Reconciliation to Net Income and Earnings Per Share
2
Statement of Income
3
Net Income by Major Component and Combined Ratio
4
Core Income
5
Selected Statistics - Property and Casualty Operations
6
Written and Earned Premiums - Property and Casualty Operations
7
Business Insurance
Segment Income
8
Segment Income 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 (Loss)
16
Segment Income (Loss) by Major Component and Combined Ratio
17
Selected Statistics
18
Net Written Premiums
19
Selected Statistics - Automobile
20
Selected Statistics - 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 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-Q 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)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Net income
$
733
$
934
$
662
$
1,333
$
1,018
Net income per share:
Basic
$
2.89
$
3.70
$
2.65
$
5.43
$
4.20
Diluted
$
2.87
$
3.66
$
2.62
$
5.37
$
4.15
Core income
$
699
$
879
$
655
$
1,289
$
1,037
Core income per share:
Basic
$
2.75
$
3.48
$
2.63
$
5.25
$
4.27
Diluted
$
2.73
$
3.45
$
2.60
$
5.20
$
4.22
Return on equity
10.2
%
13.0
%
9.2
%
18.6
%
15.0
%
Core return on equity
11.1
%
13.7
%
10.1
%
19.8
%
15.5
%
Total assets, at period end
$
117,032
$
119,759
$
120,706
$
120,466
$
118,592
Total equity, at period end
$
28,269
$
29,156
$
28,474
$
28,887
$
25,531
Book value per share, at period end
$
112.42
$
116.86
$
115.74
$
119.77
$
106.40
Less: Net unrealized investment gains (losses), net of tax
11.21
12.98
10.97
10.01
(5.79)
Adjusted book value per share, at period end
$
101.21
$
103.88
$
104.77
$
109.76
$
112.19
Weighted average number of common shares outstanding (basic)
252.1
250.7
247.7
243.8
240.9
Weighted average number of common shares outstanding and common stock equivalents (diluted)
254.1
253.1
250.1
246.4
243.7
Common shares outstanding at period end
251.5
249.5
246.0
241.2
240.0
Common stock dividends declared
$
216
$
224
$
220
$
216
$
214
Common stock repurchased:
Under Board of Directors authorization
Shares
2.4
2.6
3.8
5.1
2.9
Cost
$
356
$
400
$
600
$
800
$
500
Other
Shares
0.3
—
—
—
0.4
Cost
$
41
$
1
$
1
$
1
$
59
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 and Earnings per Share
($ and shares in millions, except earnings per share)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Net income
Net income
$
733
$
934
$
662
$
1,333
$
1,018
Adjustments:
Net realized investment (gains) losses, after-tax
(34)
(47)
(7)
(44)
19
Impact of changes in tax laws and/or tax rates (1)
—
(8)
—
—
—
Core income
$
699
$
879
$
655
$
1,289
$
1,037
Basic earnings per share
Net income
$
2.89
$
3.70
$
2.65
$
5.43
$
4.20
Adjustments:
Net realized investment (gains) losses, after-tax
(0.14)
(0.19)
(0.02)
(0.18)
0.07
Impact of changes in tax laws and/or tax rates (1)
—
(0.03)
—
—
—
Core income
$
2.75
$
3.48
$
2.63
$
5.25
$
4.27
Diluted earnings per share
Net income
$
2.87
$
3.66
$
2.62
$
5.37
$
4.15
Adjustments:
Net realized investment (gains) losses, after-tax
(0.14)
(0.18)
(0.02)
(0.17)
0.07
Impact of changes in tax laws and/or tax rates (1)
—
(0.03)
—
—
—
Core income
$
2.73
$
3.45
$
2.60
$
5.20
$
4.22
Adjustments to net income and weighted average shares for net income EPS calculations: (2)
Basic and Diluted
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Net income, as reported
$
733
$
934
$
662
$
1,333
$
1,018
Participating share-based awards - allocated income
(5)
(7)
(5)
(10)
(7)
Net income available to common shareholders - basic and diluted
$
728
$
927
$
657
$
1,323
$
1,011
Common Shares
Basic
Weighted average shares outstanding
252.1
250.7
247.7
243.8
240.9
Diluted
Weighted average shares outstanding
252.1
250.7
247.7
243.8
240.9
Weighted average effects of dilutive securities - stock options and performance shares
2.0
2.4
2.4
2.6
2.8
Diluted weighted average shares outstanding
254.1
253.1
250.1
246.4
243.7
(1) Impact is recognized in the accounting period in which the change is enacted.
(2) 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 - Consolidated
($ in millions)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Revenues
Premiums
$
7,386
$
7,616
$
7,829
$
8,024
$
8,014
Net investment income
701
818
771
743
637
Fee income
101
104
97
100
103
Net realized investment gains (losses)
44
61
8
58
(23)
Other revenues
81
88
100
86
78
Total revenues
8,313
8,687
8,805
9,011
8,809
Claims and expenses
Claims and claim adjustment expenses
4,970
5,045
5,464
4,819
5,039
Amortization of deferred acquisition costs
1,207
1,254
1,281
1,301
1,310
General and administrative expenses
1,163
1,174
1,187
1,153
1,191
Interest expense
82
83
87
88
87
Total claims and expenses
7,422
7,556
8,019
7,361
7,627
Income before income taxes
891
1,131
786
1,650
1,182
Income tax expense
158
197
124
317
164
Net income
$
733
$
934
$
662
$
1,333
$
1,018
Other statistics
Effective tax rate on net investment income
15.9
%
16.7
%
16.3
%
16.0
%
15.4
%
Net investment income (after-tax)
$
590
$
682
$
645
$
624
$
539
Catastrophes, net of reinsurance:
Pre-tax
$
835
$
475
$
501
$
36
$
160
After-tax
$
659
$
376
$
395
$
29
$
127
Prior year reserve development - favorable (unfavorable):
Pre-tax
$
317
$
182
$
(56)
$
95
$
153
After-tax
$
249
$
144
$
(44)
$
75
$
122
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
3
The Travelers Companies, Inc.
