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) April 15, 1996
------------------------
Travelers Group 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)
388 Greenwich Street, New York, New York 10013
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(212) 816-8000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS.
- ---------------------
RESULTS OF OPERATIONS
Travelers Group Inc. (the "Company") had operating earnings for the
quarter ended March 31, 1996 of $479.6 million, up 42% from $338.0 million in
the 1995 period. Earnings per share from operations were a record $1.42
versus $1.01, up 41% on average common shares of 318.8 million and 315.5
million in the respective year periods. As previously announced in March,
the Board of Directors approved a $600 million increase in authorization for
the repurchase of the Company's common stock, which may be made from time to
time, principally for employee benefit plans. Approximately 2.6 million
shares were repurchased during the quarter.
Net income for the 1996 quarter was $520.2 million, or $1.55 per share,
which includes reported investment portfolio gains of $40.6 million, or $0.13
per share. This compares with net income of $340.0 million in the 1995
period, which included reported investment portfolio losses of $18 million,
or $0.06 per share, and a gain of $20.0 million, or $0.06 per share, from the
sale of The Travelers Insurance Company's group life insurance businesses to
Metropolitan Life Insurance Company.
Revenues were $4.515 billion, up 5% over $4.299 billion in the 1995
period. Revenues from ongoing businesses were up 15% for the quarter, when
compared with the 1995 period, after deducting revenues from Transport Life
Insurance Company ("Transport Life") which was spun off, from the The
MetraHealth Companies, Inc. ("MetraHealth") investment which was sold, and from
certain related runoff operations.
INVESTMENT SERVICES
-------------------
SMITH BARNEY OPERATING EARNINGS:
$223.9 MILLION, UP 125% FROM $99.6 MILLION IN 1995 PERIOD
Ongoing strength in the financial markets contributed to Smith Barney's
third consecutive quarter of record earnings. The firm's return on equity
reached 36.1%, more than double the prior year period's 17.0%. Pre-tax
profit margins increased to 22.8% in the quarter, versus 14.6% in the prior
year period.
Total revenues, net of interest expense, reached a record level of
$1.607 billion, with gross production in both the retail and institutional
businesses hitting all-time highs. Commission revenues were up 35% to a
record $605.0 million, compared with the prior year period, primarily as a
result of strong activity in over-the-counter and listed securities, as well
as mutual funds. Annualized retail gross production per Financial Consultant
rose 38% to a record $364,000, versus $264,000 in the 1995 first quarter,
with a sales force of approximately 10,500 Financial Consultants working from
458 domestic retail offices.
<PAGE>
Investment banking revenues increased 134% to a record $272.5 million
compared to the prior year's quarter, reflecting strong volume in equity,
high yield and corporate debt underwritings, as well as fee income from
merger and acquisition activity.
Principal trading revenues also reached record levels, with particular
strength in over-the-counter equities and taxable fixed-income securities.
Asset management fees rose 33% to a record $316.6 million. At March 31,
1996, Smith Barney also had a record level of assets under management of
$102.2 billion, up 24% from a year ago.
Net interest income of $95.1 million was slightly ahead of the
comparable period last year. Total expenses, excluding interest, increased
20% over the 1995 first quarter as a result of higher production-related
compensation expense. The firm continues to maintain its focus on
controlling fixed expenses, and its ratio of non-compensation expenses to net
revenues stood at 20.3% at the end of the first quarter.
(Results for RCM Capital Management are included in the "Corporate and
Other" segment until its previously announced sale to Dresdner Bank AG is
approved by various regulatory agencies, and consummated.)
CONSUMER FINANCE
----------------
CONSUMER FINANCE OPERATING EARNINGS:
$55.9 MILLION, EQUAL TO 1995 PERIOD
Year-to-year earnings were even for the Company's consumer finance
business. A 5% higher level of receivables, as well as favorable insurance
experience, were offset by higher loan losses and additions to loan loss
reserves. At March 31, 1996, net receivables totaled a record $7.31 billion.
The average yield on the portfolio, at 15.43%, was even with the 1995
first quarter. Net interest margin, at 8.75%, was up 10 basis points
compared with the prior year's first quarter, due to lower funding costs.
