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The Travelers Companies 8-K 2011

Exhibit 99.2

 

The Travelers Companies, Inc.

Financial Supplement - Second Quarter 2011

 

 

Page Number

Consolidated Results

 

Financial Highlights

1

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

Operating Income (Loss)

5

Selected Statistics - Property and Casualty Operations

6

Written and Earned Premiums - Property and Casualty Operations

7

 

 

Business Insurance

 

Operating Income

8

Operating Income by Major Component and Combined Ratio

9

Selected Statistics

10

Net Written Premiums

11

 

 

Financial, Professional & International Insurance

 

Operating Income

12

Operating Income by Major Component and Combined Ratio

13

Selected Statistics

14

Net Written Premiums

15

 

 

Personal Insurance

 

Operating Income (Loss)

16

Operating Income (Loss) by Major Component and Combined Ratio

17

Selected Statistics

18

Selected Statistics - Agency Automobile

19

Selected Statistics - Agency Homeowners and Other

20

 

 

Supplemental Detail

 

Interest Expense and Other

21

Consolidated Balance Sheet

22

Investment Portfolio

23

Investment Portfolio - Fixed Maturities Data

24

Investment Income

25

Net Realized and Unrealized Investment Gains (Losses)

26

Reinsurance Recoverables

27

Net Reserves for Losses and Loss Adjustment Expense

28

Asbestos and Environmental Reserves

29

Capitalization

30

Statutory to GAAP Shareholders’ Equity Reconciliation

31

Statement of Cash Flows

32

Statement of Cash Flows (continued)

33

 

 

Glossary of Financial Measures and Description of Reportable Business Segments

34

 

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

 

Index

 



 

The Travelers Companies, Inc.

Financial Highlights

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2010

 

2010

 

2010

 

2010

 

2011

 

2011

 

2010

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

647

 

$

670

 

$

1,005

 

$

894

 

$

839

 

$

(364

)

$

1,317

 

$

475

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.26

 

$

1.37

 

$

2.14

 

$

1.98

 

$

1.94

 

$

(0.88

)

$

2.63

 

$

1.11

 

Diluted

 

$

1.25

 

$

1.35

 

$

2.11

 

$

1.95

 

$

1.92

 

$

(0.88

)

$

2.60

 

$

1.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

$

631

 

$

690

 

$

858

 

$

864

 

$

826

 

$

(377

)

$

1,321

 

$

449

 

Operating income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.23

 

$

1.41

 

$

1.83

 

$

1.91

 

$

1.91

 

$

(0.91

)

$

2.64

 

$

1.05

 

Diluted

 

$

1.22

 

$

1.39

 

$

1.81

 

$

1.89

 

$

1.89

 

$

(0.91

)

$

2.61

 

$

1.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on equity

 

9.6

%

10.1

%

15.0

%

13.6

%

13.3

%

(5.8

)%

9.9

%

3.8

%

Operating return on equity

 

10.1

%

11.4

%

14.3

%

14.5

%

14.1

%

(6.6

)%

10.7

%

3.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets, at period end (1)

 

$

109,171

 

$

107,498

 

$

108,629

 

$

105,656

 

$

105,252

 

$

106,468

 

$

107,498

 

$

106,468

 

Total equity, at period end

 

$

26,671

 

$

26,286

 

$

27,295

 

$

25,475

 

$

25,243

 

$

25,008

 

$

26,286

 

$

25,008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share, at period end

 

$

53.50

 

$

55.67

 

$

59.11

 

$

58.47

 

$

59.91

 

$

59.62

 

$

55.67

 

$

59.62

 

Less: Net unrealized investment gains, net of tax

 

3.90

 

5.05

 

6.49

 

4.28

 

4.32

 

5.34

 

5.05

 

5.34

 

Adjusted book value per share, at period end

 

$

49.60

 

$

50.62

 

$

52.62

 

$

54.19

 

$

55.59

 

$

54.28

 

$

50.62

 

$

54.28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding (basic)

 

508.4

 

484.5

 

465.9

 

447.9

 

428.2

 

418.6

 

496.3

 

423.3

 

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

 

515.1

 

490.8

 

472.0

 

454.7

 

434.4

 

418.6

 

502.6

 

429.1

 

Common shares outstanding at period end

 

