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 operates in three segments -- Business Insurance, Personal Insurance, and Bond & Specialty Insurance.
The Business Insurance segment (which accounts for about 50% of net earned premiums) offers property/casualty insurance and related services to clients -- primarily in the US, as well as in Canada, the UK, Ireland, and throughout other parts of the world as a corporate member of
The Personal Insurance segment offers homeowners, auto, flood, and umbrella policies. That segment, which is growing by geographic expansion, accounts for more than 30% of the group's premiums.
The Bond & Specialty Insurance segment writes fidelity and surety, general liability and property, workers' compensation, commercial automobile, and commercial multi-peril lines. It accounts for about 10% of net earned premiums.
Travelers also offers reinsurance.
The vast majority (about 95%) of Travelers' business is in the US. It also operates in the UK through two arms: Travelers Insurance Company and Travelers Syndicate Management within Lloyd's of London. Those businesses offer commercial property/casualty and risk management services. Additionally, Travelers has modest operations in Canada, Brazil, India, China, and Ireland. It's looking to expand in Latin America.
The company employs field claim management teams in 20 centers and 53 satellite and specialty-only offices in some 45 states.
Sales and Marketing
Travelers' customers include commercial businesses, government agencies, associations, and individuals.
The company's offerings are distributed through independent agents and brokers across the US. In the Business Insurance segment, some 11,000 agents are supported by three customer service centers and about 115 field offices. The unit also writes business abroad, where its products are distributed through Lloyd's wholesale and retail brokers.
Personal products are distributed through some 10,300 independent agents, employee and affinity groups, and direct marketing. Meanwhile, the Bond & Specialty Insurance segment distributes products through some 5,600 independent agents and brokers.
Travelers' revenues have maintained a slow-but-steady growth rate in recent years -- a sign that the company has spread itself smoothly across industries and has taken no significant hits to its premiums. In 2017, revenue rose 3% to $28.9 billion as premiums and net realized investment gains grew. The Personal Insurance segment saw the highest relative gains, with a 10% increase in earned premiums.
Net income has fallen for the past three years and, in 2017, it declined 32% to $2.1 billion. This was largely due to an increase in claims and claim adjustment expenses. The company had catastrophe losses of $2 billion from the impact of hurricanes Harvey and Irma, California wildfires, and severe wind and hail storms.
The lower net income led to a decline in operating cash flow, which fell 10% to $3.8 billion.
Travelers targets growth in operating return on equity over time in the mid-teens, with the notion that economic cycles, weather patterns, and other factors can impact its business from year to year. The company follows disciplined underwriting and investment strategies to help it stay immune to market fluctuations and lingering depressed interest rates.
The firm also follows a disciplined acquisition strategy, seeking opportunities that will help it expand into new geographic markets or build on its existing product portfolio. Although Travelers is first and foremost a US-based insurer, it has recently made acquisitions that have expanded its operations in Canada, the UK, and Brazil, as well as providing it with entry into Colombia's market.
Another key strategy for Travelers is to innovate to improve the way it conducts business. It has its eye on technology, from data and analytics to digital sales (as evidenced by its 2017 acquisition of UK-based Simply Business).
Travelers also innovates to create new types of coverage. In 2018 the company launched the Traverse personal insurance product, marketed to consumers who don't need traditional auto or home coverage; it includes personal liability, identity theft, and property theft coverage. It also introduced Quantum Home 2.0, a homeowners product offering policy customization and simpler customer communications. Also that year, its Canadian division began offering human resources and legal assistance services (at no charge) to its small business customers.
Like all property/casualty insurers, the company is vulnerable to severe weather and natural disasters. For example, it had catastrophe losses of $2 billion in 2017 due to the impact of hurricanes, wildfires, and severe storms. To mitigate these types of losses, Travelers prefers to raise prices in manageable, gradual increments.
The company's three educational initiatives for 2018 are centered on reducing distracted driving, increasing cybersecurity, and tackling small business challenges. It has presented numerous forums, free to the public, around these issues.
Mergers and Acquisitions
Travelers Companies acquired Simply Business, a UK-based online business insurance broker, for $490 million in 2017. Simply Business offers small business coverage; the acquisition helped Travelers expand its digital channels in the UK and beyond.
ONE TOWER SQUARE
Hartford, CT 06183-0001
Phone: 1 (860) 277-0111
Employer Type: Privately Owned
Senior Technical Specialist: Michelle Davis
Employees (This Location): 4,000
Employees (All Locations): 21,000