Delinquencies in excess of 60 days rose to 2.21% as of March 31, 1996,
compared with 2.14% at year-end 1995, and with the historically low level of
1.83% at the end of the comparable 1995 period. The charge-off rate for the
quarter was 2.87%, up from 2.58% in the 1995 fourth quarter. In part, these
trends reflect the high level of personal bankruptcies throughout the credit
industry. As a result of the higher losses, reserves as a percentage of net
receivables were increased in the quarter to 2.88%, up from 2.66% at December
31, 1995.
Commercial Credit Company's total number of offices at the end of the
quarter stood at 858, which includes the addition of 10 offices from the
March 31, 1996 acquisition of Hawaii-based Servco. During the quarter,
nearly 20 existing retail offices were converted into $.M.A.R.T. Solution
Centers -- devoted exclusively to servicing the
<PAGE>
company's growing business of underwriting real estate loans for Primerica
Financial Services. The number of credit card accounts issued through Travelers
Bank increased to a record level of more than 756,000 accounts.
LIFE INSURANCE
--------------
PRIMERICA FINANCIAL SERVICES OPERATING EARNINGS:
$65.3 MILLION, UP 20% FROM $54.5 MILLION IN 1995 PERIOD
Record operating earnings for PFS principally reflect continued
strength in life insurance in force, as well as increased mutual fund sales
and favorable mortality experience, compared to 1995.
Life insurance in force reached a record $350.4 billion, up from $337.9
billion at March 31, 1995, and continued to reflect good policy persistency.
New term life insurance sales were $12.3 billion in the quarter, down from
the $13.4 billion produced in the strong prior year period.
Sales of mutual funds at PFS in the quarter increased to $566.9 million
(at net asset value), a 57% improvement over the prior year period's $361.7
million, reflecting strong customer demand in the U.S. and Canada. The
company also continues to benefit from efforts to increase the number of
independent representatives who are licensed by the N.A.S.D. to sell
securities.
Net receivables from second-mortgage ($.M.A.R.T.) loans and personal
($.A.F.E.) loans also continued to advance to $1.27 billion, up nearly 11%
from $1.15 billion at the end of the 1995 first quarter. Both loan products
are underwritten by Commercial Credit and distributed exclusively through the
PFS sales force.
The company's Secure property casualty insurance product --issued
through Travelers Indemnity -- continues to experience healthy growth in
applications and policies, and as of March 31, 1996, had been rolled out in
20 states.
TRAVELERS LIFE AND ANNUITY OPERATING EARNINGS:
$82.6 MILLION, UP 20% FROM $68.6 MILLION IN 1995 PERIOD
Increased earnings at Travelers Life and Annuity were driven by strong
investment portfolio performance, and a capital base which benefited from
reinvestment of proceeds from the sale of MetraHealth in the 1995 fourth
quarter. Earnings growth was offset somewhat by the loss of earnings from
Transport Life, which was spun off to Travelers Group shareholders in
September 1995.
For deferred annuities, net written premiums and deposits were $487.7
million for the quarter, up 37% from $355.3 million in the prior year period,
with total policyholder account balances and benefit reserves at $11.7
billion versus $9.9 billion in the previous year. Year-over-year sales in
the quarter were up 155% for the successful Vintage
<PAGE>
variable annuity, distributed exclusively by Smith Barney Financial Consultants.
This product now accounts for nearly 40% of all deferred annuity production at
Travelers Life and Annuity.
For individual life insurance, net written premiums and deposits were
$74.5 million, up 26% over $59.3 million (excluding Transport Life) in the
1995 quarter, largely as a result of sales of the new single premium Vintage
Life product. Life insurance in force was $49.2 billion at March 31, 1996,
up from $48.5 billion (excluding Transport Life) a year ago.
Net written premiums for the growing long term care insurance line
reached $27.7 million, versus $18.6 million a year ago, largely as a result
of a 68% increase in sales.
