SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 24, 1994
------------------------
The Travelers Inc.
------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-9924 52-1568099
----------- --------------- ---------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
65 East 55th Street, New York, New York 10022
------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(212) 891-8900
------------------------------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
The Travelers Inc.
Current Report on Form 8-K
Item 5. Other Events
The Travelers Inc.'s ("Travelers") operating earnings for
the fourth quarter, ended December 31, 1993, increased 80% to
$276.6 million from $153.3 million in the 1992 period. Earnings
per share from operations were $1.10, up 67% from $0.66 per share.
For the full year 1993, operating earnings reached $899.5
million, with operating earnings per share up 41% to $3.67 per
share. This compares with 1992 results of $593.0 million, or
$2.61 per share.
Net Income for the Quarter and Year
-----------------------------------
Net income for the 1993 fourth quarter was $297.9 million,
or $1.19 per share, reflecting, as well as operating income, an
additional $21.3 million, or $0.09 per share, from the reversal
of a deferred tax liability no longer required with 100%
ownership of The Travelers Corporation ("old Travelers"), now the
Travelers Insurance Companies subsidiary. This compares to net
income of $221.3 million, or $0.96 per share, in the 1992
quarter, which reflected net gains of $68.0 million, or $0.30 per
share, from sales of various subsidiaries and affiliates.
For the full year 1993, net income reached $915.6 million,
or $3.74 per share, reflecting, in addition to operating
earnings:
- $109.2 million in reported investment portfolio gains and an
$8.1 million gain from the sale of subsidiaries and affiliates
- A charge of $16.7 million related to the cumulative effect
of FAS 106
- A charge of $17.7 million related to the cumulative effect
of FAS 112, which was adopted retroactively to the beginning
of 1993
- A $65.0 million provision for one-time expenses related to
the Smith Barney and Shearson transaction.
2
<PAGE>
This compares to 1992 net income of $728.1 million, or $3.22
per share, which reflected, in addition to operating earnings,
reported investment portfolio gains and net gains from sales
of subsidiaries and affiliates of $163.2 million and a one-time
charge of $28.1 million from the cumulative effect of FAS 109.
Investment Services
-------------------
Smith Barney Shearson earned $145.1 million in the quarter,
which includes the contribution from the Shearson acquisition for
the full period. This compares with $34.9 million reported by
Smith Barney alone in last year's quarter. For the full year,
the firm earned a record $371.0 million (before a $65.0 million
after-tax provision for one-time expenses related to the Shearson
acquisition), up from $156.9 million earned by Smith Barney in
1992. These outstanding results reflect the continued
development of the firm's capabilities in investment banking and
capital markets trading as well as its significant position in
retail brokerage in a year of robust markets. The pretax profit
margin for 1993 reached 20.9%, and the firm returned 26% after
tax on its equity for the year.
When compared with Smith Barney in the 1992 quarter, the
combined firm recorded more than a four-fold rise in commission
revenues, more than an eight-fold increase in asset management
fees, and more than triple the amount of revenues from principal
trading. For the year, commissions and net interest income more
than doubled, asset management fees increased 336%, principal
trading revenues rose 84%, and investment banking revenues jumped
54%.
The Mutual Funds and Asset Management sector reported a 9%
gain in earnings for the quarter to $8.4 million and a 4% gain
for the 1993 year to $32.5 million. Assets under management at
both American Capital Management & Research and RCM Capital
Management rose every quarter in 1993 versus the prior year,
reaching $16.7 billion at American Capital, up 15%, and $24.5
billion at RCM, up 3%. Mutual fund sales at American Capital
continued to rise in the quarter, ending the year up 38%.
With the addition of the businesses acquired in the
Shearson transaction, total third-party assets under management
at the company leaped 114% to $116 billion in 1993.
Consumer Finance Services
-------------------------
Earnings from Consumer Finance increased to $55.5 million
for the quarter, up 8% from the 1992 period. For the year,
operating earnings reached a record $209.1 million, up 8% from
$193.5 million.