Net Income by Major Component and Combined Ratio - Consolidated
($ in millions, net of tax)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Underwriting gain
$
166
$
253
$
68
$
729
$
575
Net investment income
590
682
645
624
539
Other income (expense), including interest expense
(57)
(56)
(58)
(64)
(77)
Core income
699
879
655
1,289
1,037
Net realized investment gains (losses)
34
47
7
44
(19)
Impact of changes in tax laws and/or tax rates (1)
—
8
—
—
—
Net income
$
733
$
934
$
662
$
1,333
$
1,018
Combined ratio (2) (3)
Loss and loss adjustment expense ratio
66.7
%
65.6
%
69.2
%
59.5
%
62.3
%
Underwriting expense ratio
29.9
%
29.7
%
29.4
%
28.5
%
29.0
%
Combined ratio
96.6
%
95.3
%
98.6
%
88.0
%
91.3
%
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development
(4.2)
%
(2.4)
%
0.8
%
(1.2)
%
(1.9)
%
Catastrophes, net of reinsurance
11.3
%
6.3
%
6.4
%
0.5
%
2.0
%
Underlying combined ratio
89.5
%
91.4
%
91.4
%
88.7
%
91.2
%
(1) Impact is recognized in the accounting period in which the change is enacted.
(2) Before policyholder dividends.
(3) 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. These allocations are to conform the calculation of the combined ratio with statutory accounting. Additionally, 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)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Billing and policy fees and other
$
27
$
27
$
27
$
26
$
27
Fee income:
Loss and loss adjustment expenses
$
38
$
39
$
36
$
37
$
35
Underwriting expenses
63
65
61
63
68
Total fee income
$
101
$
104
$
97
$
100
$
103
Non-insurance general and administrative expenses
$
70
$
77
$
81
$
75
$
82
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
4
The Travelers Companies, Inc.
Core Income - Consolidated
($ in millions)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Revenues
Premiums
$
7,386
$
7,616
$
7,829
$
8,024
$
8,014
Net investment income
701
818
771
743
637
Fee income
101
104
97
100
103
Other revenues
81
88
100
86
78
Total revenues
8,269
8,626
8,797
8,953
8,832
Claims and expenses
Claims and claim adjustment expenses
4,970
5,045
5,464
4,819
5,039
Amortization of deferred acquisition costs
1,207
1,254
1,281
1,301
1,310
General and administrative expenses
1,163
1,174
1,187
1,153
1,191
Interest expense
82
83
87
88
87
Total claims and expenses
7,422
7,556
8,019
7,361
7,627
Core income before income taxes
847
1,070
778
1,592
1,205
Income tax expense
148
191
123
303
168
Core income
$
699
$
879
$
655
$
1,289
$
1,037
Other statistics
Effective tax rate on net investment income
15.9
%
16.7
%
16.3
%
16.0
%
15.4
%
Net investment income (after-tax)
$
590
$
682
$
645
$
624
$
539
Catastrophes, net of reinsurance:
Pre-tax
$
835
$
475
$
501
$
36
$
160
After-tax
$
659
$
376
$
395
$
29
$
127
Prior year reserve development - favorable (unfavorable):
Pre-tax
$
317
$
182
$
(56)
$
95
$
153
After-tax
$
249
$
144
$
(44)
$
75
$
122
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)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Statutory underwriting
Gross written premiums
$
8,407
$
8,597
$
8,876
$
8,364
$
9,283
Net written premiums
$
7,505
$
8,135
$
8,324
$
8,002
$
8,367
Net earned premiums
$
7,386
$
7,616
$
7,829
$
8,029
$
8,016
Losses and loss adjustment expenses
4,920
5,003
5,415
4,773
4,994
Underwriting expenses
2,276
2,361
2,385
2,269
2,441
Statutory underwriting gain
190
252
29
987
581
Policyholder dividends
11
10
10
10
11
Statutory underwriting gain after policyholder dividends
$
179
$
242
$
19
$
977
$
570
Other statutory statistics
Reserves for losses and loss adjustment expenses
$
47,153
$
47,893
$
48,662
$
48,589
$
49,027
Increase (decrease) in reserves
$
906
$
740
$
769
$
(73)
$
438
Statutory capital and surplus
$
22,403
$
22,797
$
22,987
$
23,906
$
24,168
Net written premiums/surplus (1)
1.33:1
1.35:1
1.36:1
1.34:1
1.36:1
(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)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Written premiums
Gross
$
8,407
$
8,597
$
8,876
$
8,364
$
9,283
Ceded
(902)
(462)
(552)
(369)
(916)
Net
$
7,505
$
8,135
$
8,324
$
7,995
$
8,367
Earned premiums
Gross
$
7,895
$
8,164
$
8,376
$
8,574
$
8,565
Ceded
(509)
(548)
(547)
(550)
(551)
Net
$
7,386
$
7,616
$
7,829
$
8,024
$
8,014
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
7
The Travelers Companies, Inc.
