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 (the largest percentage of business) and the UK. The company also offers surety and fidelity bonds as well as professional and management liability coverage for commercial operations.
Travelers' business insurance segment, serving all sizes of businesses, has traditionally accounted for more than half of the company's annual premiums earned. In 2014 the company realigned its reporting segments combining its international and business units into the Business and International Insurance segment. Its bond and financial products group joined with specialty coverages to form the Bond & Specialty Insurance segment.
Personal insurance, which was unchanged by the realignment, accounts for a third of the company's premiums. It is slowly growing through geographic expansion. Offerings include homeowners, auto, flood, and umbrella policies.
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. It's looking to expand in Latin America as well as in India and China.
Sales and Marketing
Customers include commercial businesses, government agencies, associations, and individuals.
Travelers' business insurance offerings are distributed through about 12,000 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 2013 the company reported a 2% increase in revenues to some $26.2 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 in 2012 and 49% to $3.7 billion in 2013. The increase was attributed to decreased claims from catastrophe losses.
Cash from operations has followed the net income trend for the last few years. In 2013 it increased by $586 million to $3.8 billion as the company collected more premiums and paid out less for catastrophic 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 2012 Travelers increased its stake in Brazilian specialty insurance firm J. Malucelli to 49.5%.