Premiums
15
Personal Insurance
Segment Income
16
Segment Income by Major Component and Combined Ratio
17
Selected Statistics
18
Net Written Premiums
19
Selected Statistics - Domestic Agency Automobile
20
Selected Statistics - Domestic Agency Homeowners and Other
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) included in Shareholders’ Equity
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
35-36
The information included in the Financial Supplement is unaudited. This document should be read in conjunction with the Company’s Form 10-K which will be filed with the Securities and Exchange Commission.
Index
The Travelers Companies, Inc.
Financial Highlights
($ and shares in millions, except for per share data)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Net income (loss)
$
796
$
557
$
396
$
873
$
600
$
(40)
$
827
$
1,310
$
2,622
$
2,697
Net income (loss) per share:
Basic
$
3.01
$
2.11
$
1.52
$
3.37
$
2.34
$
(0.16)
$
3.24
$
5.13
$
10.01
$
10.56
Diluted
$
2.99
$
2.10
$
1.50
$
3.35
$
2.33
$
(0.16)
$
3.23
$
5.10
$
9.92
$
10.52
Core income (loss)
$
755
$
537
$
378
$
867
$
676
$
(50)
$
798
$
1,262
$
2,537
$
2,686
Core income (loss) per share:
Basic
$
2.85
$
2.04
$
1.45
$
3.35
$
2.64
$
(0.20)
$
3.13
$
4.94
$
9.69
$
10.52
Diluted
$
2.83
$
2.02
$
1.43
$
3.32
$
2.62
$
(0.20)
$
3.12
$
4.91
$
9.60
$
10.48
Return on equity
13.5
%
9.0
%
6.2
%
13.5
%
9.4
%
(0.6)
%
12.1
%
18.4
%
10.5
%
10.0
%
Core return on equity
13.0
%
9.2
%
6.5
%
14.8
%
11.5
%
(0.8)
%
13.5
%
20.5
%
10.9
%
11.3
%
Total assets, at period end
$
107,246
$
108,572
$
110,241
$
110,122
$
109,436
$
113,337
$
116,384
$
116,764
$
110,122
$
116,764
Total equity, at period end
$
24,340
$
25,321
$
25,607
$
25,943
$
25,204
$
26,943
$
27,849
$
29,201
$
25,943
$
29,201
Book value per share, at period end
$
92.94
$
97.26
$
99.21
$
101.55
$
99.69
$
106.42
$
109.94
$
115.68
$
101.55
$
115.68
Less: Net unrealized investment gains, net of tax
3.85
7.21
9.12
8.79
7.06
14.41
15.05
16.14
8.79
16.14
Adjusted book value per share, at period end
$
89.09
$
90.05
$
90.09
$
92.76
$
92.63
$
92.01
$
94.89
$
99.54
$
92.76
$
99.54
Weighted average number of common shares outstanding (basic)
262.9
261.3
259.2
256.8
254.4
251.6
253.3
253.4
260.0
253.5
Weighted average number of common shares outstanding and common stock equivalents (diluted)
264.8
263.7
261.8
259.0
255.9
251.6
254.3
254.8
262.3
254.6
Common shares outstanding at period end
261.9
260.3
258.1
255.5
252.8
253.2
253.3
252.4
255.5
252.4
Common stock dividends declared
$
204
$
217
$
215
$
212
$
210
$
218
$
218
$
218
$
848
$
864
Common stock repurchased:
Under Board of Directors authorization
Shares
2.9
2.6
2.5
2.8
3.5
—
—
1.4
10.8
4.9
Cost
$
375
$
375
$
375
$
375
$
425
$
—
$
—
$
200
$
1,500
$
625
Other
Shares
0.3
—
—
0.1
0.3
—
—
—
0.4
0.3
Cost
$
46
$
1
$
—
$
1
$
46
$
—
$
—
$
1
$
48
$
47
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
1
The Travelers Companies, Inc.
Reconciliation to Net Income (Loss) and Earnings per Share
($ and shares in millions, except earnings per share)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Net income (loss)
Net income (loss)
$
796
$
557
$
396
$
873
$
600
$
(40)
$
827
$
1,310
$
2,622
$
2,697
Adjustments:
Net realized investment (gains) losses, after-tax
(41)
(20)
(18)
(6)
76
(10)
(29)
(48)
(85)
(11)
Core income (loss)
$
755
$
537
$
378
$
867
$
676
$
(50)
$
798
$
1,262
$
2,537
$
2,686
Basic earnings per share
Net income (loss)
$
3.01
$
2.11
$
1.52
$
3.37
$
2.34
$
(0.16)
$
3.24
$
5.13
$
10.01
$
10.56
Adjustments:
Net realized investment (gains) losses, after-tax
(0.16)
(0.07)
(0.07)
(0.02)
0.30
(0.04)
(0.11)
(0.19)
(0.32)
(0.04)
Core income (loss)
$
2.85
$
2.04
$
1.45
$
3.35
$
2.64
$
(0.20)
$
3.13
$
4.94
$
9.69
$
10.52
Diluted earnings per share
Net income (loss)
$
2.99
$
2.10
$
1.50
$
3.35
$
2.33
$
(0.16)
$
3.23
$
5.10
$
9.92
$
10.52
Adjustments:
Net realized investment (gains) losses, after-tax
(0.16)
(0.08)
(0.07)
(0.03)
0.29
(0.04)
(0.11)
(0.19)
(0.32)
(0.04)
Core income (loss)
$
2.83
$
2.02
$
1.43
$
3.32
$
2.62
$
(0.20)
$
3.12
$
4.91
$
9.60
$
10.48
Adjustments to net income (loss) and weighted average shares for net income (loss) EPS calculations: (1)
Basic and Diluted
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Net income (loss), as reported
$
796
$
557
$
396
$
873
$
600
$
(40)
$
827
$
1,310
$
2,622
$
2,697
Participating share-based awards - allocated income
(5)
(4)
(3)
(7)
(5)
(1)
(6)
(10)
(19)
(19)
Net income (loss) available to common shareholders - basic and diluted
$
791
$
553
$
393
$
866
$
595
$
(41)
$
821
$
1,300
$
2,603
$
2,678
Common Shares
Basic
Weighted average shares outstanding
262.9
261.3
259.2
256.8
254.4
251.6
253.3
253.4
260.0
253.5
Diluted
Weighted average shares outstanding
262.9
261.3
259.2
256.8
254.4
251.6
253.3
253.4
260.0
253.5
Weighted average effects of dilutive securities - stock options and performance shares
1.9
2.4
2.6
2.2
1.5
—
1.0
1.4
2.3
1.1
Diluted weighted average shares outstanding
264.8
263.7
261.8
259.0
255.9
251.6
254.3
254.8
262.3
254.6
(1) Adjustments to net income and weighted average shares for net income EPS calculations can generally be used for the core income EPS calculations.
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
2
The Travelers Companies, Inc.
Statement of Income (Loss) - Consolidated
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Revenues
Premiums
$
6,855
$
6,988
$
7,179
$
7,250
$
7,229
$
6,955
$
7,380
$
7,480
$
28,272
$
29,044
Net investment income
582
648
622
616
611
268
671
677
2,468
2,227
Fee income
109
116
121
113
108
114
101
106
459
429
Net realized investment gains (losses)
53
25
23
12
(98)
13
37
50
113
2
Other revenues
72
57
68
72
58
51
86
84
269
279
Total revenues
7,671
7,834
8,013
8,063
7,908
7,401
8,275
8,397
31,581
31,981
Claims and expenses
Claims and claim adjustment expenses
4,442
4,821
5,230
4,640
4,789
5,107
4,886
4,341
19,133
19,123
Amortization of deferred acquisition costs
1,117
1,134
1,169
1,181
1,178
1,173
1,207
1,215
4,601
4,773
General and administrative expenses
1,057
1,125
1,098
1,085
1,137
1,121
1,109
1,142
4,365
4,509
Interest expense
88
89
84
83
84
85
87
83
344
339
Total claims and expenses
6,704
7,169
7,581
6,989
7,188
7,486
7,289
6,781
28,443
28,744
Income (loss) before income taxes
967
665
432
1,074
720
(85)
986
1,616
3,138
3,237
Income tax expense (benefit)
171
108
36
201
120
(45)
159
306
516
540
Net income (loss)
$
796
$
557
$
396
$
873
$
600
$
(40)
$
827
$
1,310
$
2,622
$
2,697
Investment impairments
Total net investment impairment (charges) recoveries
$
(1)
$
(1)
$
—
$
(1)
$
(16)
$
(46)
$
4
$
3
$
(3)
$
(55)
Credit loss (charges) recoveries recognized in net realized investment gains (losses)
$
(1)
$
(1)
$
—
$
(2)
$
(16)
$
(46)
$
4
$
3
$
(4)
$
(55)
Non-credit losses recognized in other comprehensive income
$
—
$
—
$
—
$
1
$
—
$
—
$
—
$
—
$
1
$
—
Other statistics
Effective tax rate on net investment income
14.7
%
15.4
%
15.2
%
14.8
%
15.1
%
6.2
%
15.6
%
15.4
%
15.0
%
14.3
%
Net investment income (after-tax)
$
496
$
548
$
528
$
525
$
519
$
251
$
566
$
572
$
2,097
$
1,908
Catastrophes, net of reinsurance:
Pre-tax
$
193
$
367
$
241
$
85
$
333
$
854
$
397
$
29
$
886
$
1,613
After-tax
$
152
$
290
$
190
$
67
$
263
$
673
$
314
$
24
$
699
$
1,274
Prior year reserve development - favorable (unfavorable):
Pre-tax
$
51
$
123
$
(294)
$
60
$
27
$
2
$
142
$
180
$
(60)
$
351
After-tax
$
41
$
99
$
(232)
$
45
$
21
$
1
$
113
$
141
$
(47)
$
276
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
3
The Travelers Companies, Inc.