3
<PAGE>
The improvement in results is largely attributable to a
substantial year-over-year decline in losses and a 9% increase in
receivables outstanding to $6.34 billion at year-end, up from
$5.79 billion at December 31, 1992. Charge-offs remained at the
record low levels reached last quarter at 2.25%, down from 2.79%
at the end of 1992; 60+ days delinquencies were 2.21% in the
quarter, down from 2.55% in the period last year.
Insurance Services
------------------
Earnings from Primerica Financial Services for the fourth
quarter were $49.5 million, a 6% increase versus last year's
period. For the year operating earnings reached $188.9 million,
up from $187.3 million.
Sales of new life insurance in the quarter were $13.3
billion, up from $11.3 billion in the 1992 period, bringing full
year sales to $48.3 billion in face amount versus $46.2 billion
for 1992. For the fourth consecutive quarter, total life
insurance in force increased, reaching $309.3 billion, up from
$302.3 billion at year-end 1992, reflecting both higher sales
levels and a significant improvement in policy persistency.
Mutual fund sales (at net asset value) by the PFS sales
force continued to soar, increasing 25% for the quarter to $326.8
million, and reaching almost $1.3 billion for the year. Assets
under management in the Common Sense(R) Trust family of funds,
which account for the majority of PFS's sales, reached $3.l
billion at year end. The loan products marketed by PFS also
continued to grow in popularity, with net receivables outstanding
reaching $765.4 million at the end of 1993, up 57% from year-end
1992 levels.
Transport Life Insurance Company (formerly reported with
Voyager as part of Specialty Life and Health) earned $6.6 million
in the quarter, down from $8.0 million. For the year, operating
earnings were $25.6 million, down from $29.9 million. The
declines are principally attributable to the absence of the
employee benefits business that had been sold to "old Travelers"
when Primerica first made its 27% equity investment at the end of
1992.
The Gulf Insurance Group recorded a decline in earnings for
the 1993 quarter to $7.3 million, and a slight increase in
operating earnings for the full year to $29.7 million versus
$29.2 million in 1992, before "old Travelers'" minority interest.
The combined ratio increased in the quarter to 97.8% versus
94.7%, principally as a result of higher storm-related claims.
Corporate and Other
-------------------
The Corporate and Other segment contributed $29.1 million of
income in the quarter compared to a net expense of $4.2 million
in the 1992 quarter. Corporate expenses were $28.1 million, up
from $18.8 million, with the increase resulting from lower income
from miscellaneous investments and higher interest costs related
to increased borrowings to finance acquisitions, offset by lower
interest rates. Corporate expenses are net of contributions from
retained lines of Voyager business of $2.6 million and $2.5
million, respectively, in the 1993 and 1992 quarters. The 27%
"old Travelers" investment in effect for the 1993 quarter
4
<PAGE>
contributed $35.9 million, while for the 1992 quarter, Fingerhut
Companies, Inc., a former subsidiary of the Company, contributed
$14.6 million. The 1993 Corporate and Other contribution
also includes the reversal of a $21.3 million deferred tax
liability no longer required with 100% ownership of "old
Travelers."
For the 1993 year, the segment contributed $86.9 million
compared to a net expense of $35.9 million in 1992. Corporate
expenses were up, for the reasons already cited, to $70.2 million
versus $63.8 million, net of $9.8 million and $10.1 million,
respectively, from Voyager contributions in 1993 and 1992. The
27% "old Travelers" investment contributed $127.7 million to
operating earnings for the 1993 year, as well as $13.1 million in
reported portfolio gains, compared with a $25.7 million Fingerhut
contribution in 1992.
The Travelers Inc. is the surviving corporation of the
acquisition on December 31, 1993 by Primerica Corporation of The
Travelers Corporation ("old Travelers"). This diversified
financial services company is engaged in life and property and
casualty insurance services, investment services and consumer
finance. The principal companies that operate under the familiar
Travelers umbrella now include: Primerica Financial Services,
The Travelers Insurance Company, The Travelers Indemnity Company,
Transport Life Insurance and Gulf Insurance Group; Smith Barney
Shearson, American Capital Management & Research and RCM Capital
Management; and Commercial Credit and Primerica Bank.