PROPERTY CASUALTY INSURANCE
---------------------------
COMMERCIAL LINES OPERATING EARNINGS:
$72.7 MILLION, UP 6% FROM $68.5 MILLION IN 1995 PERIOD
The earnings improvement in Commercial Lines was driven by
significantly higher net investment income and better loss experience,
partially offset by $6.0 million in catastrophe losses, after taxes and
reinsurance, resulting from winter storm-related claims during the quarter.
This compares with catastrophe losses of $0.8 million in the prior year
period.
In the National Accounts market, premiums and equivalents were $947.9
million, compared with $1.039 billion in the 1995 period, reflecting
continued decline in the workers' compensation pool service business. This
decline is due to the de-population of involuntary pools, as workers'
compensation loss experience improves and insureds move to voluntary markets.
Premiums and equivalents in the Commercial Accounts market were $213.0
million, down slightly from the prior year's quarter. In this highly
competitive market, the company has continued to be more selective in renewal
activity. Programs designed to leverage underwriting experience in specific
industries have demonstrated continued growth.
Select Accounts, which covers small businesses through independent
agents, and Specialty Accounts, which includes products such as directors and
officers' liability insurance, both experienced modest premium growth in the
quarter.
PERSONAL LINES OPERATING EARNINGS:
$22.1 MILLION VERSUS $24.5 MILLION IN 1995 PERIOD
A particularly high level of winter storm-related catastrophe losses --
$18.0 million, after taxes and reinsurance, compared with $1.6 million in the
prior year period-- reduced year -over-year earnings for Personal Lines.
Excluding those catastrophe losses,
<PAGE>
operating income improved $14.0 million versus the 1995 period, primarily
reflecting favorable loss experience.
Net written premiums in the quarter of $341.2 million represent a
slight improvement over first quarter 1995 levels, after excluding the effect
of a 1995 change in reinsurance coverage, reflecting growth in target
markets, and partially offset by reductions due to catastrophe management
strategies.
CORPORATE AND OTHER
-------------------
NET EXPENSES:
($42.9 MILLION VERSUS $33.6 MILLION) IN 1995 PERIOD
Corporate expenses as a percentage of operating earnings were down.
Lower staff expenses in 1996 versus 1995 were offset by a higher level of
corporate borrowings. Results also reflect a $15 million contribution in the
1995 quarter from the MetraHealth companies.
INVESTMENT PORTFOLIO
--------------------
The Company's $40.2 billion investment portfolio consists primarily
of fixed income investments with an average quality of A1. The effective
duration of the fixed income portfolio, including short-term fixed income
investments, is 4.6 years.
The Company, which as of March 31, 1996 had assets of approximately
$118 billion, is a diversified financial services company engaged in
investment services, consumer finance and insurance services. Book value per
share at quarter-end was $33.54. Excluding the effects of FAS 115, book
value was $32.90 per share.
The Company's Board of Directors has recommended shareholder approval, at
its Annual Meeting on April 24th, of an increase in the Company's common share
authorization to 1.5 billion shares. As previously announced, contingent upon
that approval the Board has declared a 3-for-2 split in the Company's common
stock, in the form of a 50% stock dividend, payable May 24, 1996 to shareholders
of record on May 6, 1996.
<PAGE>
TRAVELERS GROUP - SUMMARY OF EARNINGS
(In millions of dollars and shares, except per share amounts)
For the quarter ended
March 31,
------------------------
1996 1995
----------- -----------
Revenues $ 4,514.6 $ 4,298.9
=========== ===========
After-tax income:
Operating earnings $ 479.6 $ 338.0
Portfolio gains (losses) 40.6 (18.0)
Gain on sale of subsidiary 0.0 20.0
----------- -----------
Net income 520.2 340.0
----------- -----------
Preferred dividends (1) (26.5) (20.9)
----------- -----------
Income applicable to common stock $ 493.7 $ 319.1
=========== ===========
Earnings per share:
Before portfolio gains (losses)
and gain on sale of subsidiary $ 1.42 $ 1.01
Portfolio gains (losses) 0.13 (0.06)
Gain on sale of subsidiary 0.00 0.06
----------- -----------
Net income $ 1.55 $ 1.01
=========== ===========
Total average common
and equivalent shares 318.8 315.5
=========== ===========
Common shares issued and
outstanding at period end 318.3 319.7
=========== ===========
(1) Includes a non-recurring dividend of $6.0 million relating to the
redemption of approximately 411,000 shares of the Company's Series C
Preferred Stock during the 1996 quarter.