Net Income (Loss) by Major Component and Combined Ratio - Consolidated
($ in millions, net of tax)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Underwriting gain (loss)
$
307
$
52
$
(101)
$
396
$
220
$
(232)
$
281
$
741
$
654
$
1,010
Net investment income
496
548
528
525
519
251
566
572
2,097
1,908
Other income (expense), including interest expense
(48)
(63)
(49)
(54)
(63)
(69)
(49)
(51)
(214)
(232)
Core income (loss)
755
537
378
867
676
(50)
798
1,262
2,537
2,686
Net realized investment gains (losses)
41
20
18
6
(76)
10
29
48
85
11
Net income (loss)
$
796
$
557
$
396
$
873
$
600
$
(40)
$
827
$
1,310
$
2,622
$
2,697
Combined ratio (1) (2)
Loss and loss adjustment expense ratio
64.0
%
68.2
%
72.0
%
63.3
%
65.5
%
72.7
%
65.6
%
57.3
%
66.9
%
65.1
%
Underwriting expense ratio
29.7
%
30.2
%
29.5
%
29.1
%
30.0
%
31.0
%
29.3
%
29.4
%
29.6
%
29.9
%
Combined ratio
93.7
%
98.4
%
101.5
%
92.4
%
95.5
%
103.7
%
94.9
%
86.7
%
96.5
%
95.0
%
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development
(0.7)
%
(1.8)
%
4.1
%
(0.8)
%
(0.4)
%
—
%
(1.9)
%
(2.4)
%
0.2
%
(1.2)
%
Catastrophes, net of reinsurance
2.8
%
5.3
%
3.3
%
1.1
%
4.6
%
12.3
%
5.3
%
0.4
%
3.1
%
5.5
%
Underlying combined ratio
91.6
%
94.9
%
94.1
%
92.1
%
91.3
%
91.4
%
91.5
%
88.7
%
93.2
%
90.7
%
(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. In addition, general and administrative expenses include non-insurance expenses that are excluded from underwriting expenses, and accordingly are excluded in calculating the combined ratio. See following:
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Billing and policy fees and other
$
27
$
26
$
28
$
27
$
28
$
17
$
24
$
28
$
108
$
97
Fee income:
Loss and loss adjustment expenses
$
40
$
45
$
47
$
42
$
41
$
44
$
35
$
41
$
174
$
161
Underwriting expenses
69
71
74
71
67
70
66
65
285
268
Total fee income
$
109
$
116
$
121
$
113
$
108
$
114
$
101
$
106
$
459
$
429
Non-insurance general and administrative expenses
$
47
$
50
$
48
$
56
$
55
$
52
$
60
$
67
$
201
$
234
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
4
The Travelers Companies, Inc.
Core Income (Loss) - Consolidated
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Revenues
Premiums
$
6,855
$
6,988
$
7,179
$
7,250
$
7,229
$
6,955
$
7,380
$
7,480
$
28,272
$
29,044
Net investment income
582
648
622
616
611
268
671
677
2,468
2,227
Fee income
109
116
121
113
108
114
101
106
459
429
Other revenues
72
57
68
72
58
51
86
84
269
279
Total revenues
7,618
7,809
7,990
8,051
8,006
7,388
8,238
8,347
31,468
31,979
Claims and expenses
Claims and claim adjustment expenses
4,442
4,821
5,230
4,640
4,789
5,107
4,886
4,341
19,133
19,123
Amortization of deferred acquisition costs
1,117
1,134
1,169
1,181
1,178
1,173
1,207
1,215
4,601
4,773
General and administrative expenses
1,057
1,125
1,098
1,085
1,137
1,121
1,109
1,142
4,365
4,509
Interest expense
88
89
84
83
84
85
87
83
344
339
Total claims and expenses
6,704
7,169
7,581
6,989
7,188
7,486
7,289
6,781
28,443
28,744
Core income (loss) before income taxes
914
640
409
1,062
818
(98)
949
1,566
3,025
3,235
Income tax expense (benefit)
159
103
31
195
142
(48)
151
304
488
549
Core income (loss)
$
755
$
537
$
378
$
867
$
676
$
(50)
$
798
$
1,262
$
2,537
$
2,686
Other statistics
Effective tax rate on net investment income
14.7
%
15.4
%
15.2
%
14.8
%
15.1
%
6.2
%
15.6
%
15.4
%
15.0
%
14.3
%
Net investment income (after-tax)
$
496
$
548
$
528
$
525
$
519
$
251
$
566
$
572
$
2,097
$
1,908
Catastrophes, net of reinsurance:
Pre-tax
$
193
$
367
$
241
$
85
$
333
$
854
$
397
$
29
$
886
$
1,613
After-tax
$
152
$
290
$
190
$
67
$
263
$
673
$
314
$
24
$
699
$
1,274
Prior year reserve development - favorable (unfavorable):
Pre-tax
$
51
$
123
$
(294)
$
60
$
27
$
2
$
142
$
180
$
(60)
$
351
After-tax
$
41
$
99
$
(232)
$
45
$
21
$
1
$
113
$
141
$
(47)
$
276
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
5
The Travelers Companies, Inc.
Selected Statistics - Property and Casualty Operations
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Statutory underwriting
Gross written premiums
$
7,839
$
7,824
$
8,022
$
7,378
$
8,152
$
7,751
$
8,243
$
7,617
$
31,063
$
31,763
Net written premiums
$
7,057
$
7,450
$
7,569
$
7,075
$
7,346
$
7,346
$
7,771
$
7,269
$
29,151
$
29,732
Net earned premiums
$
6,855
$
6,988
$
7,179
$
7,250
$
7,229
$
6,955
$
7,380
$
7,480
$
28,272
$
29,044
Losses and loss adjustment expenses
4,389
4,764
5,166
4,578
4,733
5,053
4,830
4,291
18,897
18,907
Underwriting expenses
2,116
2,217
2,179
2,072
2,193
2,212
2,214
2,153
8,584
8,772
Statutory underwriting gain (loss)
350
7
(166)
600
303
(310)
336
1,036
791
1,365
Policyholder dividends
13
9
15
10
12
8
11
10
47
41
Statutory underwriting gain (loss) after policyholder dividends
$
337
$
(2)
$
(181)
$
590
$
291
$
(318)
$
325
$
1,026
$
744
$
1,324
Other statutory statistics
Reserves for losses and loss adjustment expenses
$
42,581
$
42,979
$
43,624
$
43,743
$
43,913
$
45,112
$
46,181
$
46,247
$
43,743
$
46,247
Increase in reserves
$
172
$
398
$
645
$
119
$
170
$
1,199
$
1,069
$
66
$
1,334
$
2,504
Statutory capital and surplus
$
21,074
$
21,080
$
20,780
$
21,330
$
20,808
$
20,607
$
21,230
$
22,180
$
21,330
$
22,180
Net written premiums/surplus (1)
1.33:1
1.34:1
1.38:1
1.37:1
1.41:1
1.42:1
1.39:1
1.34:1
1.37:1
1.34:1
(1) Based on 12 months of rolling net written premiums.
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
6
The Travelers Companies, Inc.
Written and Earned Premiums - Property and Casualty Operations
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Written premiums
Gross
$
7,839
$
7,824
$
8,022
$
7,378
$
8,152
$
7,751
$
8,243
$
7,617
$
31,063
$
31,763
Ceded
(782)
(374)
(453)
(303)
(806)
(405)
(472)
(348)
(1,912)
(2,031)
Net
$
7,057
$
7,450
$
7,569
$
7,075
$
7,346
$
7,346
$
7,771
$
7,269
$
29,151
$
29,732
Earned premiums
Gross
$
7,282
$
7,429
$
7,636
$
7,723
$
7,683
$
7,446
$
7,898
$
7,961
$
30,070
$
30,988
Ceded
(427)
(441)
(457)
(473)
(454)
(491)
(518)
(481)
(1,798)
(1,944)
Net
$
6,855
$
6,988
$
7,179
$
7,250
$
7,229
$
6,955
$
7,380
$
7,480
$
28,272
$
29,044
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
7
The Travelers Companies, Inc.
