01—Abstract
Summary
Summary of the 10-K filed February 11, 2016. Cited figures are marked; the original filing is the authoritative source.
The Travelers Companies, Inc. reported solid performance for the fiscal year ended December 31, 2015.
The company generated total revenues of $26.8 billiona and a net income of $3.44 billion, or $10.88 per diluted share. The property and casualty insurer demonstrated a combined ratio of 88.3%, indicating strong underwriting discipline. Key financial strengths include total investments of $70.47 billion and total assets of $100.18 billion, with shareholders' equity at $23.60 billion.
The company actively returned capital to shareholders through $3.22 billionb in share repurchases and $739 million in dividends paid. The company's investment portfolio remains largely focused on high-quality, liquid fixed-maturity securities, with a slight decrease in net unrealized gains due to rising interest rates. The company operates across three main segments: Business and International Insurance, Bond & Specialty Insurance, and Personal Insurance.
The Business and International Insurance segment remains the largest, with earned premiums of $14.52 billionc, though operating income saw a decrease due to lower net investment income and underwriting margins. The Bond & Specialty Insurance segment reported operating income of $633 million, impacted by lower prior year reserve development.
Personal Insurance showed growth in operating income to $889 milliond, driven by higher prior year reserve development and lower catastrophe losses, though net investment income declined. Travelers maintained a strong capital position, with a debt-to-total capital ratio of 21.2%, well within its target range.
02—Key points
Key Highlights
- Total revenues reached $26.8 billion, with net income of $3.44 billion ($10.88 per diluted share).
- Combined ratio improved to 88.3% from 89.0% in the prior year, reflecting strong underwriting performance.
- Total investments stood at $70.47 billion, primarily composed of high-quality fixed maturities.
- Shareholders' equity was $23.60 billion, demonstrating a solid capital base.
- The company returned significant capital to shareholders, repurchasing $3.22 billion in common stock and paying $739 million in dividends.
- Business and International Insurance generated $14.52 billion in earned premiums, despite a decline in operating income due to lower investment income and underwriting margins.
- Personal Insurance saw an increase in operating income to $889 million, driven by favorable reserve development and lower catastrophe losses.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 11, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $26.82B$27.17B | −1.3% |
| SG&A Expenses | $4.09B$3.96B | +3.3% |
| Interest Expense | $373.00M$369.00M | +1.1% |
| Net Income | $3.44B$3.69B | −6.9% |
| EPS (Basic) | $10.99$10.82 | +1.6% |
| EPS (Diluted) | $10.88$10.70 | +1.7% |
| Shares Outstanding (Basic) | 310.60M338.80M | −8.3% |
| Shares Outstanding (Diluted) | 313.90M342.50M | −8.4% |
05—Questions
Frequently Asked Questions
What was Travelers' net income and earnings per share for the fiscal year 2015?
Travelers reported a net income of $3.44 billion, or $10.88 per diluted share, for the fiscal year ended December 31, 2015.
How did the company's major business segments perform in 2015?
The Business and International Insurance segment earned $14.52 billion in premiums but saw operating income decrease due to lower net investment income and underwriting margins. The Bond & Specialty Insurance segment's operating income was $633 million, affected by lower prior year reserve development. Personal Insurance's operating income increased to $889 million, driven by favorable reserve development and reduced catastrophe losses.
What was the company's combined ratio and what does it indicate?
Travelers achieved a combined ratio of 88.3% for 2015, an improvement from 89.0% in 2014. This indicates that the company is profitably underwriting its business, as a ratio below 100% generally signifies an underwriting profit.
How did Travelers return capital to shareholders in 2015?
In 2015, Travelers returned capital to shareholders by repurchasing $3.22 billion of its common stock and paying $739 million in dividends.
What is the general composition and quality of Travelers' investment portfolio?
The investment portfolio totaled $70.47 billion, with 93% invested in high-quality, liquid fixed-maturity and short-term securities. The average credit quality for the fixed maturity portfolio was 'Aa2' as of December 31, 2015, with below investment grade securities representing only 2.8% of the portfolio.
06—Continue