<PAGE>
TRAVELERS GROUP - SEGMENT REVENUES
(In millions of dollars)
For the quarter ended
March 31,
---------------------
1996 1995
---------- ----------
REVENUES
Investment Services
- -------------------
Smith Barney $ 1,957.1 $ 1,524.2
---------- ----------
Consumer Finance Services 348.2 324.0
- -------------------------
Life Insurance Services
Primerica Financial Services 355.2 331.7
Travelers Life and Annuity 577.0 591.7
---------- ----------
Total Life Insurance Services 932.2 923.4
---------- ----------
Property and Casualty Insurance Services
- ----------------------------------------
Commercial Lines 805.2 813.0
Personal Lines 373.1 359.6
---------- ----------
Total P&C Insurance Services 1,178.3 1,172.6
---------- ----------
Corporate and Other 98.8 354.7
- ------------------- ---------- ----------
Total Revenues $ 4,514.6 $ 4,298.9
========== ==========
<PAGE>
TRAVELERS GROUP - SEGMENT OPERATING EARNINGS
(In millions of dollars)
For the quarter ended
March 31,
------------------
1996 1995
-------- --------
OPERATING EARNINGS
Investment Services
- -------------------
Smith Barney $ 223.9 $ 99.6
-------- --------
Consumer Finance Services 55.9 55.9
- ------------------------- -------- --------
Life Insurance Services
- -----------------------
Primerica Financial Services 65.3 54.5
Travelers Life and Annuity 82.6 68.6
-------- --------
Total Life Insurance Services 147.9 123.1
-------- --------
Property and Casualty Insurance Services
- ----------------------------------------
Commercial Lines 72.7 68.5
Personal Lines 22.1 24.5
-------- --------
Total P&C Insurance Services 94.8 93.0
-------- --------
Total business income 522.5 371.6
-------- --------
Corporate and Other (42.9) (33.6)
- ------------------- -------- --------
Operating earnings $ 479.6 $ 338.0
======== ========
<PAGE>
INVESTMENT SERVICES -- Page 1
(In millions of dollars)
As of, and for the quarter
ended March 31,
-----------------------
1996 1995
---------- ----------
SMITH BARNEY INC
Revenues:
Commissions $ 605.0 $ 448.0
Investment banking 272.5 116.3
Principal trading 282.9 282.4
Asset management fees 316.6 237.4
Other income 34.9 33.4
---------- ----------
Total revenues before interest 1,511.9 1,117.5
---------- ----------
Interest and dividends 445.2 406.7
Interest expense 350.1 314.8
---------- ----------
Net interest revenue 95.1 91.9
---------- ----------
Total revenues, net of interest expense 1,607.0 1,209.4
---------- ----------
Expenses:
Compensation and benefits 913.1 742.2
Occupancy, communications 138.6 146.3
Other expenses 188.2 144.6
---------- ----------
Total expenses 1,239.9 1,033.1
---------- ----------
Income before income taxes 367.1 176.3
Provision for income taxes (143.2) (76.7)
---------- ----------
After-tax earnings $ 223.9 $ 99.6
========== ==========
Total assets (in billions) $ 45.0 $ 41.6
Total equity (in billions) $ 2.5 $ 2.4
Total regulatory capital (in billions) (1) $ 3.2 $ 3.0
Return on equity 36.1% 17.0%
Pre-tax profit margin 22.8% 14.6%
Non-compensation expenses as a
percent of net revenue 20.3% 24.0%
(1) Represents total regulatory capital of broker/dealer subsidiary, Smith
Barney Inc.