Segment Income (Loss) - Business Insurance
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Revenues
Premiums
$
3,742
$
3,783
$
3,882
$
3,893
$
3,864
$
3,735
$
3,841
$
3,854
$
15,300
$
15,294
Net investment income
427
481
457
451
453
180
498
502
1,816
1,633
Fee income
104
111
114
108
102
108
95
100
437
405
Other revenues
43
30
39
43
31
36
58
51
155
176
Total revenues
4,316
4,405
4,492
4,495
4,450
4,059
4,492
4,507
17,708
17,508
Claims and expenses
Claims and claim adjustment expenses
2,580
2,686
3,028
2,669
2,791
2,880
2,804
2,329
10,963
10,804
Amortization of deferred acquisition costs
615
618
634
636
636
622
633
627
2,503
2,518
General and administrative expenses
632
686
657
652
685
656
651
672
2,627
2,664
Total claims and expenses
3,827
3,990
4,319
3,957
4,112
4,158
4,088
3,628
16,093
15,986
Segment income (loss) before income taxes
489
415
173
538
338
(99)
404
879
1,615
1,522
Income tax expense (benefit)
75
64
(6)
90
49
(41)
39
166
223
213
Segment income (loss)
$
414
$
351
$
179
$
448
$
289
$
(58)
$
365
$
713
$
1,392
$
1,309
Other statistics
Effective tax rate on net investment income
14.6
%
15.3
%
15.1
%
14.8
%
15.0
%
6.3
%
15.6
%
15.4
%
15.0
%
14.4
%
Net investment income (after-tax)
$
365
$
407
$
389
$
384
$
385
$
169
$
421
$
423
$
1,545
$
1,398
Catastrophes, net of reinsurance:
Pre-tax
$
95
$
211
$
116
$
48
$
195
$
377
$
97
$
(24)
$
470
$
645
After-tax
$
75
$
167
$
91
$
37
$
154
$
298
$
76
$
(19)
$
370
$
509
Prior year reserve development - favorable (unfavorable):
Pre-tax
$
(21)
$
71
$
(316)
$
8
$
5
$
—
$
(220)
$
124
$
(258)
$
(91)
After-tax
$
(16)
$
57
$
(249)
$
5
$
3
$
—
$
(173)
$
97
$
(203)
$
(73)
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
8
The Travelers Companies, Inc.
Segment Income (Loss) by Major Component and Combined Ratio - Business Insurance
($ in millions, net of tax)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Underwriting gain (loss)
$
44
$
(48)
$
(210)
$
65
$
(84)
$
(221)
$
(59)
$
292
$
(149)
$
(72)
Net investment income
365
407
389
384
385
169
421
423
1,545
1,398
Other income (expense)
5
(8)
—
(1)
(12)
(6)
3
(2)
(4)
(17)
Segment income (loss)
$
414
$
351
$
179
$
448
$
289
$
(58)
$
365
$
713
$
1,392
$
1,309
Combined ratio (1) (2)
Loss and loss adjustment expense ratio
67.6
%
69.6
%
76.6
%
67.3
%
70.9
%
75.8
%
71.8
%
59.2
%
70.3
%
69.4
%
Underwriting expense ratio
30.5
%
31.5
%
30.4
%
30.2
%
31.3
%
31.3
%
30.5
%
30.6
%
30.6
%
30.9
%
Combined ratio
98.1
%
101.1
%
107.0
%
97.5
%
102.2
%
107.1
%
102.3
%
89.8
%
100.9
%
100.3
%
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development
0.6
%
(1.9)
%
8.1
%
(0.2)
%
(0.1)
%
—
%
5.8
%
(3.2)
%
1.7
%
0.6
%
Catastrophes, net of reinsurance
2.5
%
5.6
%
3.0
%
1.3
%
5.0
%
10.1
%
2.5
%
(0.6)
%
3.0
%
4.2
%
Underlying combined ratio
95.0
%
97.4
%
95.9
%
96.4
%
97.3
%
97.0
%
94.0
%
93.6
%
96.2
%
95.5
%
(1) Before policyholder dividends.
(2) Billing and policy fees and other, which are a component of other revenues, are allocated as a reduction of underwriting expenses. In addition, fee income is allocated as a reduction of losses and loss adjustment expenses and underwriting expenses. In addition, general and administrative expenses include non-insurance expenses that are excluded from underwriting expenses, and accordingly are excluded in calculating the combined ratio. See following:
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Billing and policy fees and other
$
4
$
3
$
5
$
4
$
4
$
3
$
4
$
5
$
16
$
16
Fee income:
Loss and loss adjustment expenses
$
40
$
45
$
47
$
42
$
41
$
44
$
35
$
41
$
174
$
161
Underwriting expenses
64
66
67
66
61
64
60
59
263
244
Total fee income
$
104
$
111
$
114
$
108
$
102
$
108
$
95
$
100
$
437
$
405
Non-insurance general and administrative expenses
$
38
$
41
$
39
$
43
$
47
$
42
$
52
$
56
$
161
$
197
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
9
The Travelers Companies, Inc.
Selected Statistics - Business Insurance
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Statutory underwriting
Gross written premiums
$
4,730
$
4,193
$
4,271
$
3,957
$
4,794
$
4,127
$
4,230
$
3,909
$
17,151
$
17,060
Net written premiums
$
4,163
$
3,874
$
3,889
$
3,703
$
4,190
$
3,777
$
3,833
$
3,631
$
15,629
$
15,431
Net earned premiums
$
3,742
$
3,783
$
3,882
$
3,893
$
3,864
$
3,735
$
3,841
$
3,854
$
15,300
$
15,294
Losses and loss adjustment expenses
2,529
2,631
2,969
2,608
2,737
2,828
2,750
2,282
10,737
10,597
Underwriting expenses
1,226
1,226
1,164
1,133
1,247
1,167
1,145
1,132
4,749
4,691
Statutory underwriting gain (loss)
(13)
(74)
(251)
152
(120)
(260)
(54)
440
(186)
6
Policyholder dividends
11
7
11
7
10
6
9
7
36
32
Statutory underwriting gain (loss) after policyholder dividends
$
(24)
$
(81)
$
(262)
$
145
$
(130)
$
(266)
$
(63)
$
433
$
(222)
$
(26)
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
10
The Travelers Companies, Inc.
Net Written Premiums - Business Insurance
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Net written premiums by market
Domestic
Select Accounts
$
785
$
756
$
695
$
675
$
799
$
734
$
658
$
630
$
2,911
$
2,821
Middle Market
2,410
2,009
2,150
2,061
2,408
1,960
2,131
2,012
8,630
8,511
National Accounts
304
223
273
251
301
215
239
241
1,051
996
National Property and Other
387
588
553
437
428
585
602
471
1,965
2,086
Total Domestic
3,886
3,576
3,671
3,424
3,936
3,494
3,630
3,354
14,557
14,414
International
277
298
218
279
254
283
203
277
1,072
1,017
Total
$
4,163
$
3,874
$
3,889
$
3,703
$
4,190
$
3,777
$
3,833
$
3,631
$
15,629
$
15,431
Net written premiums by product line
Domestic
Workers’ compensation
$
1,191
$
893
$
905
$
817
$
1,096
$
780
$
774
$
699
$
3,806
$
3,349
Commercial automobile
719
677
674
666
755
667
689
679
2,736
2,790
Commercial property
389
583
568
474
433
620
603
507
2,014
2,163
General liability
678
548
611
579
683
531
630
603
2,416
2,447
Commercial multi-peril
902
871
885
884
956
892
899
861
3,542
3,608
Other
7
4
28
4
13
4
35
5
43
57
Total Domestic
3,886
3,576
3,671
3,424
3,936
3,494
3,630
3,354
14,557
14,414
International
277
298
218
279
254
283
203
277
1,072
1,017
Total
$
4,163
$
3,874
$
3,889
$
3,703
$
4,190
$
3,777
$
3,833
$
3,631
$
15,629
$
15,431
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
11
The Travelers Companies, Inc.
Segment Income - Bond & Specialty Insurance
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Revenues
Premiums
$
606
$
632
$
653
$
674
$
667
$
693
$
723
$
740
$
2,565
$
2,823
Net investment income
56
58
59
60
55
42
58
58
233
213
Other revenues
6
6
7
7
5
5
7
10
26
27
Total revenues
668
696
719
741
727
740
788
808
2,824
3,063
Claims and expenses
Claims and claim adjustment expenses
266
238
303
287
327
403
392
342
1,094
1,464
Amortization of deferred acquisition costs
112
118
123
125
124
128
133
134
478
519
General and administrative expenses
117
120
124
122
125
123
124
128
483
500
Total claims and expenses
495
476
550
534
576
654
649
604
2,055
2,483
Segment income before income taxes
173
220
169
207
151
86
139
204
769
580
Income tax expense
35
46
30
40
29
14
24
40
151
107
Segment income
$
138
$
174
$
139
$
167
$
122
$
72
$
115
$
164
$
618
$
473
Other statistics
Effective tax rate on net investment income
14.4
%
14.8
%
14.9
%
13.2
%
14.7
%
3.0
%
14.8
%
14.4
%
14.3
%
12.3
%
Net investment income (after-tax)
$
47
$
50
$
50
$
52
$
47
$
41
$
49
$
50
$
199
$
187
Catastrophes, net of reinsurance:
Pre-tax
$
3
$
—
$
1
$
1
$
1
$
7
$
2
$
1
$
5
$
11
After-tax
$
2
$
—
$
1
$
1
$
1
$
5
$
2
$
1
$
4
$
9
Prior year reserve development - favorable (unfavorable):
Pre-tax
$
3
$
39
$
3
$
20
$
—
$
(33)
$
—
$
32
$
65
$
(1)
After-tax
$
2
$
31
$
2
$
16
$
—
$
(26)
$
—
$
25
$
51
$
(1)
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
12
The Travelers Companies, Inc.