Segment Income - Business Insurance
($ in millions)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Revenues
Premiums
$
3,799
$
3,880
$
3,970
$
4,085
$
4,071
Net investment income
523
615
575
552
468
Fee income
95
97
90
93
96
Other revenues
53
57
69
56
53
Total revenues
4,470
4,649
4,704
4,786
4,688
Claims and expenses
Claims and claim adjustment expenses
2,788
2,539
2,703
2,368
2,514
Amortization of deferred acquisition costs
627
642
653
659
668
General and administrative expenses
683
688
684
691
697
Total claims and expenses
4,098
3,869
4,040
3,718
3,879
Segment income before income taxes
372
780
664
1,068
809
Income tax expense
55
137
106
201
140
Segment income
$
317
$
643
$
558
$
867
$
669
Other statistics
Effective tax rate on net investment income
15.8
%
16.7
%
16.3
%
16.0
%
15.3
%
Net investment income (after-tax)
$
441
$
511
$
481
$
464
$
396
Catastrophes, net of reinsurance:
Pre-tax
$
506
$
149
$
181
$
(43)
$
79
After-tax
$
399
$
119
$
143
$
(34)
$
63
Prior year reserve development - favorable (unfavorable):
Pre-tax
$
134
$
73
$
(108)
$
74
$
113
After-tax
$
105
$
58
$
(86)
$
58
$
90
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
8
The Travelers Companies, Inc.
Segment Income by Major Component and Combined Ratio - Business Insurance
($ in millions, net of tax)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Underwriting gain (loss)
$
(116)
$
137
$
80
$
412
$
291
Net investment income
441
511
481
464
396
Other income (expense)
(8)
(5)
(3)
(9)
(18)
Segment income
$
317
$
643
$
558
$
867
$
669
Combined ratio (1) (2)
Loss and loss adjustment expense ratio
72.2
%
64.3
%
67.0
%
56.9
%
60.7
%
Underwriting expense ratio
31.3
%
31.0
%
30.5
%
30.1
%
30.2
%
Combined ratio
103.5
%
95.3
%
97.5
%
87.0
%
90.9
%
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development
(3.5)
%
(1.9)
%
2.7
%
(1.8)
%
(2.8)
%
Catastrophes, net of reinsurance
13.3
%
3.9
%
4.6
%
(1.0)
%
1.9
%
Underlying combined ratio
93.7
%
93.3
%
90.2
%
89.8
%
91.8
%
(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. These allocations are to conform the calculation of the combined ratio with statutory accounting. Additionally, 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)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Billing and policy fees and other
$
4
$
3
$
4
$
3
$
3
Fee income:
Loss and loss adjustment expenses
$
38
$
39
$
36
$
37
$
35
Underwriting expenses
57
58
54
56
61
Total fee income
$
95
$
97
$
90
$
93
$
96
Non-insurance general and administrative expenses
$
60
$
65
$
68
$
63
$
70
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)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Statutory underwriting
Gross written premiums
$
4,776
$
4,356
$
4,453
$
4,244
$
5,148
Net written premiums
$
4,125
$
3,980
$
4,021
$
3,973
$
4,502
Net earned premiums
$
3,799
$
3,880
$
3,970
$
4,090
$
4,073
Losses and loss adjustment expenses
2,741
2,500
2,657
2,326
2,472
Underwriting expenses
1,251
1,226
1,205
1,190
1,313
Statutory underwriting gain (loss)
(193)
154
108
574
288
Policyholder dividends
8
6
8
7
8
Statutory underwriting gain (loss) after policyholder dividends
$
(201)
$
148
$
100
$
567
$
280
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)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Net written premiums by market
Domestic
Select Accounts
$
729
$
726
$
685
$
693
$
819
Middle Market
2,384
2,087
2,252
2,210
2,616
National Accounts
290
213
228
256
303
National Property and Other
445
647
638
535
497
Total Domestic
3,848
3,673
3,803
3,694
4,235
International
277
307
218
272
267
Total
$
4,125
$
3,980
$
4,021
$
3,966
$
4,502
Net written premiums by product line
Domestic
Workers’ compensation
$
948
$
754
$
751
$
722
$
1,008
Commercial automobile
762
715
716
705
781
Commercial property
466
678
656
608
551
General liability
714
615
685
685
789
Commercial multi-peril
940
908
953
967
1,085
Other
18
3
42
7
21
Total Domestic
3,848
3,673
3,803
3,694
4,235
International
277
307
218
272
267
Total
$
4,125
$
3,980
$
4,021
$
3,966
$
4,502
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)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Revenues
Premiums
$
743
$
776
$
806
$
813
$
820
Net investment income
59
64
63
61
59
Other revenues
5
7
5
6
4
Total revenues
807
847
874
880
883
Claims and expenses
Claims and claim adjustment expenses
374
335
375
389
354
Amortization of deferred acquisition costs
134
142
147
147
149
General and administrative expenses
130
135
135
132
141
Total claims and expenses
638
612
657
668
644
Segment income before income taxes
169
235
217
212
239
Income tax expense
32
48
43
42
22
Segment income
$
137
$
187
$
174
$
170
$
217
Other statistics
Effective tax rate on net investment income
15.0
%
15.7
%
15.3
%
15.1
%
15.1
%
Net investment income (after-tax)
$
50
$
55
$
53
$
52
$
50
Catastrophes, net of reinsurance:
Pre-tax
$
24
$
3
$
3
$
10
$
1
After-tax
$
19
$
2
$
2
$
8
$
1
Prior year reserve development - favorable:
Pre-tax
$
15
$
44
$
22
$
24
$
35
After-tax
$
12
$
35
$
18
$
19
$
28
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)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Underwriting gain
$
84
$
128
$
118
$
114
$
165
Net investment income
50
55
53
52
50
Other income
3
4
3
4
2
Segment income
$
137
$
187
$
174
$
170
$
217
Combined ratio (1)