<PAGE>
INVESTMENT SERVICES -- Page 2
(In millions of dollars)
As of, and for the
quarter ended March 31,
------------------------
1996 1995
----------- -----------
SMITH BARNEY INC
Retail Brokerage
Number of registered Financial Consultants 10,527 10,994
Annualized retail gross production per FC (000) $ 364 $ 264
Domestic retail offices 458 481
Priced assets in client accounts (in billions) $ 433.2 $ 361.9
Asset Management
Assets under fee-based management (in billions):
Money market funds $ 39.2 $ 29.7
Mutual funds 32.3 28.0
Managed accounts 24.5 20.1
Assets managed by Financial Consultants 6.2 4.3
----------- -----------
Total $ 102.2 $ 82.1
========== ===========
Externally managed assets (wrap accts.) $ 37.6 $ 28.4
Investment Banking
Domestic underwriting (full credit to lead mgr.):
Equity -- Volume $ 2,341.4 $ 415.0
-- Market share 10.4% 3.4%
Debt -- Volume $ 7,808.7 $ 3,238.9
-- Market share 3.2% 2.4%
Municipals -- Volume $ 4,460.8 $ 1,861.2
-- Market share 9.9% 5.1%
Capital Markets/Research
Number of institutional specialists 423 390
Number of stocks in which markets are made 1,654 1,634
Number of equity research analysts 150 141
% of S&P sectors covered by research 98% 96%
CONSOLIDATED TRAVELERS GROUP
ASSETS UNDER MANAGEMENT (in billions)
- -------------------------------------
Smith Barney $ 102.2 $ 82.1
Travelers Life and Annuity (1) 21.6 19.8
----------- -----------
Total assets managed for third parties (2) $ 123.8 $ 101.9
========== ===========
(1) Part of the Life Insurance Services segment.
(2) Excludes assets under management at RCM Capital Management of $24.9 and
$23.9 billion at March 31, 1996 and 1995, respectively.
<PAGE>
CONSUMER FINANCE SERVICES
(In millions of dollars)
As of, and for the quarter
ended March 31,
-----------------------------
1996 1995
------------- -------------
REVENUES $ 348.2 $ 324.0
OPERATING EARNINGS $ 55.9 $ 55.9
Net receivables
Personal loans $ 3,011.3 $ 2,934.6
Real estate-secured loans 3,010.6 2,888.0
Credit cards 807.4 696.8
Sales finance and other 478.1 450.0
------------- -------------
Consumer finance receivables,
net of unearned finance charges 7,307.4 6,969.4
Accrued interest receivable 44.6 39.0
Allowance for credit losses (210.7) (184.2)
------------- -------------
Consumer finance receivables, net $ 7,141.3 $ 6,824.2
============= =============
Number of offices 858 872
Number of credit card accounts 756,600 664,400
Average yield 15.43% 15.43%
Average net interest margin 8.75% 8.65%
Charge-off rate 2.87% 2.16%
60+ days past due as % of receivables 2.21% 1.83%
Reserves as % of net receivables 2.88% 2.64%
Finance insurance premiums earned $ 37.7 $ 31.8
<PAGE>
LIFE INSURANCE SERVICES -- Page 1
(In millions of dollars)
As of, and for the
quarter ended March 31,
----------------------
1996 1995
---------- ----------
REVENUES $ 932.2 $ 923.4
OPERATING EARNINGS
Primerica Financial Services $ 65.3 $ 54.5
Travelers Life and Annuity 82.6 68.6
---------- ----------
Total $ 147.9 $ 123.1
========== ==========
Statutory Data
Travelers Insurance Company :
Statutory surplus & capital (1) $ 3,164.8 $ 2,442.9
Surplus to liabilities (1) 15.8% 12.1%
(1) Current period data is preliminary.