497.0

 

470.8

 

460.5

 

434.6

 

420.3

 

419.5

 

470.8

 

419.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock dividends declared

 

$

168

 

$

173

 

$

169

 

$

160

 

$

155

 

$

175

 

$

341

 

$

330

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock repurchased:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Under Board of Director authorization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

27.0

 

28.0

 

11.8

 

28.9

 

18.9

 

3.9

 

55.0

 

22.8

 

Cost

 

$

1,400

 

$

1,400

 

$

600

 

$

1,600

 

$

1,100

 

$

237

 

$

2,800

 

$

1,337

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

0.8

 

0.2

 

 

0.3

 

0.8

 

0.6

 

1.0

 

1.4

 

Cost

 

$

40

 

$

14

 

$

 

$

12

 

$

46

 

$

36

 

$

54

 

$

82

 

 


(1)  Includes impact from certain reclassifications made to 2010 amounts to conform to 2011 presentation.

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

 

1



 

The Travelers Companies, Inc.

Reconciliation to Net Income (Loss) and Earnings Per Share

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2010

 

2010

 

2010

 

2010

 

2011

 

2011

 

2010

 

2011

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

$

631

 

$

690

 

$

858

 

$

864

 

$

826

 

$

(377

)

$

1,321

 

$

449

 

Net realized investment gains (losses)

 

16

 

(20

)

147

 

30

 

13

 

13

 

(4

)

26

 

Net income (loss)

 

$

647

 

$

670

 

$

1,005

 

$

894

 

$

839

 

$

(364

)

$

1,317

 

$

475

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

$

1.23

 

$

1.41

 

$

1.83

 

$

1.91

 

$

1.91

 

$

(0.91

)

$

2.64

 

$

1.05

 

Net realized investment gains (losses)

 

0.03

 

(0.04

)

0.31

 

0.07

 

0.03

 

0.03

 

(0.01

)

0.06

 

Net income (loss)

 

$

1.26

 

$

1.37

 

$

2.14

 

$

1.98

 

$

1.94

 

$

(0.88

)

$

2.63

 

$

1.11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

$

1.22

 

$

1.39

 

$

1.81

 

$

1.89

 

$

1.89

 

$

(0.91

)

$

2.61

 

$

1.04

 

Net realized investment gains (losses)

 

0.03

 

(0.04

)

0.30

 

0.06

 

0.03

 

0.03

 

(0.01

)

0.06

 

Net income (loss)

 

$

1.25

 

$

1.35

 

$

2.11

 

$

1.95

 

$

1.92

 

$

(0.88

)

$

2.60

 

$

1.10

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2010

 

2010

 

2010

 

2010

 

2011

 

2011

 

2010

 

2011

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss), as reported

 

$

647

 

$

670

 

$

1,005

 

$

894

 

$

839

 

$

(364

)

$

1,317

 

$

475

 

Preferred stock dividends

 

(1

)

 

(1

)

(1

)

(1

)

 

(1

)

(1

)

Participating share-based awards - allocated income

 

(5

)

(5

)

(8

)

(7

)

(7

)

(2

)

(10

)

(4

)

Net income (loss) available to common shareholders - basic

 

$

641

 

$

665

 

$

996

 

$

886

 

$

831

 

$

(366

)

$

1,306

 

$

470

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) available to common shareholders - basic

 

$

641

 

$

665

 

$

996

 

$

886

 

$

831

 

$

(366

)

$

1,306

 

$

470

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible preferred stock

 

1

 

 

1

 

1

 

1

 

 

1

 

1

 

Performance shares

 

 

 

1

 

1

 

 

 

 

 

Net income (loss) available to common shareholders - diluted

 

$

642

 

$

665

 

$

998

 

$

888

 

$

832

 

$

(366

)

$

1,307

 

$

471

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

508.4

 

484.5

 

465.9

 

447.9

 

428.2

 

418.6

 

496.3

 

423.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

508.4

 

484.5

 

465.9

 

447.9

 

428.2

 

418.6

 

496.3

 

423.3

 

Weighted average effects of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible preferred stock

 

1.9

 

1.8

 

1.7

 

1.7

 

1.6

 

 

1.8

 

1.4

 

Stock options and performance shares

 

4.8

 

4.5

 

4.4

 

5.1

 

4.6

 

 

4.5

 

4.4

 

Diluted weighted average shares outstanding

 

515.1

 

490.8

 

472.0

 

454.7

 

434.4

 

418.6

 

502.6

 

429.1

 

 


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

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

 

2



 

The Travelers Companies, Inc.

