Welcome! Our site may look different to you because we made updates to help improve its accessibility to visitors with disabilities. The substance of Travelers 2020 Sustainability content has not changed.

  

Business Strategy & Competitive Advantages

At Travelers, our simple and unwavering mission for creating shareholder value is to deliver superior returns on equity by leveraging our competitive advantages; generate earnings and capital substantially in excess of our growth needs; and thoughtfully rightsize capital and grow book value per share over time. Our Board of Directors regularly reviews this long-term financial strategy. Executing our long-term strategy requires that we fulfill our promise to take care of our customers, our communities and our employees. By executing our financial strategy, investing strategically in the future and delivering on the Travelers Promise, we will continue to deliver meaningful shareholder value over time.

Business Strategy

Our Long-Term Financial Strategy for Creating Shareholder Value

More than a decade ago, Travelers laid out a clear, simple and unwavering mission for creating shareholder value:

Three text boxes with arrows pointing from left to right. The text in the first box says

A text box that reads

Our results in achieving the elements of this long-term financial strategy speak for themselves. Over the past decade:

  • Our return on equity has significantly outperformed the average return on equity for the industry.
  • We returned nearly $29 billion of excess capital to our shareholders.
  • We grew dividends per share at an average annual rate of 9%.
  • We have grown book value per share and adjusted book value per share at a compound annual rate of 7% and 6%, respectively.

Importantly, over this 10-year period, our return on equity has been less volatile than that of others in the property and casualty industry. The level and consistency of our return on equity over time reflect the value of our competitive advantages and demonstrate the discipline with which we run our business.

Delivering Industry-Leading Return on Equity Over Time

The results we deliver are due to our deliberate and consistent approach to creating shareholder value. We have been clear for many years that one of our crucial responsibilities is to produce an appropriate return on equity for our shareholders. This has meant developing and executing financial and operational plans consistent with our goal of achieving superior returns, which we defined many years ago as a mid-teens core return on equity over time. We emphasize that the objective is measured over time because we recognize that interest rates, reserve development and weather, among other factors, impact our results from year to year and that there are years – or longer periods – and environments in which a mid-teens return is not attainable. In that regard, we established the mid-teens goal at a time when the 10-year Treasury was yielding around 5%, and in that environment, a mid-teens return was industry leading. Our ability to achieve a mid-teens return over time going forward will depend on interest rates returning to more normal levels by historical standards. In any event, we will always seek to deliver industry-leading, superior returns over time.

Our focus on core return on equity encompasses multiple performance objectives key to creating shareholder value. The measure is a function of both core income and shareholders’ equity (excluding unrealized gains and losses on investments). Accordingly, core return on equity reflects a number of separate areas of financial performance related to both our income statement and balance sheet, including the quality and profitability of our underwriting and investment decisions, the pricing of our policies, the effectiveness of our claims management and the efficacy of our capital and risk management.

Granular and Deliberate Execution

One critical component of our ability to deliver exceptional returns over time is our granular approach to underwriting. In our commercial businesses, that means execution, including the allocation of capital, on an account-by-account or class-by-class basis. In personal lines, that means a very high degree of account segmentation and the allocation of capital generally by product and geography. With that and our advanced data and analytics, we select the risks we write and price our products deliberately with our targeted return in mind. Underlying all of this is a culture that understands how to balance the art and science of decision-making based on data and analytics. This culture alone is a competitive advantage, and one that we believe is hard to replicate. Our underwriting expertise is a hallmark of our success, and evaluating risk and reward is at the heart of what we do.

We actively manage all levers of profitability available to us, including risk selection, mix of business, claim and expense initiatives, volume, reinsurance, terms and conditions, and price. We have a long track record of capitalizing on all of the available levers to deliver superior returns – and of applying these levers on a strategic and business-by-business basis. This is evident in the way we have executed quite differently in each of our business segments through changing economic and business cycles.

Disciplined Investment Approach

Much like our underwriting strategy, successfully balancing risk and reward is at the heart of our well-defined investment philosophy. Our investment portfolio is managed first and foremost to support our insurance operations and, accordingly, is positioned to meet our obligations to policyholders under a wide range of conditions. With this in mind, we emphasize risk-adjusted returns and credit quality rather than reaching for yield that is not consistent with the underlying risk. Our asset allocation is designed so that the predictable stream of investment income from our fixed income portfolio will provide a firm and reliable foundation for our overall results. In addition, our Investment Policy, approved by our Board of Directors, reflects a long-term approach to sustainable value creation and requires that Travelers consider environmental, social and governance (ESG) factors in the investment process, to the extent relevant.

Rightsizing Capital and Growing Book Value Over Time: A Balanced Approach

Our capital management strategy has been an important driver of shareholder value creation over time. Our first objective for the capital we generate is to reinvest it in our business – organically and inorganically – to create shareholder value. For example, as we continue to grow our premium volumes, as we have for the past few years, we will retain more capital to support that growth. Also, we continue to invest in everything from talent to technology to further our ambitious innovation agenda and advance our strategic objectives. Having said that, we are disciplined stewards of our shareholders’ capital. To the extent that we continue to generate capital that we cannot reinvest consistent with our objective of generating industry-leading returns over time, we will manage it the same way we have for more than a decade – by returning it to our shareholders through dividends and share repurchases.

Acquisitions and Footprint

The lens through which we evaluate acquisition opportunities is that a transaction should contribute to our mission by improving our long-term return profile, reducing the volatility of our returns or creating shareholder value through some other important strategic benefit, such as a geographic or product position.