Loss and loss adjustment expense ratio
49.9
%
42.6
%
46.3
%
47.4
%
42.8
%
Underwriting expense ratio
35.3
%
35.5
%
34.8
%
34.1
%
35.2
%
Combined ratio
85.2
%
78.1
%
81.1
%
81.5
%
78.0
%
Impact on combined ratio:
Net favorable prior year reserve development
(2.1)
%
(5.7)
%
(2.6)
%
(3.0)
%
(4.3)
%
Catastrophes, net of reinsurance
3.1
%
0.4
%
0.3
%
1.2
%
0.1
%
Underlying combined ratio
84.2
%
83.4
%
83.4
%
83.3
%
82.2
%
(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)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Non-insurance general and administrative expenses
$
2
$
1
$
1
$
2
$
1
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)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Statutory underwriting
Gross written premiums
$
834
$
919
$
984
$
988
$
1,009
Net written premiums
$
723
$
854
$
894
$
905
$
882
Net earned premiums
$
743
$
776
$
806
$
813
$
820
Losses and loss adjustment expenses
371
331
373
385
351
Underwriting expenses
270
287
300
288
319
Statutory underwriting gain
102
158
133
140
150
Policyholder dividends
3
4
2
3
3
Statutory underwriting gain after policyholder dividends
$
99
$
154
$
131
$
137
$
147
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)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Net written premiums by market
Domestic
Management Liability
$
444
$
497
$
532
$
510
$
505
Surety
200
232
241
215
257
Total Domestic
644
729
773
725
762
International
79
125
121
180
120
Total
$
723
$
854
$
894
$
905
$
882
Net written premiums by product line
Domestic
Fidelity & surety
$
256
$
287
$
307
$
273
$
320
General liability
340
389
401
400
389
Other
48
53
65
52
53
Total Domestic
644
729
773
725
762
International
79
125
121
180
120
Total
$
723
$
854
$
894
$
905
$
882
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
15
The Travelers Companies, Inc.
Segment Income (Loss) - Personal Insurance
($ in millions)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Revenues
Premiums
$
2,844
$
2,960
$
3,053
$
3,126
$
3,123
Net investment income
119
139
133
130
110
Fee income
6
7
7
7
7
Other revenues
23
24
26
24
21
Total revenues
2,992
3,130
3,219
3,287
3,261
Claims and expenses
Claims and claim adjustment expenses
1,808
2,171
2,386
2,062
2,171
Amortization of deferred acquisition costs
446
470
481
495
493
General and administrative expenses
344
343
360
323
345
Total claims and expenses
2,598
2,984
3,227
2,880
3,009
Segment income (loss) before income taxes
394
146
(8)
407
252
Income tax expense (benefit)
80
25
(6)
80
27
Segment income (loss)
$
314
$
121
$
(2)
$
327
$
225
Other statistics
Effective tax rate on net investment income
16.4
%
17.1
%
16.8
%
16.5
%
15.9
%
Net investment income (after-tax)
$
99
$
116
$
111
$
108
$
93
Catastrophes, net of reinsurance:
Pre-tax
$
305
$
323
$
317
$
69
$
80
After-tax
$
241
$
255
$
250
$
55
$
63
Prior year reserve development - favorable (unfavorable):
Pre-tax
$
168
$
65
$
30
$
(3)
$
5
After-tax
$
132
$
51
$
24
$
(2)
$
4
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
16
The Travelers Companies, Inc.
Segment Income (Loss) by Major Component and Combined Ratio - Personal Insurance
($ in millions, net of tax)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Underwriting gain (loss)
$
198
$
(12)
$
(130)
$
203
$
119
Net investment income
99
116
111
108
93
Other income
17
17
17
16
13
Segment income (loss)
$
314
$
121
$
(2)
$
327
$
225
Combined ratio (1)
Loss and loss adjustment expense ratio
63.6
%
73.3
%
78.2
%
66.0
%
69.5
%
Underwriting expense ratio
26.7
%
26.4
%
26.4
%
25.1
%
25.8
%
Combined ratio
90.3
%
99.7
%
104.6
%
91.1
%
95.3
%
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development
(5.9)
%
(2.2)
%
(1.0)
%
0.1
%
(0.1)
%
Catastrophes, net of reinsurance
10.8
%
10.9
%
10.4
%
2.3
%
2.6
%
Underlying combined ratio
85.4
%
91.0
%
95.2
%
88.7
%
92.8
%
(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 to conform the calculation of the combined ratio with statutory accounting. Additionally, 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)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Billing and policy fees and other
$
23
$
24
$
23
$
23
$
24
Fee income
$
6
$
7
$
7
$
7
$
7
Non-insurance general and administrative expenses
$
2
$
3
$
4
$
3
$
3
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)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Statutory underwriting
Gross written premiums
$
2,797
$
3,322
$
3,439
$
3,132
$
3,126
Net written premiums
$
2,657
$
3,301
$
3,409
$
3,124
$
2,983
Net earned premiums
$
2,844
$
2,960
$
3,053
$
3,126
$
3,123
Losses and loss adjustment expenses
1,808
2,172
2,385
2,062
2,171
Underwriting expenses
755
848
880
791
809
Statutory underwriting gain (loss)
$
281
$
(60)
$
(212)
$
273
$
143
Policies in force (in thousands)
Automobile
3,056
3,098
3,141
3,179
3,212
Homeowners and Other
5,944
6,076
6,168
6,230
6,284
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)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Net written premiums by product line
Domestic
Automobile
$
1,375
$
1,467
$
1,529
$
1,456
$
1,496
Homeowners and Other
1,144
1,634
1,698
1,504
1,344
Total Domestic
2,519
3,101
3,227
2,960
2,840
International
138
200
182
164
143
Total
$
2,657
$
3,301
$
3,409
$
3,124
$
2,983
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 - Automobile