Statement of Income (Loss) - Consolidated

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2010

 

2010

 

2010

 

2010

 

2011

 

2011

 

2010

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premiums

 

$

5,230

 

$

5,340

 

$

5,422

 

$

5,440

 

$

5,371

 

$

5,503

 

$

10,570

 

$

10,874

 

Net investment income

 

753

 

762

 

735

 

809

 

779

 

758

 

1,515

 

1,537

 

Fee income

 

79

 

76

 

64

 

68

 

74

 

74

 

155

 

148

 

Net realized investment gains (losses)

 

25

 

(31

)

226

 

44

 

20

 

19

 

(6

)

39

 

Other revenues (1)

 

32

 

32

 

35

 

(29

)

34

 

34

 

64

 

68

 

Total revenues

 

6,119

 

6,179

 

6,482

 

6,332

 

6,278

 

6,388

 

12,298

 

12,666

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Claims and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Claims and claim adjustment expenses

 

3,388

 

3,419

 

3,213

 

3,190

 

3,382

 

5,141

 

6,807

 

8,523

 

Amortization of deferred acquisition costs

 

929

 

950

 

966

 

957

 

948

 

970

 

1,879

 

1,918

 

General and administrative expenses

 

847

 

832

 

837

 

890

 

883

 

907

 

1,679

 

1,790

 

Interest expense

 

98

 

97

 

95

 

98

 

96

 

97

 

195

 

193

 

Total claims and expenses

 

5,262

 

5,298

 

5,111

 

5,135

 

5,309

 

7,115

 

10,560

 

12,424

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

857

 

881

 

1,371

 

1,197

 

969

 

(727

)

1,738

 

242

 

Income tax expense (benefit)

 

210

 

211

 

366

 

303

 

130

 

(363

)

421

 

(233

)

Net income (loss)

 

$

647

 

$

670

 

$

1,005

 

$

894

 

$

839

 

$

(364

)

$

1,317

 

$

475

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized investment gains (losses)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other-than-temporary impairment losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total gains (losses)

 

$

(1

)

$

2

 

$

8

 

$

(2

)

$

2

 

$

5

 

$

1

 

$

7

 

Non-credit component of impairments recognized in accumulated other changes in equity from nonowner sources

 

(9

)

(6

)

(14

)

(4

)

(6

)

(9

)

(15

)

(15

)

Other-than-temporary impairment losses

 

(10

)

(4

)

(6

)

(6

)

(4

)

(4

)

(14

)

(8

)

Other net realized investment gains (losses)

 

35

 

(27

)

232

 

50

 

24

 

23

 

8

 

47

 

Net realized investment gains (losses)

 

$

25

 

$

(31

)

$

226

 

$

44

 

$

20

 

$

19

 

$

(6

)

$

39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective tax rate on net investment income

 

18.9

%

19.1

%

18.8

%

20.3

%

20.2

%

20.1

%

19.0

%

20.1

%

Net investment income (after-tax)

 

$

610

 

$

617

 

$

597

 

$

644

 

$

622

 

$

606

 

$

1,227

 

$

1,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Catastrophes, net of reinsurance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax

 

$

471

 

$

439

 

$

117

 

$

86

 

$

186

 

$

1,668

 

$

910

 

$

1,854

 

After-tax

 

$

312

 

$

285

 

$

77

 

$

55

 

$

122

 

$

1,085

 

$

597

 

$

1,207

 

 


(1)  In 4Q 2010, “Other revenues” include $(60) million of expenses related to the Company’s purchase and retirement of $885 million of its $1 billion 6.25% fixed-to-floating rate junior subordinated debentures.

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

 

3


 


 

The Travelers Companies, Inc.