The results reported herein are only for operations of the
company formerly known as Primerica Corporation; beginning with
the first quarter of 1994, ending March 31, reported results will
include the businesses of the "old Travelers." At year end 1993,
The Travelers had assets of approximately $100 billion.
5
<PAGE>
THE TRAVELERS INC.
SUMMARY OF EARNINGS
(In millions of dollars and shares, except per share amounts)
Three months ended Twelve months ended
December 31, December 31,
------------------- --------------------
1993 1992 1993 1992
---------------- ---- ----
Revenues $2,195.3 $1,269.0 $6,796.9 $5,125.0
======= ======= ======= =======
Income from operations before income
taxes and minority interests $ 445.1 $ 243.2 $1,509.5 $ 970.9
Provision for income
taxes on operations (143.6) (89.9) (545.1) (349.6)
------- -------- ------- -------
Income from operations
before minority interests 301.5 153.3 964.4 621.3
Minority interests,
net of income taxes (3.6) -. (22.5) -.
------- ------- ------- -------
Income from operations 297.9 153.3 941.9 621.3
Gains on sales of stock of
subsidiaries and -. 68.0 8.1 134.9
affiliates, net of income
taxes ------- ------- ------- -------
Income before cumulative effect of 297.9 221.3 950.0 756.2
changes in accounting principle ------- ------- ------- -------
Cumulative effect of change in - - (17.7) -
accounting for postemployment
benefits, net of tax (FAS 112)
Cumulative effect of change in - - (16.7) -
accounting for postretirement benefits
other than pensions, net of tax
(FAS 106)
Cumulative effect of change in -. -. -. (28.1)
accounting for income taxes
(FAS 109) ------- ------- ------ ------
Net Income 297.9 221.3 915.6 728.1
Preferred dividends (7.8) (6.1) (27.2) (10.3)
------- ------- ------- ------
Income applicable to common stock $ 290.1 $ 215.2 $ 888.4 $ 717.8
======= ======= ======= =======
Earnings per share
Before cumulative effect of
changes in accounting principle $ 1.19 $ .96 $ 3.88 $ 3.35
Cumulative effect of changes in
accounting principle -. -. (.14) (.13)
------- ------- ------- ------
$ 1.19 $ .96 $ 3.74 $ 3.22
======= ======= ======= ======
Total average common
and equivalent shares 243.9 221.8 237.8 222.8
======== ======= ======= =======
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<PAGE>
THE TRAVELERS INC. - NET INCOME SUMMARY
Three months ended Twelve months ended
December 31, December 31,
-------------------- -------------------
1993 1992 1993 1992
---- ---- ---- ----
(In millions of dollars)
Income summary, net of minority
interest in 1993
Operating earnings $ 276.6 $ 153.3 $ 899.5 $ 593.0
Provision for merger-related - - (65.0) -
costs
Reported portfolio gains - - 109.2 28.3
Reversal of deferred tax
liability on equity
investment 21.3 - - -
Cumulative effect of tax
rate change through
December 31, 1992 -. -. (1.8) -.