<PAGE>
LIFE INSURANCE SERVICES -- Page 2
(In millions of dollars)
As of, and for the
quarter ended March 31,
---------------------
1996 1995
---------- ----------
PRIMERICA FINANCIAL SERVICES
REVENUES $ 355.2 $ 331.7
OPERATING EARNINGS $ 65.3 $ 54.5
Life insurance issued ($ bil., face amount) $ 12.3 $ 13.4
Life insurance in force ($ bil., face amount) $ 350.4 $ 337.9
Number of life policies issued (000) 60.2 67.8
Number of life policies in force (000) 2,119.8 2,084.8
Annualized issued premiums $ 48.3 $ 54.9
Direct premiums $ 293.1 $ 285.3
Earned premiums - PFS Individual term life $ 236.5 $ 230.9
Other 18.7 19.7
---------- ----------
Total $ 255.2 $ 250.6
========== ==========
Mutual fund sales at NAV (1) $ 566.9 $ 361.7
$.M.A.R.T. LOANs outstanding (2) $ 1,082.3 $ 984.8
$.A.F.E. LOANs outstanding (2) $ 185.9 $ 162.4
(1) Includes $128.3 million and $80.8 million of mutual fund sales in Canada
during the 1996 and 1995 quarters, respectively.
(2) These loans are marketed by PFS; the receivables are reflected in the
assets of Consumer Finance Services.
<PAGE>
LIFE INSURANCE SERVICES -- Page 3
(In millions of dollars)
As of, and for the
quarter ended March 31,
----------------------
1996 1995
----------- ----------
TRAVELERS LIFE AND ANNUITY
REVENUES $ 577.0 $ 591.7
OPERATING EARNINGS $ 82.6 $ 68.6
Deferred annuities:
- -------------------
Number of annuities in force (000):
Fixed 399.5 393.9
Variable 222.8 175.5
----------- ----------
Total 622.3 569.4
=========== ==========
Number of annuities issued (000):
Fixed 6.4 10.6
Variable 19.7 9.2
----------- ----------
Total 26.1 19.8
=========== ==========
Net written premiums & deposits $ 487.7 $ 355.3
Policyholder account balances & benefit
reserves (1):
Fixed $ 7,153.8 $ 6,949.4
Variable 4,574.2 2,907.2
----------- ----------
Total $ 11,728.0 $ 9,856.6
=========== ==========
Payout annuities:
Net written premiums & deposits $ 16.9 $ 17.7
Policyholder account balances & benefit
reserves $ 4,421.2 $ 4,474.6
GIC and other annuities (2):
Net written premiums & deposits $ 446.5 $ 530.9
Policyholder account balances & benefit
reserves (1),(3) $ 7,310.4 $ 8,559.8
(1) Includes general account, separate accounts and managed funds.
(2) Includes $200 of deposits at March 31, 1995 related to the transfer
in-house of old Travelers pension fund assets previously managed
externally.
(3) Includes $1,998.6 and $2,501.5 in guaranteed investment contracts at March
31, 1996 and 1995, respectively.
<PAGE>
LIFE INSURANCE SERVICES -- Page 4
(In millions of dollars)
As of, and for the
quarter ended March 31,
---------- ----------
1996 1995
---------- ----------
TRAVELERS LIFE AND ANNUITY
Individual life insurance:
- --------------------------
Life insurance in force ($ bil., face amt.):
Term $ 28.8 $ 28.3
Permanent 20.4 20.7
---------- ----------
Total (1) $ 49.2 $ 49.0
========== ==========
Number of life policies in force (000) (1) 558.0 600.3
Life insurance issued ($ bil., face amt.) $ 1.5 $ 1.5
Number of life policies issued (000) 6.4 6.7
Net written premiums and deposits (1) $ 74.5 $ 61.6
Policyholder account balances & benefit
reserves (1) $ 2,101.2 $ 2,090.1
Long term care:
- ---------------
Number of policies in force (000) 58.9 40.6
Net written premiums $ 27.7 $ 18.6
Other individual accident and health:
- -------------------------------------
Net written premiums (1) $ 11.9 $ 64.3
All businesses:
- ---------------
Net investment income (1) $ 413.1 $ 414.0
Interest credited to contractholders $ 209.2 $ 259.2
(1) On September 29, 1995, Travelers Group made a pro rata distribution to its
stockholders of Transport Holdings Inc., which at the time of distribution,
was the indirect owner of the business of Transport Life Insurance Company.