($ in millions)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Statutory underwriting
Gross written premiums
$
1,481
$
1,604
$
1,656
$
1,567
$
1,605
Net written premiums
$
1,466
$
1,597
$
1,648
$
1,562
$
1,591
Net earned premiums
$
1,478
$
1,525
$
1,557
$
1,581
$
1,568
Losses and loss adjustment expenses
845
1,026
1,180
1,280
1,188
Underwriting expenses
370
389
399
369
382
Statutory underwriting gain (loss)
$
263
$
110
$
(22)
$
(68)
$
(2)
Other statistics
Combined ratio (1):
Loss and loss adjustment expense ratio
57.2
%
67.2
%
75.9
%
80.9
%
75.8
%
Underwriting expense ratio
24.6
%
24.4
%
24.1
%
23.2
%
23.5
%
Combined ratio
81.8
%
91.6
%
100.0
%
104.1
%
99.3
%
Impact on combined ratio:
Net (favorable) unfavorable prior year reserve development
(5.2)
%
(2.1)
%
(0.4)
%
0.6
%
0.3
%
Catastrophes, net of reinsurance
0.4
%
1.7
%
3.4
%
(0.3)
%
0.2
%
Underlying combined ratio
86.6
%
92.0
%
97.0
%
103.8
%
98.8
%
Catastrophes, net of reinsurance:
Pre-tax
$
6
$
26
$
53
$
(5)
$
4
After-tax
$
5
$
21
$
41
$
(4)
$
3
Prior year reserve development - favorable (unfavorable):
Pre-tax
$
78
$
33
$
6
$
(10)
$
(4)
After-tax
$
61
$
26
$
5
$
(8)
$
(3)
Policies in force (in thousands)
3,056
3,098
3,141
3,179
3,212
Change from prior year quarter
2.9
%
3.5
%
4.2
%
5.0
%
5.1
%
Change from prior quarter
0.9
%
1.4
%
1.4
%
1.2
%
1.0
%
(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)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Billing and policy fees and other
$
14
$
14
$
14
$
14
$
14
Fee income
$
3
$
4
$
4
$
4
$
4
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 - Homeowners and Other
($ in millions)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Statutory underwriting
Gross written premiums
$
1,316
$
1,718
$
1,783
$
1,565
$
1,521
Net written premiums
$
1,191
$
1,704
$
1,761
$
1,562
$
1,392
Net earned premiums
$
1,366
$
1,435
$
1,496
$
1,545
$
1,555
Losses and loss adjustment expenses
963
1,146
1,205
782
983
Underwriting expenses
385
459
481
422
427
Statutory underwriting gain (loss)
$
18
$
(170)
$
(190)
$
341
$
145
Other statistics
Combined ratio (1):
Loss and loss adjustment expense ratio
70.5
%
79.8
%
80.5
%
50.7
%
63.2
%
Underwriting expense ratio
28.9
%
28.5
%
28.8
%
27.1
%
28.0
%
Combined ratio
99.4
%
108.3
%
109.3
%
77.8
%
91.2
%
Impact on combined ratio:
Net favorable prior year reserve development
(6.6)
%
(2.2)
%
(1.6)
%
(0.4)
%
(0.6)
%
Catastrophes, net of reinsurance
21.9
%
20.6
%
17.6
%
4.8
%
4.9
%
Underlying combined ratio
84.1
%
89.9
%
93.3
%
73.4
%
86.9
%
Catastrophes, net of reinsurance:
Pre-tax
$
299
$
297
$
264
$
74
$
76
After-tax
$
236
$
234
$
209
$
59
$
60
Prior year reserve development - favorable:
Pre-tax
$
90
$
32
$
24
$
7
$
9
After-tax
$
71
$
25
$
19
$
6
$
7
Policies in force (in thousands)
5,944
6,076
6,168
6,230
6,284
Change from prior year quarter
7.4
%
7.0
%
6.5
%
6.4
%
5.7
%
Change from prior quarter
1.5
%
2.2
%
1.5
%
1.0
%
0.9
%
(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)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Billing and policy fees and other
$
9
$
10
$
9
$
9
$
10
Fee income
$
3
$
3
$
3
$
3
$
3
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)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Revenues
Other revenues
$
—
$
—
$
—
$
—
$
—
Claims and expenses
Interest expense
82
83
87
88
87
General and administrative expenses
6
8
8
7
8
Total claims and expenses
88
91
95
95
95
Loss before income tax benefit
(88)
(91)
(95)
(95)
(95)
Income tax benefit
(19)
(19)
(20)
(20)
(21)
Loss
$
(69)
$
(72)
$
(75)
$
(75)
$
(74)
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)
March 31, 2022
December 31, 2021
Assets
Fixed maturities, available for sale, at fair value (amortized cost $76,158 and $74,751; allowance for expected credit losses of $4 and $3)
$
74,386
$
77,810
Equity securities, at fair value (cost $761 and $749)
880
893
Real estate investments
975
979
Short-term securities
3,467
3,836
Other investments
3,956
3,857
Total investments
83,664
87,375
Cash
752
761
Investment income accrued
570
615
Premiums receivable (net of allowance for expected credit losses of $89 and $107)
8,593
8,085
Reinsurance recoverables (net of allowance for estimated uncollectible reinsurance of $135 and $141)
8,734
8,452
Ceded unearned premiums
1,266
902
Deferred acquisition costs
2,645
2,542
Deferred taxes
662
—
Contractholder receivables (net of allowance for expected credit losses of $19 and $21)
3,901
3,890
Goodwill
4,001
4,008
Other intangible assets
301
306
Other assets
3,503
3,530
Total assets
$
118,592
$
120,466
Liabilities
Claims and claim adjustment expense reserves
$
57,572
$
56,907
Unearned premium reserves
17,193
16,469
Contractholder payables
3,920
3,911
Payables for reinsurance premiums
694
384
Deferred taxes
—
289
Debt
7,291
7,290
Other liabilities
6,391
6,329
Total liabilities
93,061
91,579
Shareholders’ equity
Common stock (1,750.0 shares authorized; 240.0 and 241.2 shares issued and outstanding)
24,348
24,154
Retained earnings
42,359
41,555
Accumulated other comprehensive income (loss)
(2,602)
1,193
Treasury stock, at cost (544.8 and 541.5 shares)
(38,574)
(38,015)
Total shareholders’ equity
25,531
28,887
Total liabilities and shareholders’ equity
$
118,592
$
120,466
23
The Travelers Companies, Inc.
