10-KPeriod: FY2020

TRAVELERS COMPANIES, INC. Annual Report, Year Ended Dec 31, 2020

Filed February 11, 2021For Securities:TRV

Summary

The Travelers Companies, Inc. (TRV) reported solid financial performance for the year ended December 31, 2020. Net income rose by 3% to $2.70 billion, or $10.52 per diluted share. This growth was driven by improved underwriting margins, particularly in Personal Insurance and Business Insurance, and favorable prior year reserve development. However, the company faced challenges from higher catastrophe losses, amounting to $1.61 billion, and a decrease in net investment income due to lower interest rates and COVID-19 impacts on certain investment portfolios. The company demonstrated strong premium growth, with net written premiums increasing by 2% to $29.73 billion. The Personal Insurance segment showed particularly robust growth of 5% in net written premiums, largely due to the homeowners line, despite premium refunds in the auto line attributed to COVID-19. Business Insurance premiums were comparable to the prior year, while Bond & Specialty Insurance saw an 8% increase in net written premiums. Travelers maintained a strong capital position, with shareholders' equity growing to $29.20 billion and a debt-to-total capital ratio of 18.3%. The company also continued its commitment to shareholder returns through dividends and share repurchases.

Financial Highlights

35 data points
Beta

Revenue

$31.98B

Net Income

$2.70B

8.4% Net Margin

EPS (Diluted)

$10.52

Total Assets

$116.76B

Cash & Equivalents

$721.00M

Free Cash Flow

$6.52B

Financial Statements
Beta
Revenue$31.98B
SG&A Expenses$4.51B
Interest Expense$339.00M
Net Income$2.70B
EPS (Basic)$10.56
EPS (Diluted)$10.52
Shares Outstanding (Basic)253.50M
Shares Outstanding (Diluted)254.60M

Key Highlights

  • 1Net income increased by 3% to $2.70 billion, or $10.52 per diluted share.
  • 2Net written premiums grew by 2% to $29.73 billion.
  • 3Personal Insurance segment experienced a 5% increase in net written premiums.
  • 4Business Insurance premiums remained stable compared to the prior year.
  • 5Bond & Specialty Insurance saw an 8% increase in net written premiums.
  • 6Catastrophe losses increased significantly to $1.61 billion.
  • 7Net investment income decreased by 10% to $2.23 billion due to lower interest rates and COVID-19 impacts.

Frequently Asked Questions

COVID-19 had a mixed impact. While it led to lower loss estimates in some lines like personal auto due to reduced miles driven, it also contributed to higher loss estimates in others, such as management liability coverages. Premium volumes were affected by economic conditions and premium refunds in Personal Insurance, while general and administrative expenses saw modest impacts from an increased allowance for credit losses.

Travelers maintained a diversified portfolio of high-quality, liquid investments, with 94% in fixed maturities and short-term securities. Net investment income decreased by 10% due to lower interest rates and volatility in global financial markets related to COVID-19. The company continued to monitor investment duration, aiming for a duration shorter than its estimated liabilities.

Reserves are management's estimate of ultimate liability for unpaid losses, involving significant judgment and actuarial expertise. Estimates are refined regularly based on experience, external events, and changes in the legal/regulatory environment. The company experienced net favorable prior year reserve development of $351 million in 2020, primarily driven by subrogation recoveries related to wildfires and better-than-expected loss experience in Personal Insurance, partially offset by unfavorable development in Business Insurance.

In 2020, Travelers repurchased approximately 4.9 million shares for $625 million and paid $861 million in dividends to shareholders. The company expects that, over time, dividends and share repurchases will not exceed net income, and the amount returned may be influenced by premium growth and capital requirements.