Net Income (Loss) by Major Component and Combined Ratio - Consolidated

($ in millions, net of tax)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2010

 

2010

 

2010

 

2010

 

2011

 

2011

 

2010

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Underwriting gain (loss)

 

$

80

 

$

119

 

$

302

 

$

303

 

$

249

 

$

(924

)

$

199

 

$

(675

)

Net investment income

 

610

 

617

 

597

 

644

 

622

 

606

 

1,227

 

1,228

 

Other, including interest expense (1)

 

(59

)

(46

)

(41

)

(83

)

(45

)

(59

)

(105

)

(104

)

Operating income (loss)

 

631

 

690

 

858

 

864

 

826

 

(377

)

1,321

 

449

 

Net realized investment gains (losses)

 

16

 

(20

)

147

 

30

 

13

 

13

 

(4

)

26

 

Net income (loss)

 

$

647

 

$

670

 

$

1,005

 

$

894

 

$

839

 

$

(364

)

$

1,317

 

$

475

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Combined ratio (2) (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss and loss adjustment expense ratio

 

64.0

%

63.3

%

58.7

%

58.0

%

62.1

%

92.6

%

63.6

%

77.6

%

Underwriting expense ratio

 

32.4

%

31.9

%

31.9

%

32.6

%

32.6

%

32.4

%

32.2

%

32.5

%

Combined ratio

 

96.4

%

95.2

%

90.6

%

90.6

%

94.7

%

125.0

%

95.8

%

110.1

%

GAAP combined ratio excluding incremental impact of direct to consumer initiative

 

95.8

%

94.6

%

89.7

%

89.6

%

93.8

%

124.1

%

95.2

%

109.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact of catastrophes on combined ratio

 

9.0

%

8.2

%

2.2

%

1.5

%

3.4

%

30.3

%

8.6

%

17.1

%

Impact of prior year reserve development on combined ratio

 

-5.6

%

-7.2

%

-4.1

%

-6.4

%

-4.4

%

-3.1

%

-6.4

%

-3.7

%

 


(1)  In 4Q 2010, “Other, including interest expense” includes $(39) million, net of tax, of expenses related to the Company’s purchase and retirement of $885 million of its $1 billion 6.25% fixed-to-floating rate junior subordinated debentures.

(2)  Before policyholder dividends.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2010

 

2010

 

2010

 

2010

 

2011

 

2011

 

2010

 

2011

 

Billing and policy fees

 

$

27

 

$

25

 

$

27

 

$

25

 

$

26

 

$

25

 

$

52

 

$

51

 

Fee income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss and loss adjustment expenses

 

$

36

 

$

31

 

$

23

 

$

30

 

$

33

 

$

34

 

$

67

 

$

67

 

Underwriting expenses

 

43

 

45

 

41

 

38

 

41

 

40

 

88

 

81

 

Total fee income

 

$

79

 

$

76

 

$

64

 

$

68

 

$

74

 

$

74

 

$

155

 

$

148

 

 

See Glossary of Financial Measures and Description of Reportable Business Segments on page 34.

 

4


 


 

The Travelers Companies, Inc.

Operating Income (Loss) - Consolidated

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD

 

YTD

 

 

 

1Q

 

2Q

 

3Q

 

4Q

 

1Q

 

2Q

 

2Q

 

2Q

 

 

 

2010

 

2010

 

2010

 

2010

 

2011

 

2011

 

2010

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Premiums

 

$

5,230

 

$

5,340

 

$

5,422

 

$

5,440

 

$

5,371

 

$

5,503

 

$

10,570

 

$

10,874

 

Net investment income

 

753

 

762

 

735

 

809

 

779

 

758

 

1,515

 

1,537

 

Fee income

 

79

 

76

 

64

 

68

 

74

 

74

 

155

 

148

 

Other revenues (1)

 

32

 

32

 

35

 

(29

)

34

 

34

 

64

 

68

 

Total revenues

 

6,094

 

6,210

 

6,256

 

6,288

 

6,258

 

6,369

 

12,304

 

12,627

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Claims and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Claims and claim adjustment expenses

 

3,388

 

3,419

 

3,213

 

3,190

 

3,382

 

5,141

 

6,807

 

8,523

 

Amortization of deferred acquisition costs

 

929

 

950

 

966

 

957

 

948

 

970

 

1,879

 

1,918

 

General and administrative expenses

 

847

 

832

 

837

 

890

 

883

 

907

 

1,679

 

1,790

 

Interest expense