10-QPeriod: Q3 FY2021

TRAVELERS COMPANIES, INC. Quarterly Report for Q3 Ended Sep 30, 2021

Filed October 19, 2021For Securities:TRV

Summary

The Travelers Companies, Inc. reported its third-quarter and nine-month results for the period ending September 29, 2021. For the third quarter, net income was $662 million, or $2.62 per diluted share, a decrease from $827 million, or $3.23 per diluted share, in the same period last year. For the nine-month period, net income increased significantly to $2.33 billion, or $9.16 per diluted share, compared to $1.39 billion, or $5.41 per diluted share, in the prior year. The company experienced an increase in earned premiums across all segments, driven by growth in Business Insurance, Bond & Specialty Insurance, and Personal Insurance. Net investment income also showed a substantial increase, particularly in the nine-month period, benefiting from higher average investment portfolios and strong performance in 'other investments'. However, the company faced higher catastrophe losses and net unfavorable prior year reserve development in the third quarter, which impacted profitability compared to the prior year's favorable trends in these areas.

Financial Highlights

34 data points
Beta

Revenue

$8.80B

Net Income

$662.00M

7.5% Net Margin

EPS (Diluted)

$2.62

Total Assets

$120.71B

Cash & Equivalents

$818.00M

Free Cash Flow

$2.54B

Financial Statements
Beta
Revenue$8.80B
SG&A Expenses$1.19B
Interest Expense$87.00M
Net Income$662.00M
EPS (Basic)$2.65
EPS (Diluted)$2.62
Shares Outstanding (Basic)247.70M
Shares Outstanding (Diluted)250.10M

Key Highlights

  • 1Net income for Q3 2021 was $662 million, down from $827 million in Q3 2020, with diluted EPS at $2.62 vs $3.23.
  • 2Nine-month net income increased to $2.33 billion from $1.39 billion in the prior year, with diluted EPS rising to $9.16 from $5.41.
  • 3Total revenues for Q3 2021 increased to $8.8 billion from $8.28 billion in Q3 2020.
  • 4Earned premiums grew by 6% for both the three and nine-month periods ending September 30, 2021, compared to the prior year.
  • 5Net investment income saw a significant increase, up 15% for Q3 and 48% for the nine-month period compared to the prior year.
  • 6Catastrophe losses for Q3 2021 were $501 million, up from $397 million in Q3 2020. For the nine-month period, catastrophe losses were $1.81 billion, up from $1.58 billion.
  • 7The company repurchased $600 million of its common stock in Q3 2021 and paid $220 million in dividends, returning $821 million to shareholders.

Frequently Asked Questions

The decrease in net income for the third quarter of 2021 was primarily driven by higher catastrophe losses ($501 million in Q3 2021 vs. $397 million in Q3 2020) and a shift from net favorable prior year reserve development in Q3 2020 to net unfavorable prior year reserve development in Q3 2021.

The company's investment portfolio performed well, with net investment income increasing by 15% in the third quarter and 48% in the nine-month period compared to the prior year. This growth was attributed to higher average investment portfolios and strong performance in 'other investments' which include private equity, hedge fund, and real estate partnerships.

Travelers Companies returned capital to shareholders through dividends and share repurchases. In the third quarter of 2021, the company returned $821 million to shareholders, consisting of $600 million in share repurchases and $220 million in dividends. The company has a remaining share repurchase authorization of $4.81 billion as of September 30, 2021.

Business Insurance saw segment income increase by 53% in Q3 2021, driven by higher underlying underwriting margins and lower unfavorable prior year reserve development. Bond & Specialty Insurance's segment income increased by 51% due to higher underwriting margins and favorable prior year reserve development. Personal Insurance reported a net loss of $2 million in Q3 2021, a significant decrease from income of $392 million in Q3 2020, primarily due to lower favorable prior year reserve development and higher losses in the automobile product line.