Segment Income by Major Component and Combined Ratio - Bond & Specialty Insurance
($ in millions, net of tax)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Underwriting gain
$
86
$
120
$
85
$
111
$
72
$
29
$
61
$
107
$
402
$
269
Net investment income
47
50
50
52
47
41
49
50
199
187
Other income
5
4
4
4
3
2
5
7
17
17
Segment income
$
138
$
174
$
139
$
167
$
122
$
72
$
115
$
164
$
618
$
473
Combined ratio (1)
Loss and loss adjustment expense ratio
43.5
%
37.4
%
45.7
%
42.4
%
48.8
%
57.8
%
54.0
%
45.7
%
42.2
%
51.5
%
Underwriting expense ratio
37.6
%
37.5
%
37.6
%
36.2
%
37.1
%
36.0
%
35.3
%
35.2
%
37.3
%
35.9
%
Combined ratio
81.1
%
74.9
%
83.3
%
78.6
%
85.9
%
93.8
%
89.3
%
80.9
%
79.5
%
87.4
%
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development
(0.5)
%
(6.2)
%
(0.5)
%
(2.9)
%
—
%
4.7
%
—
%
(4.2)
%
(2.5)
%
—
%
Catastrophes, net of reinsurance
0.5
%
0.1
%
0.2
%
0.2
%
0.2
%
1.0
%
0.3
%
0.1
%
0.2
%
0.4
%
Underlying combined ratio
81.1
%
81.0
%
83.6
%
81.3
%
85.7
%
88.1
%
89.0
%
85.0
%
81.8
%
87.0
%
(1) General and administrative expenses include non-insurance expenses that are excluded from underwriting expenses, and accordingly are excluded in calculating the combined ratio. See following:
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Non-insurance general and administrative expenses
$
1
$
1
$
1
$
2
$
1
$
1
$
2
$
2
$
5
$
6
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
13
The Travelers Companies, Inc.
Selected Statistics - Bond & Specialty Insurance
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Statutory underwriting
Gross written premiums
$
662
$
747
$
770
$
752
$
750
$
770
$
803
$
861
$
2,931
$
3,184
Net written premiums
$
587
$
710
$
728
$
714
$
663
$
734
$
754
$
800
$
2,739
$
2,951
Net earned premiums
$
606
$
632
$
653
$
674
$
667
$
693
$
723
$
740
$
2,565
$
2,823
Losses and loss adjustment expenses
264
236
298
286
325
401
390
339
1,084
1,455
Underwriting expenses
233
251
261
242
254
253
261
261
987
1,029
Statutory underwriting gain
109
145
94
146
88
39
72
140
494
339
Policyholder dividends
2
2
4
3
2
2
2
3
11
9
Statutory underwriting gain after policyholder dividends
$
107
$
143
$
90
$
143
$
86
$
37
$
70
$
137
$
483
$
330
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
14
The Travelers Companies, Inc.
Net Written Premiums - Bond & Specialty Insurance
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Net written premiums by market
Domestic
Management Liability
$
367
$
403
$
424
$
411
$
401
$
438
$
467
$
463
$
1,605
$
1,769
Surety
184
244
232
206
215
220
208
202
866
845
Total Domestic
551
647
656
617
616
658
675
665
2,471
2,614
International
36
63
72
97
47
76
79
135
268
337
Total
$
587
$
710
$
728
$
714
$
663
$
734
$
754
$
800
$
2,739
$
2,951
Net written premiums by product line
Domestic
Fidelity & surety
$
239
$
298
$
292
$
260
$
272
$
274
$
268
$
258
$
1,089
$
1,072
General liability
262
292
293
301
289
326
339
357
1,148
1,311
Other
50
57
71
56
55
58
68
50
234
231
Total Domestic
551
647
656
617
616
658
675
665
2,471
2,614
International
36
63
72
97
47
76
79
135
268
337
Total
$
587
$
710
$
728
$
714
$
663
$
734
$
754
$
800
$
2,739
$
2,951
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
15
The Travelers Companies, Inc.
Segment Income - Personal Insurance
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Revenues
Premiums
$
2,507
$
2,573
$
2,644
$
2,683
$
2,698
$
2,527
$
2,816
$
2,886
$
10,407
$
10,927
Net investment income
99
109
106
105
103
46
115
117
419
381
Fee income
5
5
7
5
6
6
6
6
22
24
Other revenues
22
21
22
22
22
10
21
23
87
76
Total revenues
2,633
2,708
2,779
2,815
2,829
2,589
2,958
3,032
10,935
11,408
Claims and expenses
Claims and claim adjustment expenses
1,596
1,897
1,899
1,684
1,671
1,824
1,690
1,670
7,076
6,855
Amortization of deferred acquisition costs
390
398
412
420
418
423
441
454
1,620
1,736
General and administrative expenses
300
311
309
300
320
333
328
333
1,220
1,314
Total claims and expenses
2,286
2,606
2,620
2,404
2,409
2,580
2,459
2,457
9,916
9,905
Segment income before income taxes
347
102
159
411
420
9
499
575
1,019
1,503
Income tax expense (benefit)
69
14
28
84
84
(1)
107
118
195
308
Segment income
$
278
$
88
$
131
$
327
$
336
$
10
$
392
$
457
$
824
$
1,195
Other statistics
Effective tax rate on net investment income
15.4
%
16.1
%
15.8
%
15.6
%
15.8
%
9.1
%
16.2
%
16.0
%
15.8
%
15.2
%
Net investment income (after-tax)
$
84
$
91
$
89
$
89
$
87
$
41
$
96
$
99
$
353
$
323
Catastrophes, net of reinsurance:
Pre-tax
$
95
$
156
$
124
$
36
$
137
$
470
$
298
$
52
$
411
$
957
After-tax
$
75
$
123
$
98
$
29
$
108
$
370
$
236
$
42
$
325
$
756
Prior year reserve development - favorable:
Pre-tax
$
69
$
13
$
19
$
32
$
22
$
35
$
362
$
24
$
133
$
443
After-tax
$
55
$
11
$
15
$
24
$
18
$
27
$
286
$
19
$
105
$
350
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
16
The Travelers Companies, Inc.
Segment Income by Major Component and Combined Ratio - Personal Insurance
($ in millions, net of tax)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Underwriting gain (loss)
$
177
$
(20)
$
24
$
220
$
232
$
(40)
$
279
$
342
$
401
$
813
Net investment income
84
91
89
89
87
41
96
99
353
323
Other income
17
17
18
18
17
9
17
16
70
59
Segment income
$
278
$
88
$
131
$
327
$
336
$
10
$
392
$
457
$
824
$
1,195
Combined ratio (1)
Loss and loss adjustment expense ratio
63.7
%
73.7
%
71.8
%
62.8
%
61.9
%
72.2
%
60.0
%
57.9
%
68.0
%
62.8
%
Underwriting expense ratio
26.4
%
26.5
%
26.2
%
25.7
%
26.3
%
29.1
%
26.4
%
26.2
%
26.2
%
26.9
%
Combined ratio
90.1
%
100.2
%
98.0
%
88.5
%
88.2
%
101.3
%
86.4
%
84.1
%
94.2
%
89.7
%
Domestic Agency combined ratio
88.9
%
98.8
%
97.2
%
88.2
%
86.9
%
100.4
%
86.0
%
84.2
%
93.3
%
89.1
%
Impact on combined ratio:
Net favorable prior year reserve development
(2.8)
%
(0.5)
%
(0.7)
%
(1.2)
%
(0.8)
%
(1.3)
%
(12.8)
%
(0.8)
%
(1.3)
%
(4.1)
%
Catastrophes, net of reinsurance
3.8
%
6.1
%
4.7
%
1.3
%
5.0
%
18.6
%
10.5
%
1.8
%
4.0
%
8.8
%
Underlying combined ratio
89.1
%
94.6
%
94.0
%
88.4
%
84.0
%
84.0
%
88.7
%
83.1
%
91.5
%
85.0
%
(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.
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Billing and policy fees and other
$
23
$
23
$
23
$
23
$
24
$
14
$
20
$
23
$
92
$
81
Fee income
$
5
$
5
$
7
$
5
$
6
$
6
$
6
$
6
$
22
$
24
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
17
The Travelers Companies, Inc.
Selected Statistics - Personal Insurance
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Statutory underwriting
Gross written premiums
$
2,447
$
2,884
$
2,981
$
2,669
$
2,608
$
2,854
$
3,210
$
2,847
$
10,981
$
11,519
Net written premiums
$
2,307
$
2,866
$
2,952
$
2,658
$
2,493
$
2,835
$
3,184
$
2,838
$
10,783
$
11,350
Net earned premiums
$
2,507
$
2,573
$
2,644
$
2,683
$
2,698
$
2,527
$
2,816
$
2,886
$
10,407
$
10,927
Losses and loss adjustment expenses
1,596
1,897
1,899
1,684
1,671
1,824
1,690
1,670
7,076
6,855
Underwriting expenses
657
740
754
697
692
792
808
760
2,848
3,052
Statutory underwriting gain (loss)
$
254
$
(64)
$
(9)
$
302
$
335
$
(89)
$
318
$
456
$
483
$
1,020
Policies in force (in thousands)
Automobile
2,981
2,980
2,979
2,973
2,970
2,993
3,015
3,029
2,973
3,029
Homeowners and Other
5,163
5,263
5,361
5,444
5,534
5,679
5,790
5,858
5,444
5,858
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
18
The Travelers Companies, Inc.