Comparable (excluding Transport) individual life insurance amounts are as
follows: face amount in force, $48.5; number of policies in force, 577.3;
net written premiums and deposits, $59.3; and policyholder account balances
and benefit reserves, $2,002.3. Comparable Other individual accident and
health net written premiums for 1995 is $10.8. Comparable net investment
income for 1995 is $400.9.
<PAGE>
PROPERTY & CASUALTY INSURANCE SERVICES -- Page 1
(In millions of dollars)
As of, and for the quarter
ended March 31,
------------------------
1996 1995
----------- ----------
TOTAL P&C INSURANCE
REVENUES $ 1,178.3 $ 1,172.6
OPERATING EARNINGS
Commercial $ 72.7 $ 68.5
Personal 22.1 24.5
----------- ----------
Total $ 94.8 $ 93.0
=========== ==========
STATUTORY TO GAAP RECONCILIATION
Net written premiums $ 981.2 $ 960.9
----------- ----------
Net earned premiums $ 844.4 $ 863.4
Losses and loss adjustment expenses 682.0 708.3
Other underwriting expenses 258.8 241.6
Dividends to policyholders 1.8 5.0
----------- ----------
Total deductions 942.6 954.9
----------- ----------
Statutory underwriting loss (98.2) (91.5)
GAAP adjustments (58.6) (83.1)
----------- ----------
Adjusted underwriting loss (156.8) (174.6)
Net investment income 197.9 179.2
Other income 79.0 114.0
----------- ----------
Operating income before federal
income taxes 120.1 118.6
Federal income taxes 25.3 25.6
----------- ----------
Operating income $ 94.8 $ 93.0
=========== ==========
Net investment income (after-tax) $ 146.6 $ 132.1
Effective tax rate on net investment income 25.9% 26.3%
Combined ratio (1)
- ------------------
Losses and loss adjustment expenses 80.8% 82.0%
Other underwriting expenses 26.4% 25.1%
----------- ----------
Combined 107.2% 107.1%
=========== ==========
Travelers Indemnity Company:
Statutory capital and surplus (2), (3) $ 2,568.7 $ 2,134.6
Premiums to surplus ratio (2), (3) 1.41:1 1.66:1
Total loss and loss adjustment expense reserves $ 10,121.1 $ 9,828.6
(1) Before policyholder dividends, which are immaterial.
(2) Includes Travelers Indemnity Company and its subsidiaries.
(3) Current period data is preliminary.
<PAGE>
PROPERTY & CASUALTY INSURANCE SERVICES -- Page 2
(In millions of dollars)
As of, and for the quarter
ended March 31,
-----------------------
1996 1995
---------- ----------
COMMERCIAL LINES
REVENUES $ 805.2 $ 813.0
OPERATING EARNINGS $ 72.7 $ 68.5
Net written premiums & equivalents by market: (1)
- -------------------------------------------------
National Accounts
Premiums $ 195.9 $ 166.9
Equivalents 752.0 872.2
---------- ----------
Total 947.9 1,039.1
Commercial Accounts
Premiums 201.6 206.7
Equivalents 11.4 12.0
---------- ----------
Total 213.0 218.7
Select Accounts - Premiums 140.9 135.1
Specialty Accounts - Premiums 101.6 97.9
---------- ----------
Total premiums and equivalents $ 1,403.4 $ 1,490.8
========== ==========
Net written premiums by product line:
- -------------------------------------
Workers compensation $ 220.9 $ 200.3
Multi-peril 93.2 74.6
Automobile 97.4 94.9
Other liability 135.3 125.8
Property and other 93.2 111.0
---------- ----------
Total 640.0 606.6
Equivalents (1) 763.4 884.2
---------- ----------
Total premiums and equivalents $ 1,403.4 $ 1,490.8
========== ==========
Combined ratio (2):
- -------------------
Losses and loss adjustment expenses 83.2% 86.5%
Other underwriting expenses 25.3% 23.4%
---------- ----------
Combined 108.5% 109.9%
========== ==========
Statutory Ratio Development:
- ----------------------------
Earned premiums $ 518.3 $ 546.9
Losses and loss adjustment expenses $ 431.4 $ 472.8
Other underwriting expenses 161.7 142.1
---------- ----------
Total deductions 593.1 614.9
---------- ----------
Statutory underwriting gain/(loss)(2) $ (74.8) $ (68.0)
Catastrophe losses (after-tax)(3) $ 6.0 $ 0.8
Net investment income (pre-tax) $ 158.0 $ 140.5
Effective tax rate on net investment income 25.6% 25.8%
(1) Equivalents represent estimates of premiums that customers would have been
charged under a fully insured arrangement and do not equal actual revenues.