------- ------- ------- -------
Income from operations 297.9 153.3 941.9 621.3
------- ------- ------- -------
Gains on sales of stock of
subsidiaries and affiliates -. 68.0 8.1 134.9
------- -------- ------- -------
Income before cumulative effect
of changes in accounting
principle 297.9 221.3 950.0 756.2
Cumulative effect of change in
accounting for postemployment
benefits, net of tax (FAS 112) - - (17.7) -
Cumulative effect of change in
accounting for
postretirement benefits other
than pensions, net of tax
(FAS 106) - - (16.7) -
Cumulative effect of change in
accounting for income taxes
(FAS 109) -. -. -. (28.1)
------- ------- ------- -------
Net income $ 297.9 $ 221.3 $ 915.6 $ 728.1
======= ======= ======= =======
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THE TRAVELERS INC. - SEGMENT OPERATING DATA AND NET INCOME
Three months ended Twelve months ended
December 31, December 31,
------------------- -------------------
1993 1992 1993 1992
---- ---- ---- ----
(In millions of dollars)
REVENUES
Investment Services
-------------------
Smith Barney Shearson $1,357.6 $ 417.9 $3,370.7 $1,677.3
Mutual Funds and Asset Management 39.5 35.2 153.6 139.6
Margaretten -. -. -. 5.1
------- ------- ------- -------
Total 1,397.1 453.1 3,524.3 1,822.0
------- ------- ------- -------
Consumer Finance Services 297.8 287.5 1,193.2 1,157.6
------------------------- ------- ------- ------- -------
Insurance Services (1)
------------------
Primerica Financial Services 308.9 289.5 1,265.9 1,157.5
Transport Life 71.4 80.6 319.5 346.9
Gulf Property and Casualty 74.7 73.0 314.5 316.4
------- ------- ------- -------
Total 455.0 443.1 1,899.9 1,820.8
------- ------- ------- -------
Corporate and Other (1) 45.4 85.3 179.5 324.6
------------------- ------- ------- ------- -------
Total $2,195.3 $1,269.0 $6,796.9 $5,125.0
======= ======= ======= =======
AFTER-TAX INCOME (LOSS)
Investment Services
-------------------
Smith Barney Shearson
Operating earnings $ 145.1 $ 34.9 $ 371.0 $ 156.9
Provision for merger- - - (65.0) -
related costs
Cumulative effect of tax rate
change through December -. -. (.5) -.
31, 1992 ------- ------- ------- -------
145.1 34.9 305.5 156.9
------- ------- ------- -------
Mutual Funds and Asset Management
Operating earnings 8.4 7.7 32.5 31.3
Cumulative effect of tax
rate change through -. -. (2.4) -.
December 31, 1992 ------- ------- ------- -------
8.4 7.7 30.1 31.3
------- ------- ------- -------
Margaretten -. -. -. 3.0
------- ------- ------- -------
Total Investment Services $ 153.5 $ 42.6 $ 335.6 $ 191.2
------- ------- ------- -------
Consumer Finance Services
-------------------------
Operating earnings $ 55.5 $ 51.3 $ 209.1 $ 193.5
Reported portfolio gains - - 22.7 4.3
Cumulative effect of tax
rate change through
December 31, 1992 -. -. .2 -.
------- ------- ------- -------
Total Consumer Finance
Services $ 55.5 $ 51.3 $ 232.0 $ 197.8
------- ------- ------- -------
(Continued on next page)
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<PAGE>
THE TRAVELERS INC. - SEGMENT OPERATING DATA AND NET INCOME
Three months ended Twelve months ended
December 31, December 31,
-------------------- -------------------
1993 1992 1993 1992
---- ---- ---- ----
(In millions of dollars)
AFTER-TAX INCOME (LOSS) - continued
Insurance Services (1)
----------------------
Primerica Financial Services
Operating earnings $ 49.5 $ 46.8 $ 188.9 $ 187.3
Reported portfolio gains - - 45.3 9.9
Cumulative effect of tax
rate change through -. -. (10.8) -.
December 31, 1992 ------- ------- ------- -------
49.5 46.8 223.4 197.2
------- ------- ------- -------
Transport Life
Operating earnings 6.6 8.0 25.6 29.9
Reported portfolio gains - - 17.2 5.9
Cumulative effect of tax
rate change through -. -. (1.3) -.
December 31, 1992 ------- ------- -------- -------
6.6 8.0 41.5 35.8
------- ------- ------- -------
Gulf Property and Casualty
Operating earnings 7.3 8.8 29.7 29.2
Reported portfolio gains - - 15.2 6.0
Cumulative effect of tax
rate change through
December 31, 1992 - - .1 -
Less minority interest (3.6) -. (22.5) -.
------- ------- ------- -------
Total $ 3.7 $ 8.8 $ 22.5 $ 35.2
------- ------- ------- -------
Total Insurance Services $ 59.8 $ 63.6 $ 287.4 $ 268.2
------- ------- ------- -------
Total business income $ 268.8 $ 157.5 $ 855.0 $ 657.2
------- ------- ------- -------
Corporate and Other (1)
-----------------------
Corporate
Net expenses $ (28.1) $ (18.8) $ (70.2) $ (63.8)
Reported portfolio gains - - 3.3 2.2
Cumulative effect of tax
rate change through
December 31, 1992 -. -. 2.3 -.