We have a great deal of experience in executing strategic transactions, and we view this as a core competency. The company that we are today has come together through a number of significant transactions over the past two decades.

Across all of our businesses, our strategic focus continues to include creating opportunities to write more business through retaining and growing our relationships with our high-quality in-force accounts and bringing our franchise value to new customers. As we have done successfully over the past few years, we will continue to seek to grow without compromising our return objectives or changing our risk profile, primarily by targeting customers, industries, products and geographies that we know well. In terms of geography, we continue to believe that geopolitical risk and economic instability around the world are underappreciated today. Accordingly, we like our North America concentration. That is not to say that we do not continue to recognize value and evaluate opportunities outside of North America, but we have set an even higher bar for those opportunities today.

Investing in Our Future

Our competitive advantages set us apart; they are foundational to the success of our long-term financial strategy. At the same time, we understand clearly that the world is changing, and changing quickly. Broadly speaking, we see four significant forces of change impacting our industry:

  • Consumers’ expectations are changing and being shaped by their experiences in other industries.
  • Rapid progress in technology is enabling us to reimagine almost every aspect of our business.
  • The opportunities presented by data and analytics are becoming even more consequential.
  • Traditional distribution is consolidating and alternative models are developing.

We are focused intently on these forces of change. While our long-term financial strategy is not changing, the competitive advantages that have fueled our success over the last decade will not necessarily be the same as those we will need to continue to lead for the next decade. That is the focus of our innovation agenda: making sure that our competitive advantages are as relevant and differentiating tomorrow as they are today.

Ultimately, the vision for our innovation agenda is to be:

the undeniable choice for the customer and an indispensable partner for our agents and brokers.

This vision drives our three innovation priorities:

  • Extending our advantage in risk expertise.
  • Providing great experiences for our customers, agents and brokers and employees.
  • Optimizing our productivity and efficiency.

A key theme running through our investments is that they are designed in large part to enable us to optimize the top line at attractive returns. We have been investing in these priorities for several years while delivering industry-leading returns and an improving expense ratio.

We are undertaking this work from a position of strength. We have the resources and expertise to be successful. Moreover, our business is complex, and the value of deep domain expertise in understanding risk and the products and services our customers need to manage that risk cannot be underestimated as the starting point for innovation. We believe the winners in our industry will be those who can innovate successfully on top of a foundation of excellence.

 * * *

Underlying our financial strategy and our innovation agenda is the Travelers Promise – our promise to be there for our customers, communities and employees. Only by faithfully keeping the Travelers Promise will we earn the support of key stakeholders essential to our success. And only by successfully delivering on our financial strategy and executing our innovation agenda will we earn the resources we need to keep the Travelers Promise. That’s why, at Travelers, our business strategy and performance are inextricably linked with the Travelers Promise.

Our Competitive Advantages

Our Drivers of Sustained Value

  • icon-business-strategy
    Business Strategy & Competitive Advantages
  • icon-risk-management
    Capital &
    Risk Management
  • icon-climate-strategy
    Climate
    Strategy
  • icon-community
    Community
  • icon-customer-experience
    Customer
    Experience
  • icon-data-privacy-and-cybersecurity
    Data Privacy &
    Cybersecurity
  • icon-disaster-preparedness-and-response
    Disaster Preparedness
    & Response
  • icon-diversity-and-inclusion
    Diversity &
    Inclusion
  • icon-eco-efficient-operations
    Eco-Efficient
    Operations
  • icon-ethics-and-values
    Ethics &
    Values
  • icon-governance
    Governance Practices
  • icon-human-capital-management
    Human Capital
    Management
  • icon-innovation
    Innovation
  • icon-investment-management
    Investment
    Management
  • icon-public-policy
    Public Policy
  • icon-safety-and-health
    Safety &
    Health
For IndividualsFor BusinessesClaim ServicesPrepare & PreventAbout TravelersCareersInvestorsSustainabilityCustomer SupportMyTravelers®For AgentsAccessibility Support Terms of ServicePrivacy & SecurityProducer Compensation Disclosure

IMPORTANT LEGAL INFORMATION

This site contains information about Travelers. Travelers disclaims any duty or obligation to update such information. Any "forward-looking statement" is made only as of the date such information was originally prepared by Travelers and is intended to fall within the safe harbor for forward-looking information provided in 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, statements about our future results of operations and financial condition; our share repurchases and dividends; our strategy and competitive advantages; our strategic and operational initiatives to improve profitability and competitiveness; our new product offerings; our innovation agenda; our investment portfolio; our risk management, including climate-related risks and opportunities, as well as catastrophe modeling; and our underwriting strategy. Results may differ materially from those expressed or implied by forward-looking statements. Factors that can cause results to differ materially include those described under “Forward Looking Statements” in the Corporation's most recent Form 10-K and Form 10-Qs filed with the SEC and available on our website.

 
This site may contain links to other Internet sites, and may frame material from other Internet sites. Such links or frames are not endorsements of any products or services in such sites, and no information in such site has been endorsed or approved by Travelers.
 
Except where noted, the information covered on this site highlights our performance and initiatives in fiscal year 2020.
 
The inclusion of information on this site should not be construed as a characterization regarding the materiality or financial impact of that information. For additional information regarding Travelers, please see our current and periodic reports with the Securities and Exchange Commission, including our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q.

Travelers and The Travelers Umbrella are registered trademarks of The Travelers Indemnity Company in the U.S. and other countries.