(2) Before policyholder dividends, which are immaterial.
(3) Net of reinsurance. Effective April 1, 1995, the threshold of losses
incurred to qualify a specific event as a catastrophe loss was increased.
<PAGE>
PROPERTY & CASUALTY INSURANCE SERVICES -- Page 3
(In millions of dollars)
As of, and for the quarter
ended March 31,
-------------------
1996 1995
-------- --------
PERSONAL LINES
REVENUES $ 373.1 $ 359.6
OPERATING EARNINGS $ 22.1 $ 24.5
Net written premiums by product line:
Personal auto $ 276.9 $ 271.9
Homeowners and other 64.3 82.4
-------- --------
Total written premiums 341.2 354.3
======== ========
Number of policies (millions) 1.8 1.8
Combined ratio:
Losses and loss adjustment expenses 76.8% 74.4%
Other underwriting expenses 28.5% 28.1%
-------- --------
Combined 105.3% 102.5%
======== ========
Statutory Ratio Development:
Earned premiums $ 326.1 $ 316.5
Losses and loss adjustment expenses 250.6 235.5
Other underwriting expenses 97.1 99.5
-------- --------
Total deductions 347.7 335.0
-------- --------
Statutory underwriting gain/(loss) $ (21.6) $ (18.5)
Catastrophe losses (after-tax)(1) $ 18.0 $ 1.6
Net investment income (pre-tax) $ 39.9 $ 38.7
Effective tax rate on net investment income 27.3% 28.2%
(1) Net of reinsurance. Effective April 1, 1995, the threshold of losses
incurred to qualify a specific event as a catastrophe loss was increased.
<PAGE>
SELECTED OTHER DATA
(In millions of dollars)
<TABLE><CAPTION>
At March 31, At December 31,
1996 1995
------- -------
<S> <C> <C>
INVESTMENT PORTFOLIO (at carrying value) (1)
Fixed-income investments
Trading securities, at market $ 97.0 $ 0.0
Available for sale, at market:
Mortgage-backed securities - principally obligations
of U.S. Government agencies 5,561 6,085
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies 2,457 2,848
Corporates (including redeemable preferreds) 16,688 17,166
Obligations of states and political subdivisions 4,203 4,092
Debt securities issued by foreign governments 703 453
Held to maturity, at amortized cost 64 68
------- -------
Total fixed income 29,773 30,712
Equity securities, at market 1,002 856
Mortgage loans and real estate held for sale 4,118 4,369
Policy loans 1,903 1,888
Short-term and other 3,407 3,140
------- -------
Total invested assets $40,203 $40,965
======= =======
After tax unrealized gains/(losses) on invested assets $ 204 $ 756
======= =======
DETAIL OF MORTGAGE LOANS & REAL ESTATE
Performing mortgages $ 3,594 $ 3,796
Performing real estate (2) 144 194
------- -------
Total $ 3,738 $ 3,990
Yield 9.0% 8.6%
Underperforming mortgages $ 136 $ 252
Underperforming real estate (2) 406 308
------- -------
Total $ 542 $ 560
Yield 4.4% 1.0%
Total (2) $ 4,280 $ 4,550
======= =======
Yield 8.4% 7.5%
======= =======
Proceeds from sales during period $ 166 $ 995
======= =======
(1) Represents Travelers Group's consolidated investments, which primarily
support the company's insurance operations but also include corporate
investments and investments managed on behalf of Consumer Finance Services.
(2) Includes real estate joint ventures.
<PAGE>
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: April 22, 1996
TRAVELERS GROUP INC.
By: /s/ William T. Bozarth
-----------------------
William T. Bozarth
Vice President
</TABLE>