------- ------- ------- -------
(28.1) (18.8) (64.6) (61.6)
------- ------- ------- -------
Equity in earnings of Travelers
in 1993 and Fingerhut in 1992
Operating earnings 35.9 14.6 127.7 25.7
Reported portfolio gains - - 13.1 -
Reversal of deferred tax
liability on equity
investment 21.3 - - -
Cumulative effect of tax
rate change through -. -. 10.7 -.
December 31, 1992 ------- ------- ------- -------
$ 57.2 $ 14.6 $ 151.5 $ 25.7
------- ------- ------- -------
Total Corporate and Other $ 29.1 $ (4.2) $ 86.9 $ (35.9)
------- ------- ------- -------
(Continued on next page)
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THE TRAVELERS INC. - SEGMENT OPERATING DATA AND NET INCOME
Three months ended Twelve months ended
December 31, December 31,
-------------------- --------------------
1993 1992 1993 1992
---- ---- ---- ----
(In millions of dollars)
AFTER-TAX INCOME (LOSS) - continued
Income from operations $ 297.9 $ 153.3 $ 941.9 $ 621.3
------- ------- ------- -------
Gains on sales of stock of
subsidiary and affiliates -. 68.0 8.1 134.9
------- ------- ------- -------
Income before cumulative effect of
changes in accounting
principle $ 297.9 221.3 950.0 756.2
------- ------- ------- -------
Cumulative effect of change in
accounting for postemployment
benefits, net of tax (FAS 112) - - (17.7) -
Cumulative effect of change in
accounting for postretirement
benefits other than pensions, - -
net of tax (FAS 106) - - (16.7) -
Cumulative effect of change in
accounting for income taxes
(FAS 109) -. -. -. (28.1)
------- ------- ------- -----
Net income $ 297.9 $ 221.3 $ 915.6 $ 728. 1
======= ======= ======= ========
(1) Included in Corporate and Other for the three and twelve months ended
December 31, 1992 is $59.1 million and $259.9 million of revenue,
respectively, and $2.5 million and $10.1 million included in net
expenses, respectively, from Voyager which was previously reported in
the Insurance segment.
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<PAGE>
THE TRAVELERS INC.
SELECTED FINANCIAL DATA
As of December 31,
----------------------------------
1993 1992
---- ----
INVESTMENT SERVICES
Assets under management ($ billions)
Smith Barney Shearson $ 74.8 $16.0
RCM Capital Management 24.5 23.8
American Capital 16.7 14.5
----- ----
Total $116.0 $54.3
----- ----
Three months ended Twelve months ended
December 31, December 31,
--------------------- ------------------
1993 1992 1993 1992
---- ---- ---- ----
(In millions of dollars)
Smith Barney Shearson
Revenues:
Commissions $ 545.3 $124.9 $1,252.3 $ 509.2
Investment banking 217.0 119.6 666.6 433.3
Principal trading 204.7 63.1 549.2 297.9
Interest income, net (1) 78.0 27.7 206.5 100.5
Asset management fees 165.4 19.8 318.9 73.2
Other income 56.8 9.8 100.6 34.6
------- ----- ------- -------
Total revenues, net (1) $1,267.2 $364.9 $3,094.1 $1,448.7
------- ----- ------- -------
Total assets ($ billions)
at quarter end $ 31.5 $ 10.1 * *
Stockholder's equity - at
quarter end $2,129.1 $933.8 * *
American Capital
Mutual fund sales at
net asset value $ 887.8 $557.1 $3,061.1 $2,212.1
(1) Net of interest expense of $90.4 million and $53.0
million for the three months ended December 31, 1993 and
1992, respectively, and $276.6 million and $228.6 million
for the first twelve months, respectively.
* Same as at the quarter end.
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THE TRAVELERS INC.