Net Written Premiums - Personal Insurance
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Net written premiums by market
Domestic
Agency
Automobile
$
1,224
$
1,300
$
1,347
$
1,253
$
1,260
$
1,141
$
1,402
$
1,277
$
5,124
$
5,080
Homeowners and Other
837
1,258
1,300
1,145
990
1,419
1,482
1,294
4,540
5,185
Total Agency
2,061
2,558
2,647
2,398
2,250
2,560
2,884
2,571
9,664
10,265
Direct-to-Consumer
95
103
115
99
100
102
124
107
412
433
Total Domestic
2,156
2,661
2,762
2,497
2,350
2,662
3,008
2,678
10,076
10,698
International
151
205
190
161
143
173
176
160
707
652
Total
$
2,307
$
2,866
$
2,952
$
2,658
$
2,493
$
2,835
$
3,184
$
2,838
$
10,783
$
11,350
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
19
The Travelers Companies, Inc.
Selected Statistics - Personal Insurance - Domestic Agency Automobile (1)
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Statutory underwriting
Gross written premiums
$
1,240
$
1,304
$
1,352
$
1,258
$
1,272
$
1,145
$
1,407
$
1,282
$
5,154
$
5,106
Net written premiums
$
1,224
$
1,300
$
1,347
$
1,253
$
1,260
$
1,141
$
1,402
$
1,277
$
5,124
$
5,080
Net earned premiums
$
1,228
$
1,249
$
1,271
$
1,276
$
1,279
$
1,091
$
1,316
$
1,309
$
5,024
$
4,995
Losses and loss adjustment expenses
810
876
891
971
842
627
742
819
3,548
3,030
Underwriting expenses
296
312
310
299
301
317
323
315
1,217
1,256
Statutory underwriting gain
$
122
$
61
$
70
$
6
$
136
$
147
$
251
$
175
$
259
$
709
Other statistics
Combined ratio (2):
Loss and loss adjustment expense ratio
66.0
%
70.1
%
70.1
%
76.1
%
65.9
%
57.5
%
56.4
%
62.6
%
70.7
%
60.7
%
Underwriting expense ratio
23.4
%
23.9
%
22.9
%
23.1
%
23.5
%
28.2
%
23.4
%
23.9
%
23.3
%
24.6
%
Combined ratio
89.4
%
94.0
%
93.0
%
99.2
%
89.4
%
85.7
%
79.8
%
86.5
%
94.0
%
85.3
%
Impact on combined ratio:
Net favorable prior year reserve development
(3.4)
%
(1.1)
%
(0.5)
%
(0.5)
%
(0.4)
%
(1.0)
%
(1.6)
%
(1.2)
%
(1.3)
%
(1.1)
%
Catastrophes, net of reinsurance
0.7
%
1.3
%
0.8
%
0.1
%
0.6
%
2.5
%
0.4
%
—
%
0.7
%
0.8
%
Underlying combined ratio
92.1
%
93.8
%
92.7
%
99.6
%
89.2
%
84.2
%
81.0
%
87.7
%
94.6
%
85.6
%
Catastrophe losses, net of reinsurance:
Pre-tax
$
9
$
16
$
11
$
1
$
7
$
27
$
6
$
—
$
37
$
40
After-tax
$
7
$
13
$
8
$
1
$
6
$
21
$
4
$
—
$
29
$
31
Prior year reserve development - favorable:
Pre-tax
$
42
$
13
$
5
$
6
$
6
$
11
$
22
$
16
$
66
$
55
After-tax
$
33
$
10
$
5
$
4
$
5
$
9
$
17
$
13
$
52
$
44
Policies in force (in thousands)
2,516
2,517
2,524
2,532
2,540
2,570
2,596
2,614
Change from prior year quarter
(0.1)
%
—
%
0.2
%
0.6
%
1.0
%
2.1
%
2.9
%
3.2
%
Change from prior quarter
(0.1)
%
—
%
0.3
%
0.3
%
0.3
%
1.2
%
1.0
%
0.7
%
(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.
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Billing and policy fees and other
$
12
$
12
$
12
$
11
$
12
$
7
$
10
$
11
$
47
$
40
Fee income
$
3
$
3
$
4
$
3
$
3
$
4
$
4
$
3
$
13
$
14
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
20
The Travelers Companies, Inc.
Selected Statistics - Personal Insurance - Domestic Agency Homeowners and Other (1)
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Statutory underwriting
Gross written premiums
$
954
$
1,268
$
1,316
$
1,147
$
1,086
$
1,432
$
1,495
$
1,297
$
4,685
$
5,310
Net written premiums
$
837
$
1,258
$
1,300
$
1,145
$
990
$
1,419
$
1,482
$
1,294
$
4,540
$
5,185
Net earned premiums
$
1,011
$
1,050
$
1,089
$
1,125
$
1,145
$
1,188
$
1,227
$
1,294
$
4,275
$
4,854
Losses and loss adjustment expenses
604
801
801
542
642
1,010
792
702
2,748
3,146
Underwriting expenses
277
335
349
314
310
385
392
361
1,275
1,448
Statutory underwriting gain (loss)
$
130
$
(86)
$
(61)
$
269
$
193
$
(207)
$
43
$
231
$
252
$
260
Other statistics
Combined ratio (2):
Loss and loss adjustment expense ratio
59.8
%
76.3
%
73.6
%
48.2
%
56.1
%
85.0
%
64.5
%
54.2
%
64.3
%
64.8
%
Underwriting expense ratio
28.4
%
28.2
%
28.4
%
27.6
%
28.1
%
28.9
%
28.3
%
27.7
%
28.2
%
28.2
%
Combined ratio
88.2
%
104.5
%
102.0
%
75.8
%
84.2
%
113.9
%
92.8
%
81.9
%
92.5
%
93.0
%
Impact on combined ratio:
Net favorable prior year reserve development
(2.4)
%
(1.3)
%
(1.4)
%
(0.8)
%
(1.5)
%
(1.7)
%
(27.2)
%
(0.5)
%
(1.4)
%
(7.8)
%
Catastrophes, net of reinsurance
8.0
%
12.9
%
9.9
%
3.0
%
10.8
%
34.2
%
23.6
%
3.9
%
8.3
%
17.9
%
Underlying combined ratio
82.6
%
92.9
%
93.5
%
73.6
%
74.9
%
81.4
%
96.4
%
78.5
%
85.6
%
82.9
%
Catastrophe losses, net of reinsurance:
Pre-tax
$
80
$
136
$
107
$
34
$
123
$
407
$
289
$
51
$
357
$
870
After-tax
$
63
$
107
$
85
$
27
$
97
$
322
$
228
$
41
$
282
$
688
Prior year reserve development - favorable:
Pre-tax
$
25
$
13
$
15
$
9
$
17
$
21
$
333
$
7
$
62
$
378
After-tax
$
19
$
11
$
12
$
7
$
14
$
16
$
263
$
6
$
49
$
299
Policies in force (in thousands)
4,726
4,825
4,927
5,016
5,111
5,255
5,365
5,432
Change from prior year quarter
6.1
%
6.5
%
7.1
%
7.8
%
8.1
%
8.9
%
8.9
%
8.3
%
Change from prior quarter
1.6
%
2.1
%
2.1
%
1.8
%
1.9
%
2.8
%
2.1
%
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.
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Billing and policy fees and other
$
8
$
8
$
8
$
8
$
8
$
5
$
7
$
8
$
32
$
28
Fee income
$
2
$
2
$
3
$
2
$
2
$
3
$
3
$
2
$
9
$
10
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
21
The Travelers Companies, Inc.
Interest Expense and Other
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Revenues
Other revenues
$
1
$
—
$
—
$
—
$
—
$
—
$
—
$
—
$
1
$
—
Claims and expenses
Interest expense
88
89
84
83
84
85
87
83
344
339
General and administrative expenses
8
8
8
11
7
9
6
9
35
31
Total claims and expenses
96
97
92
94
91
94
93
92
379
370
Loss before income tax benefit
(95)
(97)
(92)
(94)
(91)
(94)
(93)
(92)
(378)
(370)
Income tax benefit
(20)
(21)
(21)
(19)
(20)
(20)
(19)
(20)
(81)
(79)
Loss
$
(75)
$
(76)
$
(71)
$
(75)
$
(71)
$
(74)
$
(74)
$
(72)
$
(297)
$
(291)
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
22
The Travelers Companies, Inc.