Investment Portfolio
(at carrying value, $ in millions)
March 31, 2022
Pre-tax Book Yield (1)
December 31, 2021
Pre-tax Book Yield (1)
Investment portfolio
Taxable fixed maturities
$
42,829
2.62
%
$
44,743
2.60
%
Tax-exempt fixed maturities
31,557
2.79
%
33,067
2.81
%
Total fixed maturities
74,386
2.69
%
77,810
2.69
%
Non-redeemable preferred stocks
64
2.90
%
66
3.04
%
Common stocks
816
827
Total equity securities
880
893
Real estate investments
975
979
Short-term securities
3,467
0.53
%
3,836
0.10
%
Private equities
2,758
2,672
Hedge funds
234
231
Real estate partnerships
771
768
Other investments
193
186
Total other investments
3,956
3,857
Total investments
$
83,664
$
87,375
Net unrealized investment gains (losses), net of tax, included in shareholders’ equity
$
(1,391)
$
2,415
(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)
March 31, 2022
December 31, 2021
Fixed maturities
U.S. Treasury securities and obligations of U.S. Government corporations and agencies
$
3,173
$
3,562
Obligations of U.S. states and political subdivisions:
Pre-refunded
3,975
4,032
All other
31,313
32,830
Total
35,288
36,862
Debt securities issued by foreign governments
1,041
1,041
Mortgage-backed securities - principally obligations of U.S. Government agencies
1,760
1,817
Corporate and all other bonds
33,124
34,528
Total fixed maturities
$
74,386
$
77,810
Fixed Maturities
Quality Characteristics (1)
March 31, 2022
December 31, 2021
Amount
% of Total
Amount
% of Total
Quality Ratings
Aaa
$
31,609
42.5
%
$
33,323
42.8
%
Aa
17,713
23.8
18,140
23.3
A
14,057
18.9
14,757
19.0
Baa
9,976
13.4
10,483
13.5
Total investment grade
73,355
98.6
76,703
98.6
Ba
686
0.9
742
0.9
B
274
0.4
293
0.4
Caa and lower
71
0.1
72
0.1
Total below investment grade
1,031
1.4
1,107
1.4
Total fixed maturities
$
74,386
100.0
%
$
77,810
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
4.5
4.2
(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)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Gross investment income
Fixed maturities
$
491
$
493
$
497
$
508
$
505
Short-term securities
3
1
2
1
2
Other
218
335
281
243
142
712
829
780
752
649
Investment expenses
11
11
9
9
12
Net investment income, pre-tax
701
818
771
743
637
Income taxes
111
136
126
119
98
Net investment income, after-tax
$
590
$
682
$
645
$
624
$
539
Effective tax rate
15.9
%
16.7
%
16.3
%
16.0
%
15.4
%
Average invested assets (1)
$81,209
$82,594
$84,647
$85,806
$86,345
Average yield pre-tax (1)
3.5
%
4.0
%
3.6
%
3.5
%
2.9
%
Average yield after-tax
2.9
%
3.3
%
3.0
%
2.9
%
2.5
%
(1) Excludes net unrealized investment gains (losses), and is adjusted for cash, receivables for investment sales, payables on investment purchases and accrued investment income.
26
The Travelers Companies, Inc.
Net Realized and Unrealized Investment Gains (Losses) included in Shareholders' Equity
($ in millions)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Net realized investment gains (losses)
Fixed maturities
$
14
$
24
$
12
$
17
$
2
Equity securities
26
32
(1)
38
(19)
Other
4
5
(3)
3
(6)
Realized investment gains (losses) before tax
44
61
8
58
(23)
Related taxes
10
14
1
14
(4)
Net realized investment gains (losses)
$
34
$
47
$
7
$
44
$
(19)
Gross investment gains
$
50
$
72
$
24
$
66
$
13
Gross investment losses before impairments
(6)
(11)
(15)
(7)
(35)
Net investment gains (losses) before impairments
44
61
9
59
(22)
Net credit impairment (charges) recoveries
—
—
(1)
(1)
(1)
Net realized investment gains (losses) before tax
44
61
8
58
(23)
Related taxes
10
14
1
14
(4)
Net realized investment gains (losses)
$
34
$
47
$
7
$
44
$
(19)
($ in millions)
March 31, 2021
June 30, 2021
September 30, 2021
December 31, 2021
March 31, 2022
Net unrealized investment gains (losses), net of tax, included in shareholders’ equity, by asset type
Fixed maturities
$
3,577
$
4,113
$
3,428
$
3,062
$
(1,768)
Other
2
(1)
(2)
(2)
(2)
Unrealized investment gains (losses) before tax
3,579
4,112
3,426
3,060
(1,770)
Related taxes
762
873
727
645
(379)
Balance, end of period
$
2,817
$
3,239
$
2,699
$
2,415
$
(1,391)
27
The Travelers Companies, Inc.
