The Travelers Companies, Inc. (NYSE: TRV) today announced
preliminary results for the fourth quarter of 2022.
For the fourth quarter of 2022, the Company expects to report
net income of $819 million, or $3.44 per diluted share, and core
income of $810 million, or $3.40 per diluted share.
Fourth quarter 2022 results include the Company’s estimate for
catastrophe losses of $459 million pre-tax ($362 million
after-tax), net of reinsurance. Catastrophe losses primarily
resulted from the significant winter storm that impacted much of
the U.S and Canada in late December.
“We are pleased with the solid results for the quarter in light
of the late December winter storm,” said Alan Schnitzer, Chairman
and Chief Executive Officer. “While the footprint of the storm was
substantial, impacting 37 U.S. states, the District of Columbia and
Canada, our loss experience is consistent with our modeled
estimates.
“Aside from the catastrophic weather, underlying results in our
commercial businesses were exceptional. Underlying results in
Personal Insurance remain challenged by elevated industrywide loss
costs. We recorded another quarter of progress with strong pricing
and other actions to address these challenges. Across all three
segments, we are also pleased with continued strong net written
premium growth in the quarter, positioning us well as we enter the
new year.”
The Company also expects results in the fourth quarter of 2022
to include an underlying underwriting gain of $723 million pre-tax
($571 million after-tax), net investment income of $625 million
pre-tax ($531 million after-tax), which includes $601 million
pre-tax ($510 million after-tax) from the fixed income portfolio,
and net favorable prior year reserve development of $185 million
pre-tax ($145 million after-tax).
Conference Call
As previously announced, Travelers will review its fourth
quarter and full year 2022 results at 9 a.m. ET on Tuesday, January
24, following the release of results earlier that morning.
Investors can access the call via webcast at investor.travelers.com
and by dialing 888-440-6281 within the United States or
646-960-0218 outside the United States. A slide presentation,
statistical supplement and live audio broadcast will be available
on the same website. Following the event, replays will be available
via webcast for one year at investor.travelers.com and by telephone
for 30 days by dialing 800-770-2030 within the United States or
647-362-9199 outside the United States. All callers should use
conference ID 5449478.
Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements, other than statements of historical facts,
may be forward-looking statements. Words such as “may,” “will,”
“should,” “likely,” “anticipates,” “expects,” “intends,” “plans,”
“projects,” “believes,” “estimates” and similar expressions are
used to identify these forward-looking statements. These statements
include, among other things, the Company’s statements about:
- the Company’s expected results of operations for the fourth
quarter ended December 31, 2022;
- the Company’s progress in Personal Insurance on addressing the
elevated industrywide loss costs; and
- top-line production.
The forward-looking statements in this press release provide
preliminary information based on the Company’s current estimates
and expectations, and remain subject to change and finalization
based on management’s ongoing review of results of the quarter and
completion of all quarter-end close processes. The Company cautions
investors that if the estimates, expectations or assumptions
underlying the forward-looking statements in this press release
prove inaccurate or if other risks or uncertainties arise, actual
results could differ materially from those expressed in, or implied
by, these forward-looking statements. Other factors that could
cause actual results to differ materially from the forward looking
statements in this press release are discussed under the captions
“Risk Factors,” “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and “Forward Looking
Statements” in the Company’s quarterly report on Form 10-Q filed
with the Securities and Exchange Commission (SEC) on October 19,
2022, and in the Company’s most recent annual report on Form 10-K
filed with the SEC on February 17, 2022, in each case as updated by
periodic filings with the SEC. The Company’s forward-looking
statements speak only as of the date of this press release, and the
Company undertakes no obligation to update forward-looking
statements.
About Travelers
The Travelers Companies, Inc. (NYSE: TRV) is a leading provider
of property casualty insurance for auto, home and business. A
component of the Dow Jones Industrial Average, Travelers has more
than 30,000 employees and generated revenues of approximately $37
billion in 2022. For more information, visit www.travelers.com.
GLOSSARY OF FINANCIAL MEASURES AND RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES
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.
Reconciliations of these measures to the most comparable GAAP
measures also follow.
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. 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.
Reconciliation of Net Income to Core Income
Three Months Ended
($ in millions, after-tax)
December 31, 2022
Net income
$
819
Adjustments:
Net realized investment gains
(9)
Core income
$
810
Reconciliation of Net Income per Share to Core Income per
Share on a Basic and Diluted Basis
Three Months Ended
Basic income per share
December 31, 2022
Net income
$
3.49
Adjustments:
Net realized investment gains
(0.04)
Core income
$
3.45
Diluted income per share
Net income
$
3.44
Adjustments:
Net realized investment gains
(0.04)
Core income
$
3.40
RECONCILIATION OF NET INCOME TO UNDERWRITING GAIN EXCLUDING
CERTAIN ITEMS
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. Underwriting gain, excluding the
impact of catastrophes and net favorable (unfavorable) prior year
loss reserve development, is the underwriting gain adjusted to
exclude claims and claim adjustment expenses, reinstatement
premiums and assessments related to catastrophes and loss reserve
development related to time periods prior to the current year. In
the opinion of the Company’s management, this measure is meaningful
to users of the financial statements to understand the Company’s
periodic earnings and the variability of earnings caused by the
unpredictable nature (i.e., the timing and amount) of catastrophes
and loss reserve development. This measure is also referred to as
underlying underwriting gain, underlying underwriting margin,
underlying underwriting income or underlying underwriting
result.
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 $30 million of losses before reinsurance and taxes.
Net favorable (unfavorable) prior year loss reserve
development is the increase or decrease in incurred claims and
claim adjustment expenses as a result of the re-estimation of
claims and claim adjustment expense reserves at successive
valuation dates for a given group of claims, which may be related
to one or more prior years. In the opinion of the Company’s
management, a discussion of loss reserve development is meaningful
to users of the financial statements as it allows them to assess
the impact between prior and current year development on incurred
claims and claim adjustment expenses, net and core income (loss),
and changes in claims and claim adjustment expense reserve levels
from period to period.
Reconciliation of Net Income to Pre-Tax Underlying
Underwriting Income (also known as Underlying Underwriting
Gain)
Three Months Ended
($ in millions, after-tax, except as
noted)
December 31, 2022
Net income
$
819
Net realized investment gains
(9)
Core income
810
Net investment income
(531)
Other (income) expense, including interest
expense
75
Underwriting income
354
Income tax expense on underwriting
results
95
Pre-tax underwriting income
449
Pre-tax impact of net favorable prior year
reserve development
(185)
Pre-tax impact of catastrophes
459
Pre-tax underlying underwriting
income
$
723
Reconciliation of Net Income to After-Tax Underlying
Underwriting Income (also known as Underlying Underwriting
Gain)
Three Months Ended
($ in millions, after-tax)
December 31, 2022
Net income
$
819
Net realized investment gains
(9)
Core income
810
Net investment income
(531)
Other (income) expense, including interest
expense
75
Underwriting income
354
Impact of net favorable prior year reserve
development
(145)
Impact of catastrophes
362
Underlying underwriting income
$
571
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Media: Patrick Linehan 917.778.6267 Institutional Investors:
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