Consolidated Balance Sheet
($ in millions)
December 31, 2020 (1)
December 31, 2019
Assets
Fixed maturities, available for sale, at fair value (amortized cost $68,830 and $65,281; allowance for expected credit losses of $2 at December 31, 2020)
$
74,003
$
68,134
Equity securities, at fair value (cost $387 and $376)
453
425
Real estate investments
1,026
963
Short-term securities
5,511
4,943
Other investments
3,430
3,419
Total investments
84,423
77,884
Cash
721
494
Investment income accrued
603
618
Premiums receivable (net of allowance for expected credit losses of $105 at December 31, 2020)
7,829
7,909
Reinsurance recoverables (net of allowance for estimated uncollectible reinsurance of $146 at December 31, 2020)
8,350
8,235
Ceded unearned premiums
772
689
Deferred acquisition costs
2,358
2,273
Contractholder receivables (net of allowance for expected credit losses of $19 at December 31, 2020)
4,242
4,599
Goodwill
3,976
3,961
Other intangible assets
317
330
Other assets
3,173
3,130
Total assets
$
116,764
$
110,122
Liabilities
Claims and claim adjustment expense reserves
$
54,521
$
51,849
Unearned premium reserves
15,222
14,604
Contractholder payables
4,261
4,619
Payables for reinsurance premiums
356
363
Deferred taxes
558
137
Debt
6,550
6,558
Other liabilities
6,095
6,049
Total liabilities
87,563
84,179
Shareholders’ equity
Common stock (1,750.0 shares authorized; 252.4 and 255.5 shares issued and outstanding)
23,743
23,469
Retained earnings
38,771
36,977
Accumulated other comprehensive income
2,502
640
Treasury stock, at cost (527.3 and 522.1 shares)
(35,815)
(35,143)
Total shareholders’ equity
29,201
25,943
Total liabilities and shareholders’ equity
$
116,764
$
110,122
Note: Certain reclassifications have been made to the 2019 consolidated balance sheet to conform to the 2020 presentation.
Net unrealized investment gains, net of tax, included in shareholders’ equity
$
4,074
$
2,246
(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)
December 31, 2020
December 31, 2019
Fixed maturities
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
$
2,149
$
2,095
Obligations of states and political subdivisions:
Pre-refunded
3,544
2,056
All other
32,816
27,861
Total
36,360
29,917
Debt securities issued by foreign governments
1,054
1,173
Mortgage-backed securities - principally obligations of U.S. Government agencies
2,361
3,280
Corporates (including redeemable preferreds)
32,079
31,669
Total fixed maturities
$
74,003
$
68,134
Fixed Maturities
Quality Characteristics (1)
December 31, 2020
December 31, 2019
Amount
% of Total
Amount
% of Total
Quality Ratings
Aaa
$
31,653
42.8
%
$
29,164
42.9
%
Aa
18,327
24.8
15,819
23.2
A
12,944
17.5
12,148
17.8
Baa
9,738
13.1
9,541
14.0
Total investment grade
72,662
98.2
66,672
97.9
Ba
870
1.2
846
1.2
B
366
0.5
511
0.7
Caa and lower
105
0.1
105
0.2
Total below investment grade
1,341
1.8
1,462
2.1
Total fixed maturities
$
74,003
100.0
%
$
68,134
100.0
%
Average weighted quality
Aa2, AA
Aa2, AA
Weighted average duration of fixed maturities and short-term securities, net of securities lending activities and net receivables and payables on investment sales and purchases
3.8
4.0
(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)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Gross investment income
Fixed maturities
$
511
$
514
$
520
$
525
$
511
$
498
$
502
$
500
$
2,070
$
2,011
Short-term securities
28
27
26
24
22
13
6
3
105
44
Other
53
118
85
77
88
(234)
173
182
333
209
592
659
631
626
621
277
681
685
2,508
2,264
Investment expenses
10
11
9
10
10
9
10
8
40
37
Net investment income, pre-tax
582
648
622
616
611
268
671
677
2,468
2,227
Income taxes
86
100
94
91
92
17
105
105
371
319
Net investment income, after-tax
$
496
$
548
$
528
$
525
$
519
$
251
$
566
$
572
$
2,097
$
1,908
Effective tax rate
14.7
%
15.4
%
15.2
%
14.8
%
15.1
%
6.2
%
15.6
%
15.4
%
15.0
%
14.3
%
Average invested assets (1)
$74,040
$74,370
$74,910
$75,996
$76,191
$76,635
$78,722
$80,373
$74,866
$78,070
Average yield pre-tax (1)
3.1
%
3.5
%
3.3
%
3.2
%
3.2
%
1.4
%
3.4
%
3.4
%
3.3
%
2.9
%
Average yield after-tax
2.7
%
2.9
%
2.8
%
2.8
%
2.7
%
1.3
%
2.9
%
2.8
%
2.8
%
2.4
%
(1) Excludes net unrealized investment gains (losses), and is adjusted for cash, receivables for investment sales, payables on investment purchases and accrued investment income.
26
The Travelers Companies, Inc.
Net Realized and Unrealized Investment Gains (Losses) included in Shareholders' Equity
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Net realized investment gains (losses)
Fixed maturities
$
16
$
13
$
14
$
12
$
(2)
$
10
$
23
$
21
$
55
$
52
Equity securities
41
10
8
14
(88)
43
16
37
73
8
Other (1)
(4)
2
1
(14)
(8)
(40)
(2)
(8)
(15)
(58)
Realized investment gains (losses) before tax
53
25
23
12
(98)
13
37
50
113
2
Related taxes
12
5
5
6
(22)
3
8
2
28
(9)
Net realized investment gains (losses)
$
41
$
20
$
18
$
6
$
(76)
$
10
$
29
$
48
$
85
$
11
Gross investment gains (1)
$
65
$
31
$
30
$
32
$
31
$
69
$
41
$
64
$
158
$
205
Gross investment losses before impairments (1)
(11)
(5)
(7)
(18)
(113)
(10)
(8)
(17)
(41)
(148)
Net investment gains (losses) before impairments
54
26
23
14
(82)
59
33
47
117
57
Net credit impairment (charges) recoveries
(1)
(1)
—
(2)
(16)
(46)
4
3
(4)
(55)
Net realized investment gains (losses) before tax
53
25
23
12
(98)
13
37
50
113
2
Related taxes
12
5
5
6
(22)
3
8
2
28
(9)
Net realized investment gains (losses)
$
41
$
20
$
18
$
6
$
(76)
$
10
$
29
$
48
$
85
$
11
($ in millions)
March 31, 2019
June 30, 2019
September 30, 2019
December 31, 2019
March 31, 2020
June 30, 2020
September 30, 2020
December 31, 2020
Net unrealized investment gains, net of tax, included in shareholders’ equity, by asset type
Fixed maturities
$
1,284
$
2,388
$
2,990
$
2,853
$
2,271
$
4,632
$
4,842
$
5,175
Equity securities & other
—
1
1
—
2
2
2
—
Unrealized investment gains before tax
1,284
2,389
2,991
2,853
2,273
4,634
4,844
5,175
Related taxes
277
511
637
607
488
988
1,032
1,101
Balance, end of period
$
1,007
$
1,878
$
2,354
$
2,246
$
1,785
$
3,646
$
3,812
$
4,074
(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
$
1
$
—
$
—
$
—
$
5
$
—
$
—
$
—
$
1
$
5
Gross investment Treasury future losses
$
1
$
—
$
—
$
—
$
12
$
—
$
—
$
—
$
1
$
12
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)
December 31, 2020
December 31, 2019
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses (1)
$
3,731
$
3,476
Gross structured settlements (2)
2,964
2,965
Mandatory pools and associations (3)
1,801
1,886
Gross reinsurance recoverables (4)
8,496
8,327
Allowance for estimated uncollectible reinsurance (5)
(146)
(92)
Net reinsurance recoverables
$
8,350
$
8,235
(1) The Company’s top five reinsurer groups, including retroactive reinsurance, included in gross reinsurance recoverables is as follows:
Reinsurer
A.M. Best Rating of Group's Predominant Reinsurer
December 31, 2020
Swiss Re Group
A+ second highest of 16 ratings
$
535
Berkshire Hathaway
A++ highest of 16 ratings
333
Munich Re Group
A+ second highest of 16 ratings
290
Alleghany Group
A+ second highest of 16 ratings
204
Axa Group
A+ second highest of 16 ratings
177
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.
(2) 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 amounts due from the life insurance company related to the structured settlement are included in both the claims and claim adjustment expense reserves and reinsurance recoverables in the Company’s consolidated balance sheet, as the Company retains the 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 included in gross structured settlements is as follows:
Group
A.M. Best Rating of Group's Predominant Insurer
December 31, 2020
Fidelity & Guaranty Life Group
A- fourth highest of 16 ratings
$
757
Genworth Financial Group (a)
B seventh highest of 16 ratings
323
John Hancock Group
A+ second highest of 16 ratings
271
Brighthouse Financial, Inc.
A third highest of 16 ratings
234
Symetra Financial Corporation
A third highest of 16 ratings
229
(a) On October 23, 2016, Genworth Financial (Genworth) announced that they have entered into a definitive agreement under which China Oceanwide Holdings Group Co., Ltd. agreed to acquire all of the outstanding shares of Genworth. On March 7, 2017, Genworth stockholders adopted the merger agreement. On January 4, 2021, the parties announced that although the merger agreement remains in effect, they have not extended the closing deadline of December 31, 2020, and either party is able to terminate the merger agreement at any time.
(3) 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.
(4) Of the total reinsurance recoverables at December 31, 2020, after deducting mandatory pools and associations and before allowances for estimated uncollectible reinsurance, $5.85 billion, or 87%, were rated by A.M. Best Company. The Company utilizes updated A.M. Best credit ratings on a quarterly basis when determining the allowance. Of the total rated by A.M. Best Company, 94% were rated A- or better. The remaining 13% of reinsurance recoverables were comprised of the following: 6% related to captive insurance companies, 1% related to the Company’s participation in voluntary pools and 6% were balances from other companies not rated by A.M. Best Company. Certain of the Company's reinsurance recoverables are collateralized by letters of credit, funds held or trust agreements.