Reinsurance Recoverables
($ in millions)
March 31, 2022
December 31, 2021
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses (1)
$
4,159
$
3,931
Gross structured settlements (2)
2,900
2,900
Mandatory pools and associations (3)
1,810
1,762
Gross reinsurance recoverables (4)
8,869
8,593
Allowance for estimated uncollectible reinsurance (5)
(135)
(141)
Net reinsurance recoverables
$
8,734
$
8,452
(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
March 31, 2022
Swiss Re Group
A+ second highest of 16 ratings
$
564
Munich Re Group
A+ second highest of 16 ratings
493
Berkshire Hathaway
A++ highest of 16 ratings
319
Alleghany Group
A+ second highest of 16 ratings
240
Axa Group
A+ second highest of 16 ratings
169
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
March 31, 2022
Fidelity & Guaranty Life Group
A- fourth highest of 16 ratings
$
718
Genworth Financial Group
B seventh highest of 16 ratings
315
John Hancock Group
A+ second highest of 16 ratings
264
Symetra Financial Corporation
A third highest of 16 ratings
220
Brighthouse Financial, Inc.
A third highest of 16 ratings
215
(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 March 31, 2022, after deducting mandatory pools and associations and before allowances for estimated uncollectible reinsurance, $5.94 billion, or 84%, were rated by A.M. Best Company. The Company utilizes updated A.M. Best credit ratings on a quarterly basis when determining the allowance. Of the total rated by A.M. Best Company, 94% were rated A- or better. The remaining 16% of reinsurance recoverables were comprised of the following: 6% related to captive insurance companies, 1% related to the Company’s participation in voluntary pools and 9% were balances from other companies not rated by A.M. Best Company. Certain of the Company's reinsurance recoverables are collateralized by letters of credit, funds held or trust agreements.
(5) The Company reports its reinsurance recoverables net of an allowance for estimated uncollectible reinsurance. The allowance is based upon the Company’s ongoing review of amounts outstanding, length of collection periods, changes in reinsurer credit standing, disputes, applicable coverage defenses and other relevant factors. For structured settlements, the allowance is also based upon the Company’s ongoing review of life insurers’ creditworthiness and estimated amounts of coverage that would be available from state guaranty funds if a life insurer defaults. A probability-of-default methodology which reflects current and forecasted economic conditions is used to estimate the amount of uncollectible reinsurance due to credit-related factors and the estimate is reported in an allowance for estimated uncollectible reinsurance. The allowance also includes estimated uncollectible amounts related to dispute risk with reinsurers.
28
The Travelers Companies, Inc.
Net Reserves for Losses and Loss Adjustment Expense
($ in millions)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Statutory Reserves for Losses and Loss Adjustment Expenses
Business Insurance
Beginning of period
$
36,999
$
37,694
$
38,010
$
38,342
$
38,233
Incurred
2,741
2,500
2,657
2,326
2,472
Paid
(2,056)
(2,196)
(2,288)
(2,438)
(2,242)
Foreign exchange and other
10
12
(37)
3
(13)
End of period
$
37,694
$
38,010
$
38,342
$
38,233
$
38,450
Bond & Specialty Insurance
Beginning of period
$
3,571
$
3,691
$
3,770
$
3,892
$
3,938
Incurred
371
331
373
385
351
Paid
(256)
(254)
(235)
(341)
(197)
Foreign exchange and other
5
2
(16)
2
(13)
End of period
$
3,691
$
3,770
$
3,892
$
3,938
$
4,079
Personal Insurance
Beginning of period
$
5,677
$
5,768
$
6,113
$
6,428
$
6,418
Incurred
1,808
2,172
2,385
2,062
2,171
Paid
(1,730)
(1,837)
(2,051)
(2,075)
(2,103)
Foreign exchange and other
13
10
(19)
3
12
End of period
$
5,768
$
6,113
$
6,428
$
6,418
$
6,498
Total
Beginning of period
$
46,247
$
47,153
$
47,893
$
48,662
$
48,589
Incurred
4,920
5,003
5,415
4,773
4,994
Paid
(4,042)
(4,287)
(4,574)
(4,854)
(4,542)
Foreign exchange and other
28
24
(72)
8
(14)
End of period
$
47,153
$
47,893
$
48,662
$
48,589
$
49,027
Prior Year Reserve Development: Unfavorable (Favorable)
Business Insurance
Asbestos
$
—
$
—
$
225
$
—
$
—
All other
(134)
(73)
(117)
(74)
(113)
Total Business Insurance (1)
(134)
(73)
108
(74)
(113)
Bond & Specialty Insurance
(15)
(44)
(22)
(24)
(35)
Personal Insurance
(168)
(65)
(30)
3
(5)
Total
$
(317)
$
(182)
$
56
$
(95)
$
(153)
(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 Reserves
($ in millions)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Asbestos reserves
Beginning reserves:
Gross
$
1,668
$
1,616
$
1,565
$
1,777
$
1,687
Ceded
(330)
(327)
(315)
(369)
(346)
Net
1,338
1,289
1,250
1,408
1,341
Incurred losses and loss expenses:
Gross
—
—
287
—
—
Ceded
—
—
(62)
—
—
Paid loss and loss expenses:
Gross
52
51
75
89
52
Ceded
(3)
(12)
(8)
(23)
(16)
Foreign exchange and other:
Gross
—
—
—
(1)
—
Ceded
—
—
—
—
(1)
Ending reserves:
Gross
1,616
1,565
1,777
1,687
1,635
Ceded
(327)
(315)
(369)
(346)
(331)
Net
$
1,289
$
1,250
$
1,408
$
1,341
$
1,304
See Glossary of Financial Measures and Description of Reportable Business Segments on pages 35 and 36.
