Running a business is a risk The Travelers Companies will insure. While it does offer personal auto and homeowners insurance, the company's largest segment is commercial property/casualty insurance to businesses big and small. It is one of the largest business insurers in the US, providing commercial auto, property, workers' compensation, marine, and general and financial liability coverage to companies in North America and the UK. The company also offers surety and fidelity bonds as well as professional and management liability coverage for commercial operations.
While the vast majority (over 95%) of the company's business is in the US, it does have a presence in the UK, where it operates through two arms: Travelers Insurance Company and Travelers Syndicate Management within Lloyd's of London. The two businesses offer commercial property/casualty and risk management services. Travelers also has modest operations in Canada, Bermuda, Brazil, and Singapore.
Travelers' business insurance segment accounts for more than half of the company's annual premiums earned. The division serves small, midsized, and large multinational corporations. In addition to serving general commercial accounts, Travelers maintains a group of industry-specific underwriting units serving the agribusiness, construction, oil and gas, and technology industries, as well as the public sector.
Personal insurance now accounts for a third of the company's premiums and it is slowly building up the business with geographic expansion. Offerings include homeowners, auto, flood, and umbrella policies.
A third segment -- financial, professional, and international insurance -- accounts for about 15% of premiums and includes surety bond, management and professional liability, and crime coverage, as well as the international insurance operations.
Sales and Marketing
Customers include commercial businesses, government agencies, associations, and individuals.
Travelers' business insurance offerings are distributed through about 10,500 independent agents and brokers across the US. These agents are supported by three customer service centers and 120 field offices.
The personal products are distributed through some 12,000 independent agents, employee and affinity groups, and direct marketing. Meanwhile, the financial, professional, and international insurance segment distributes products through more than 6,000 independent agents and brokers.
Despite general market turmoil, The Traveler's revenues have maintained a slow-but-steady growth rate in recent years -- a sign that the company has spread itself smoothly across industries and took no significant hits to its premiums. In 2012 the company reported a 1% increase in revenues to some $25.7 billion due to higher premiums earned in the business and personal insurance segments.
Net income levels have been more volatile for the company. Investment income recovered from stock market woes just in time for an uptick of catastrophe claims in 2010 and 2011 due to harsh weather events, and Travelers' net income dropped both years following common share repurchases. In 2012 net income returned to growth, rising some 73% to nearly $2.5 billion; the increase was attributed to decreased claims from catastrophe losses.
The company launched a restructuring program in 2013 to reduce operating expenses in the personal insurance division. The program aims to improve Travelers' competitive position in the private passenger auto insurance market. The program, which aims to cut $140 million in annual expenses by 2015, includes a workforce reduction of about 450 jobs (less than 2% of total employees) and facility consolidation efforts.
Travelers moved to help its business customers control costs and increase safety through the launch of its IntelliDrive fleet safety program in 2012. On the personal insurance side, Travelers launched a wind credit for homeowners who have utilized wind-resistant building practices.
Though Travelers has reduced its international holdings in recent years, the company is pursuing opportunities in emerging markets such as Brazil; the firm is also considering expansion in high-growth countries such as India and China.
Mergers and Acquisitions
Travelers expanded in North America through the $1.1 billion purchase of The Dominion of Canada General Insurance from E-L Financial in late 2013. The move improves Travelers position with brokers and customers across Canada; the acquired business will combined with existing Canadian operations (Travelers Canada) headquartered in Toronto.
In 2010 the company moved to expand in emerging markets by acquiring a 43% stake in J. Malucelli, a leading provider of surety policies in the fast-growing Brazilian market. In 2012 Travelers increased its stake in the Brazilian firm to 49.5%; meanwhile, J. Malucelli launched other types of property/casualty policies (in addition to surety) that year.