(5) The Company reports its reinsurance recoverables net of an allowance for estimated uncollectible reinsurance. The allowance is based upon the Company’s ongoing review of amounts outstanding, length of collection periods, changes in reinsurer credit standing, disputes, applicable coverage defenses and other relevant factors. For structured settlements, the allowance is also based upon the Company’s ongoing review of life insurers’ creditworthiness and estimated amounts of coverage that would be available from state guaranty funds if a life insurer defaults. A probability-of-default methodology which reflects current and forecasted economic conditions is used to estimate the amount of uncollectible reinsurance due to credit-related factors and the estimate is reported in an allowance for estimated uncollectible reinsurance. The allowance also includes estimated uncollectible amounts related to dispute risk with reinsurers. The Company adopted updated guidance for the accounting for credit losses for financial instruments for the quarter ending March 31, 2020 which resulted in the recognition of an allowance for expected credit losses on structured settlements of $53 million, pre-tax, with an offsetting after-tax cumulative effect adjustment to retained earnings as of January 1, 2020.
28
The Travelers Companies, Inc.
Net Reserves for Losses and Loss Adjustment Expense
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Statutory Reserves for Losses and Loss Adjustment Expenses
Business Insurance
Beginning of period
$
33,857
$
34,086
$
34,377
$
34,963
$
35,142
$
35,415
$
36,210
$
36,946
$
33,857
$
35,142
Incurred
2,529
2,631
2,969
2,608
2,737
2,828
2,750
2,282
10,737
10,597
Paid
(2,320)
(2,345)
(2,354)
(2,482)
(2,364)
(2,067)
(2,054)
(2,296)
(9,501)
(8,781)
Foreign exchange and other
20
5
(29)
53
(100)
34
40
67
49
41
End of period
$
34,086
$
34,377
$
34,963
$
35,142
$
35,415
$
36,210
$
36,946
$
36,999
$
35,142
$
36,999
Bond & Specialty Insurance
Beginning of period
$
2,987
$
3,068
$
3,042
$
3,074
$
3,094
$
3,085
$
3,276
$
3,447
$
2,987
$
3,094
Incurred
264
236
298
286
325
401
390
339
1,084
1,455
Paid
(189)
(260)
(256)
(290)
(300)
(216)
(237)
(243)
(995)
(996)
Foreign exchange and other
6
(2)
(10)
24
(34)
6
18
28
18
18
End of period
$
3,068
$
3,042
$
3,074
$
3,094
$
3,085
$
3,276
$
3,447
$
3,571
$
3,094
$
3,571
Personal Insurance
Beginning of period
$
5,565
$
5,427
$
5,560
$
5,587
$
5,507
$
5,413
$
5,626
$
5,788
$
5,565
$
5,507
Incurred
1,596
1,897
1,899
1,684
1,671
1,824
1,690
1,670
7,076
6,855
Paid
(1,751)
(1,781)
(1,862)
(1,782)
(1,693)
(1,644)
(1,546)
(1,816)
(7,176)
(6,699)
Foreign exchange and other
17
17
(10)
18
(72)
33
18
35
42
14
End of period
$
5,427
$
5,560
$
5,587
$
5,507
$
5,413
$
5,626
$
5,788
$
5,677
$
5,507
$
5,677
Total
Beginning of period
$
42,409
$
42,581
$
42,979
$
43,624
$
43,743
$
43,913
$
45,112
$
46,181
$
42,409
$
43,743
Incurred
4,389
4,764
5,166
4,578
4,733
5,053
4,830
4,291
18,897
18,907
Paid
(4,260)
(4,386)
(4,472)
(4,554)
(4,357)
(3,927)
(3,837)
(4,355)
(17,672)
(16,476)
Foreign exchange and other
43
20
(49)
95
(206)
73
76
130
109
73
End of period
$
42,581
$
42,979
$
43,624
$
43,743
$
43,913
$
45,112
$
46,181
$
46,247
$
43,743
$
46,247
Prior Year Reserve Development: Unfavorable (Favorable)
Business Insurance
Asbestos
$
—
$
—
$
220
$
—
$
—
$
—
$
295
$
—
$
220
$
295
Environmental
—
60
8
8
17
17
4
16
76
54
All other
21
(131)
88
(16)
(22)
(17)
(79)
(140)
(38)
(258)
Total Business Insurance (1)
21
(71)
316
(8)
(5)
—
220
(124)
258
91
Bond & Specialty Insurance
(3)
(39)
(3)
(20)
—
33
—
(32)
(65)
1
Personal Insurance
(69)
(13)
(19)
(32)
(22)
(35)
(362)
(24)
(133)
(443)
Total
$
(51)
$
(123)
$
294
$
(60)
$
(27)
$
(2)
$
(142)
$
(180)
$
60
$
(351)
(1) Excludes accretion of discount.
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
29
The Travelers Companies, Inc.
Asbestos and Environmental Reserves
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Asbestos reserves
Beginning reserves:
Gross
$
1,608
$
1,564
$
1,474
$
1,685
$
1,601
$
1,530
$
1,470
$
1,772
$
1,608
$
1,601
Ceded
(327)
(321)
(295)
(334)
(322)
(316)
(301)
(365)
(327)
(322)
Net
1,281
1,243
1,179
1,351
1,279
1,214
1,169
1,407
1,281
1,279
Incurred losses and loss expenses:
Gross
—
—
268
—
—
—
362
—
268
362
Ceded
—
—
(48)
—
—
—
(67)
—
(48)
(67)
Paid loss and loss expenses:
Gross
44
90
57
86
69
60
61
105
277
295
Ceded
(6)
(26)
(9)
(12)
(6)
(15)
(2)
(35)
(53)
(58)
Foreign exchange and other:
Gross
—
—
—
2
(2)
—
1
1
2
—
Ceded
—
—
—
—
—
—
1
—
—
1
Ending reserves:
Gross
1,564
1,474
1,685
1,601
1,530
1,470
1,772
1,668
1,601
1,668
Ceded
(321)
(295)
(334)
(322)
(316)
(301)
(365)
(330)
(322)
(330)
Net
$
1,243
$
1,179
$
1,351
$
1,279
$
1,214
$
1,169
$
1,407
$
1,338
$
1,279
$
1,338
Environmental reserves
Beginning reserves:
Gross
$
358
$
338
$
388
$
374
$
350
$
350
$
356
$
351
$
358
$
350
Ceded
(24)
(24)
(29)
(29)
(29)
(27)
(26)
(37)
(24)
(29)
Net
334
314
359
345
321
323
330
314
334
321
Incurred losses and loss expenses:
Gross
—
67
8
9
19
17
15
16
84
67
Ceded
—
(7)
—
(1)
(2)
—
(11)
—
(8)
(13)
Paid loss and loss expenses:
Gross
20
16
22
34
18
11
21
25
92
75
Ceded
—
(1)
—
(1)
(4)
(1)
—
(1)
(2)
(6)
Foreign exchange and other:
Gross
—
(1)
—
1
(1)
—
1
1
—
1
Ceded
—
1
—
—
—
—
—
—
1
—
Ending reserves:
Gross
338
388
374
350
350
356
351
343
350
343
Ceded
(24)
(29)
(29)
(29)
(27)
(26)
(37)
(36)
(29)
(36)
Net
$
314
$
359
$
345
$
321
$
323
$
330
$
314
$
307
$
321
$
307
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
30
The Travelers Companies, Inc.
Capitalization
($ in millions)
December 31, 2020
December 31, 2019
Debt
Short-term debt
Commercial paper
$
100
$
100
3.90% Senior notes due November 1, 2020 (1)
—
500
Total short-term debt
100
600
Long-term debt
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
500
8.312% Junior subordinated debentures due July 1, 2046
73
73
4.00% Senior notes due May 30, 2047 (1)
700
700
4.05% Senior notes due March 7, 2048 (1)
500
500
4.10% Senior notes due March 4, 2049 (1)
500
500
2.55% Senior notes due April 27, 2050 (1)
500
—
Total long-term debt
6,504
6,004
Unamortized fair value adjustment
41
43
Unamortized debt issuance costs
(95)
(89)
6,450
5,958
Total debt
6,550
6,558
Common equity (excluding net unrealized investment gains, net of tax, included in shareholders’ equity)
25,127
23,697
Total capital (excluding net unrealized investment gains, net of tax, included in shareholders’ equity)
$
31,677
$
30,255
Total debt to capital (excluding net unrealized investment gains, net of tax, included in shareholders’ equity)
20.7
%
21.7
%
(1) Redeemable anytime with “make-whole” premium.
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
31
The Travelers Companies, Inc.
Statutory Capital and Surplus to GAAP Shareholders' Equity Reconciliation
($ in millions)
December 31, 2020 (1)
December 31, 2019
Statutory capital and surplus
$
22,180
$
21,330
GAAP adjustments
Goodwill and intangible assets
3,568
3,589
Investments
5,337
3,130
Noninsurance companies
(3,730)
(4,111)
Deferred acquisition costs
2,358
2,273
Deferred federal income tax
(1,585)
(1,144)
Current federal income tax
(42)
(29)
Reinsurance recoverables
55
47
Furniture, equipment & software
841
676
Agents balances
168
212
Other
51
(30)
Total GAAP adjustments
7,021
4,613
GAAP shareholders’ equity
$
29,201
$
25,943
(1) Estimated and Preliminary
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
32
The Travelers Companies, Inc.