30
The Travelers Companies, Inc.
Capitalization
($ in millions)
March 31, 2022
December 31, 2021
Debt
Short-term debt
Commercial paper
$
100
$
100
Total short-term debt
100
100
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
500
3.05% Senior notes due June 8, 2051 (1)
750
750
Total long-term debt
7,254
7,254
Unamortized fair value adjustment
39
39
Unamortized debt issuance costs
(102)
(103)
7,191
7,190
Total debt
7,291
7,290
Common equity (excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity)
26,922
26,472
Total capital (excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity)
$
34,213
$
33,762
Total debt to capital (excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity)
21.3
%
21.6
%
(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)
March 31, 2022 (1)
December 31, 2021
Statutory capital and surplus
$
24,168
$
23,906
GAAP adjustments
Goodwill and intangible assets
3,562
3,557
Investments
(1,477)
3,261
Noninsurance companies
(4,204)
(4,230)
Deferred acquisition costs
2,645
2,542
Deferred federal income tax
(276)
(1,274)
Current federal income tax
(1)
(39)
Reinsurance recoverables
87
87
Furniture, equipment & software
742
770
Agents balances
131
147
Other
154
160
Total GAAP adjustments
1,363
4,981
GAAP shareholders’ equity
$
25,531
$
28,887
(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
($ in millions)
1Q2021
2Q2021
3Q2021
4Q2021
1Q2022
Cash flows from operating activities
Net income
$
733
$
934
$
662
$
1,333
$
1,018
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized investment (gains) losses
(44)
(61)
(8)
(58)
23
Depreciation and amortization
235
215
212
208
234
Deferred federal income tax expense
56
1
4
1
40
Amortization of deferred acquisition costs
1,207
1,254
1,281
1,301
1,310
Equity in income from other investments
(200)
(313)
(261)
(219)
(118)
Premiums receivable
(333)
(385)
256
204
(509)
Reinsurance recoverables
12
142
(134)
(121)
(282)
Deferred acquisition costs
(1,258)
(1,343)
(1,354)
(1,272)
(1,413)
Claims and claim adjustment expense reserves
777
536
986
89
679
Unearned premium reserves
509
459
492
(211)
727
Other
(504)
410
407
437
(443)
Net cash provided by operating activities
1,190
1,849
2,543
1,692
1,266
Cash flows from investing activities
Proceeds from maturities of fixed maturities
2,064
2,283
2,176
2,329
1,879
Proceeds from sales of investments:
Fixed maturities
1,238
1,244
382
301
1,044
Equity securities
25
20
29
28
63
Real estate investments
—
—
7
24
—
Other investments
79
116
80
152
81
Purchases of investments:
Fixed maturities
(4,754)
(4,708)
(4,894)
(3,797)
(4,409)
Equity securities
(19)
(22)
(334)
(32)
(63)
Real estate investments
(5)
(9)
(8)
(6)
(9)
Other investments
(97)
(124)
(115)
(184)
(135)
Net sales (purchases) of short-term securities
524
(718)
948
917
367
Securities transactions in the course of settlement
Treasury stock acquired - net employee share-based compensation
(41)
(1)
(1)
(1)
(59)
Dividends paid to shareholders
(214)
(222)
(219)
(214)
(213)
Issuance of debt
—
739
—
—
—
Issuance of common stock - employee share options
134
72
50
37
159
Net cash provided by (used in) financing activities
(477)
188
(770)
(978)
(613)
Effect of exchange rate changes on cash
3
—
(7)
3
(5)
Net increase (decrease) in cash
(58)
26
129
(57)
(9)
Cash at beginning of period
721
663
689
818
761
Cash at end of period
$
663
$
689
$
818
$
761
$
752
Income taxes paid
$
58
$
284
$
201
$
164
$
10
Interest paid
$
59
$
104
$
59
$
115
$
59
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.
Reconciliation of Shareholders’ Equity to Adjusted Shareholders’ Equity
As of
($ in millions)
March 31, 2021
June 30, 2021
September 30, 2021
December 31, 2021
March 31, 2022
Shareholders’ equity
$
28,269
$
29,156
$
28,474
$
28,887
$
25,531
Adjustments:
Net unrealized investment (gains) losses, net of tax, included in shareholders’ equity
(2,817)
(3,239)
(2,699)
(2,415)
1,391
Net realized investment (gains) losses, net of tax
(34)
(81)
(88)
(132)
19
Impact of changes in tax laws and/or tax rates (1)
—
(8)
(8)
(8)
—
Adjusted shareholders’ equity
$
25,418
$
25,828
$
25,679
$
26,332
$
26,941
(1) Impact is recognized in the accounting period in which the change is enacted
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 2022 ranges from $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
35
The Travelers Companies, Inc.
Glossary of Financial Measures and Description of Reportable Business Segments
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.
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.