SELECTED FINANCIAL DATA
As of December 31,
-------------------------------
1993 1992
---- ----
(In millions of dollars)
CONSUMER FINANCE SERVICES
Net receivables
Real estate-secured loans $2,705.8 $2,607.7
Personal loans 2,495.2 2,378.8
Credit cards 697.1 538.2
Sales finance and other 443.7 263.0
------- -------
Consumer finance receivables,
net of unearned finance 6,341.8 5,787.7
charges
Accrued interest receivable 41.3 35.8
Allowance for credit losses (167.5) (168.6)
------- -------
Consumer finance receivables, net
$6,215.6 $5,654.9
------- -------
As of, and for the
three months ended Twelve months ended
December 31, December 31,
------------------- -------------------
1993 1992 1993 1992
---- ---- ---- ----
Average yield 15.59% 16.24% 15.83% 16.31%
Average net interest margin 8.51% 8.64% 8.44% 8.66%
Charge-off rate 2.25% 2.79% 2.36% 2.84%
60+ days past due as
% of receivables 2.21% 2.55% * *
Reserves as % of net receivables 2.64% 2.91% * *
Finance insurance
premiums earned $ 22.0 $ 22.4 $ 87.9 $ 89.6
* Same as at the quarter end.
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THE TRAVELERS INC. - SELECTED FINANCIAL DATA
As of, and for, the As of, and for, the
three months ended twelve months ended
December 31, December 31,
--------------------- -------------------
1993 1992 1993 1992
---- ---- ---- ----
(In millions of dollars)
INSURANCE SERVICES
Primerica Financial Services
Life insurance issued
($ billions of face amount)$ 13.3 $ 11.3 $ 48.3 $ 46.2
Life insurance in force
($ billions of face amount)$ 309.3 $ 302.3 * *
Number of life
policies issued (in thousands) 72.1 61.3 260.3 252.5
Number of life
policies in force
(in thousands) 2,003.5 1,993.7 * *
Direct premiums $ 263.3 $ 256.9 $1,037.2 $1,030.5
Annualized issued premiums $ 47.2 $ 37.9 $ 168.8 $ 156.7
Mutual fund sales at NAV $ 326.8 $ 261.9 $1,266.5 $1,071.2
$.M.A.R.T. LOANs
net outstandings (1) $ 651.4 $ 404.9 * *
S.A.F.E. LOANs
outstandings(1) $ 114.0 $ 81.9 * *
Premiums earned
Primerica Financial Services:
PFS Individual term life $ 203.0 $ 190.2 $ 788.7 $ 750.9
Other 27.9 30.5 101.2 111.8
----- ----- ------- -------
Total Primerica Financial
Services 230.9 220.7 889.9 862.7
----- ----- ------ -------
Transport Life:
Individual life 1.5 1.7 4.9 9.7
Individual accident & health 57.9 60.9 240.1 251.9
Group -. 2.1 -. 12.3
----- ----- ------- -------
Total 59.4 64.7 245.0 273.9
----- ----- ------- -------
Gulf Property and Casualty:
Regional 30.1 31.2 121.9 128.4
Specialty 36.3 32.1 135.4 112.1
----- ----- ------- -------
Total Gulf Property
and Casualty 66.4 63.3 257.3 240.5
----- ----- ------- -------
Voyager -. 51.3 -. 226.8
----- ----- ------- -------
Total Premiums $ 356.7 $ 400.0 $1,392.2 $1,603.9
----- ----- ------- -------
Gulf Property and Casualty
Net premiums written $ 63.7 $ 62.2 $ 264.9 $ 250.1
Loss ratio 76.7% 66.6% 72.1% 70.3%
Expense ratio 21.1% 28.1% 23.8% 27.3%
Combined ratio 97.8% 94.7% 95.9% 97.6%
Loss and loss expense reserves,
net $ 244.7 $ 223.1 * *
(1) $.M.A.R.T. and S.A.F.E. LOANs are marketed by
Primerica Financial Services; the receivables are
reflected in the assets of Consumer Finance Services.
* Same as at the quarter end.
13
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Dated: January 26, 1994 THE TRAVELERS INC.
By: /s/ William T. Bozarth
------------------------------------
William T. Bozarth
Vice President
14