Statement of Cash Flows - Preliminary
($ in millions)
1Q2019
2Q2019
3Q2019
4Q2019
1Q2020
2Q2020
3Q2020
4Q2020
YTD 4Q2019
YTD 4Q2020
Cash flows from operating activities
Net income (loss)
$
796
$
557
$
396
$
873
$
600
$
(40)
$
827
$
1,310
$
2,622
$
2,697
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net realized investment (gains) losses
(53)
(25)
(23)
(12)
98
(13)
(37)
(50)
(113)
(2)
Depreciation and amortization
211
190
180
182
203
188
186
212
763
789
Deferred federal income tax expense (benefit)
32
(22)
(20)
(23)
6
(77)
4
38
(33)
(29)
Amortization of deferred acquisition costs
1,117
1,134
1,169
1,181
1,178
1,173
1,207
1,215
4,601
4,773
Equity in (income) loss from other investments
(34)
(98)
(64)
(55)
(67)
253
(154)
(162)
(251)
(130)
Premiums receivable
(434)
(345)
168
227
(326)
(245)
247
418
(384)
94
Reinsurance recoverables
98
53
61
(55)
(15)
75
(210)
(12)
157
(162)
Deferred acquisition costs
(1,185)
(1,223)
(1,211)
(1,128)
(1,215)
(1,238)
(1,241)
(1,160)
(4,747)
(4,854)
Claims and claim adjustment expense reserves
(2)
331
598
120
388
1,067
1,218
(51)
1,047
2,622
Unearned premium reserves
551
407
392
(342)
414
229
317
(368)
1,008
592
Other
(458)
194
355
444
(636)
292
(38)
511
535
129
Net cash provided by operating activities
639
1,153
2,001
1,412
628
1,664
2,326
1,901
5,205
6,519
Cash flows from investing activities
Proceeds from maturities of fixed maturities
1,556
1,482
1,857
1,950
1,461
1,610
2,170
2,146
6,845
7,387
Proceeds from sales of investments:
Fixed maturities
769
726
306
386
388
832
774
1,063
2,187
3,057
Equity securities
39
32
28
41
33
21
22
35
140
111
Other investments
105
135
106
113
64
75
45
97
459
281
Purchases of investments:
Fixed maturities
(2,914)
(2,794)
(2,526)
(2,477)
(2,630)
(2,160)
(5,161)
(4,122)
(10,711)
(14,073)
Equity securities
(22)
(19)
(21)
(32)
(35)
(24)
(21)
(32)
(94)
(112)
Real estate investments
(77)
(8)
(10)
(12)
(16)
(8)
(9)
(80)
(107)
(113)
Other investments
(146)
(116)
(107)
(128)
(103)
(125)
(93)
(166)
(497)
(487)
Net sales (purchases) of short-term securities
(109)
606
(1,114)
(340)
906
(2,053)
(240)
821
(957)
(566)
Securities transactions in course of settlement
295
(72)
209
(274)
85
9
428
(569)
158
(47)
Other
(82)
(87)
(74)
(82)
(69)
(75)
(78)
(108)
(325)
(330)
Net cash provided by (used in) investing activities
Treasury stock acquired - net employee share-based compensation
(46)
(1)
—
(1)
(46)
—
—
(1)
(48)
(47)
Dividends paid to shareholders
(205)
(214)
(214)
(211)
(210)
(216)
(217)
(218)
(844)
(861)
Payment of debt
—
(500)
—
—
—
—
—
(500)
(500)
(500)
Issuance of debt
492
—
—
—
—
490
—
—
492
490
Issuance of common stock - employee share options
63
111
32
7
31
34
7
55
213
127
Net cash provided by (used in) financing activities
(71)
(979)
(557)
(580)
(650)
308
(210)
(864)
(2,187)
(1,416)
Effect of exchange rate changes on cash
2
—
(6)
9
(12)
5
7
16
5
16
Net increase (decrease) in cash
(16)
59
92
(14)
50
79
(40)
138
121
227
Cash at beginning of period
373
357
416
508
494
544
623
583
373
494
Cash at end of period
$
357
$
416
$
508
$
494
$
544
$
623
$
583
$
721
$
494
$
721
Income taxes paid
$
5
$
320
$
42
$
61
$
15
$
2
$
396
$
165
$
428
$
578
Interest paid
$
50
$
121
$
60
$
107
$
60
$
106
$
60
$
113
$
338
$
339
34
The Travelers Companies, Inc.
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, to establish performance targets on a consolidated basis, and for other reasons as discussed below. 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.
Some of these measures exclude net realized investment gains (losses), net of tax, and/or net unrealized investment gains (losses), net of tax, included in shareholders’ equity, 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.
Core income (loss) is consolidated net income (loss) excluding the after-tax impact of net realized investment gains (losses), discontinued operations, the effect of a change in tax laws and tax rates at enactment, and cumulative effect of changes in accounting principles when applicable. Segment income (loss) is determined in the same manner as core income (loss) on a segment basis. Management uses segment income (loss) to analyze each segment’s performance and as a tool in making business decisions. Financial statement users also consider core income (loss) when analyzing the results and trends of insurance companies. Core income (loss) per share is core 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 realized investment gains (losses), net of tax, net unrealized investment gains (losses), net of tax, included in shareholders’ equity for the periods presented and the effect of a change in tax laws and tax rates at enactment (excluding the portion related to net unrealized investment gains (losses)). 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. Core return on equity is the ratio of annualized core 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 designated a catastrophe by internationally recognized organizations that track and report on insured losses resulting from catastrophic events, such as Property Claim Services (PCS) for events in the United States and Canada. Catastrophes can be caused by various natural events, including, among others, hurricanes, tornadoes and other windstorms, earthquakes, hail, wildfires, severe winter weather, floods, tsunamis, volcanic eruptions and other naturally-occurring events, such as solar flares. Catastrophes can also be man-made, such as terrorist attacks and other intentionally destructive acts including those involving nuclear, biological, chemical and radiological events, cyber events, explosions and destruction of infrastructure. Each catastrophe has unique characteristics and catastrophes are not predictable as to timing or amount. Their effects are included in net and core 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. The Company’s threshold for disclosing catastrophes is primarily determined at the reportable segment level. If a threshold for one segment or a combination thereof is exceeded and the other segments have losses from the same event, losses from the event are identified as catastrophe losses in the segment results and for the consolidated results of the Company. Additionally, an aggregate threshold is applied for international business across all reportable segments. The threshold for 2020 ranges from approximately $20 million to $30 million of losses before reinsurance and taxes.
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 core 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 premiums 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 and other, 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. Underlying combined ratio is the combined ratio adjusted to exclude the impact of prior year reserve development and catastrophes, net of reinsurance.
35
The Travelers Companies, Inc.
Glossary of Financial Measures and Description of Reportable Business Segments
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.
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 net unrealized investment gains and losses, net of tax, included in shareholders’ equity, 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, net of tax, included in shareholders’ equity is the ratio of debt to total capital excluding net unrealized investment gains and losses, net of tax, included in shareholders’ equity. 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 Insurance - Business Insurance offers a broad array of property and casualty insurance and insurance-related services to its customers, primarily in the United States, as well as in Canada, the United Kingdom, the Republic of Ireland and throughout other parts of the world as a corporate member of Lloyd’s. Business Insurance is organized as follows: Select Accounts; Middle Market including Commercial Accounts, Construction, Technology, Public Sector Services, Oil & Gas, Excess Casualty, Inland Marine, Ocean Marine, and Boiler & Machinery; National Accounts; National Property and Other including National Property, Northland Transportation, Northfield, National Programs, and Agribusiness; and International including Global Services. Business Insurance also includes Simply Business, a leading provider of small business insurance policies primarily in the United Kingdom that was acquired in August 2017, as well as Business Insurance Other, which primarily comprises the Company’s asbestos and environmental liabilities, and the assumed reinsurance and certain other runoff operations.
Bond & Specialty Insurance - Bond & Specialty Insurance provides surety, fidelity, management liability, professional liability, and other property and casualty coverages and related risk management services to its customers in the United States and certain specialty insurance products in Canada, the United Kingdom, the Republic of Ireland and Brazil (through a joint venture as described below), 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 including directors’ and officers’ liability, employee dishonesty, employment practices liability, fiduciary liability and cyber risk for public corporations, private companies, not-for-profit organizations and financial institutions; professional liability coverage for a variety of professionals including, among others, lawyers and design professionals; and in the United States only, property, workers’ compensation, auto and general liability for financial institutions.
Bond & Specialty Insurance surety business in Brazil and Colombia is conducted through Junto Holding Brasil S.A. (Junto) and Junto Holding Latam S.A. in Brazil. The Company owns 49.5% of both Junto, a market leader in surety coverages in Brazil, and Junto Holding Latam S.A., a Colombian start-up surety provider. These joint venture investments are accounted for using the equity method and are included in “other investments” on the consolidated balance sheet.
Personal Insurance - Personal Insurance writes a broad range of property and casualty insurance covering individuals’ personal risks, primarily in the United States, as well as in Canada. The primary products of automobile and homeowners insurance are complemented by a broad suite of related coverages.