<PAGE>
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 26, 1998
---------------------------
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
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(Address of principal executive offices) (Zip Code)
(212) 816-8000
- -----------------------------------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS
- --------------------
Travelers Group Inc. (the "Company") had operating earnings for the fourth
quarter ended December 31, 1997 of $728.7 million, or $0.63 per share (basic)
and $0.60 per share (diluted). This is down from $836.9 million, or $0.73 per
share (basic) and $0.69 (diluted) in the comparable 1996 period. (Basic
operating EPS are calculated on the basis of weighted average shares actually
outstanding, excluding common stock equivalents.)
These results reflect the November 28, 1997 acquisition of Salomon Inc,
which was accounted for as a pooling of interests, and the subsequent merger
of Salomon Inc with Smith Barney Holdings Inc. to form Salomon Smith Barney
Holdings Inc. ("Salomon Smith Barney"). Accordingly, all periods prior to
the merger have been restated to include Salomon Inc. Fourth quarter results
reflect a decline of $181.7 million in Salomon Smith Barney's operating
earnings to $273.1 million from $454.8 million in 1996. This decline is
largely attributable to losses previously reported by Salomon Inc prior to
the merger related to global market volatility in October and November 1997,
months which had been profitable in 1996.
The balance of the Company's operations registered a 19% increase in
operating earnings in the quarter to $455.6 million versus $382.1 million in the
1996 period.
For the full year 1997, operating earnings, on a pooled basis, reached a
record $3.36 billion, up 8% from $3.11 billion in 1996. This includes operating
earnings of $1.65 billion for Salomon Smith Barney, versus $1.76 billion in
1996, and $1.71 billion for the balance of the Company's operations, versus
$1.34 billion in 1996, a 28% increase. Basic operating earnings per share for
1997 were a record $2.92, up 9% over $2.68 in 1996, and diluted were $2.76
versus $2.56 in the respective years, up 8%.
NET INCOME AND REVENUES FOR QUARTER AND YEAR
- --------------------------------------------
Net income for the 1997 fourth quarter was $376.7 million, or $0.31 per
share (basic) and $0.30 (diluted), which includes investment portfolio gains of
$144.0 million and restructuring charges of $496 million related to the
acquisition of Salomon Inc. This compares with net income in the 1996 period of
$581.7 million, or $0.50 per share (basic) and $0.47 (diluted), which included
portfolio gains of $60.6 million; a $290 million loss on the disposition of a
subsidiary, Basis Petroleum Inc.; and net charges of $25.8 million (after
minority interest) related to the acquisition of Aetna's property casualty
operations.
For the full year 1997 net income was $3.10 billion, or $2.69 per share
(basic) and $2.54 (diluted) which includes net investment portfolio gains of
$240.6 million and the restructuring charges related to the acquisition of
Salomon Inc. This compares with net income of $2.95 billion, or $2.53 per share
(basic) and $2.42 (diluted), in the 1996 period, which included net investment
portfolio gains of $27.4 million; charges related to the acquisition of Aetna's
property casualty operations of $346.4 million (after minority interest); and a
$160.6 million net gain from sales of subsidiaries and affiliates.
2
<PAGE>
Revenues for the 1997 quarter were $9.77 billion, up 14% from $8.56 billion
in the 1996 period. For the year, revenues rose 16% to $37.6 billion versus
$32.4 billion in 1996.
INVESTMENT SERVICES
-------------------
SALOMON SMITH BARNEY OPERATING EARNINGS:
(Before merger-related restructuring charges)
QUARTER: $273.1 MILLION VERSUS $454.8 MILLION IN 1996 PERIOD
YEAR: $1.65 BILLION VERSUS $1.76 BILLION IN 1996 PERIOD
Salomon Smith Barney's operating earnings for the quarter and year reflect
the pooling of interests, including the restatement of all numbers and
percentages for all periods prior to the merger.
The firm's return on equity from operating earnings for the quarter and
year were 12.5% and 20.5%, respectively, compared with 26.0% and 28.0% in the
comparable 1996 periods. Pre-tax profit margins, before the restructuring
charge, were 16.6% for the quarter and 24.3% for the year, compared with 27.7%
and 27.1%, respectively, in the prior year periods.
Revenues for the quarter, net of interest expense, were $2.50 billion, a 5%
decline from $2.65 billion in the 1996 quarter. For the year, net revenues were
$11.0 billion, a 3% improvement over $10.7 billion in 1996. Commission revenues
were $781.5 million for the quarter and $2.97 billion for the year, increases of
16% and 14%, respectively, compared with $672.5 million and $2.61 billion in the
1996 periods, reflecting increases in listed and over-the-counter securities,
and mutual funds and insurance commissions.
Asset management and administration fees rose 30% to a record $479.2
million in the quarter, reflecting broad growth in all recurring fee-based
products, led by a 46% increase in managed accounts, a 39% increase in
externally managed Consulting Group revenues, and a 12% increase in money market
and mutual fund revenues. Internally managed assets reached $164.1 billion, and
total fee-based assets under management were $223.8 billion at quarter-end,
representing increases of 22% and 25%, respectively, compared with the prior
year period. Asset management and administration fees for the year totaled
$1.72 billion, up 23% from 1996.
Investment banking revenues in the quarter totaled $562.4 million, a 9%
increase over the 1996 fourth quarter, primarily reflecting an increase in
merger and acquisition advisory revenues. For the year, investment banking
revenues rose 6% to $2.12 billion, reflecting revenue growth in unit trusts,
public finance, high yield and high grade debt underwritings, and mergers and
acquisitions. This was offset somewhat by a decline in equity underwritings.
Principal transaction revenues totaled $243.2 million, down from $663.7
million in the 1996 quarter, largely as a result of lower revenues from equity
and fixed income trading and commodities trading conducted by Phibro Inc. This
decline reflects the recent volatility experienced in global markets, a
significant portion of which relates to trading in equity derivatives.
Additionally, fixed income results reflect a decline in revenues from the
trading of financial instruments of emerging markets. For the year, revenues
from principal transactions
3
<PAGE>
were down 17% to $2.50 billion. Net interest income totaled $395.3 million and
$1.51 billion for the quarter and year, respectively, representing increases of
14% and 2% from the prior year periods.
Annualized retail gross production per Financial Consultant was $416,000
compared with $356,000 in the prior year period. The firm currently has a sales
force of approximately 10,300 Financial Consultants in 430 domestic retail
offices and 878 institutional salespeople worldwide.
Total expenses in the quarter, excluding interest and prior to the merger-
related restructuring charge, increased 9% to $2.09 billion, primarily the
result of higher production related compensation expense, as well as higher
floor brokerage and other production related costs. The firm's ratio of
non-compensation expense to net revenues was 23.9% for the quarter and 20.7% for
the year, compared to 20.6% and 20.9%, respectively, in the prior year periods.
Compensation and benefit expenses as a percentage of net revenues were 59.5% for
the quarter and 55.0% for the year, compared to 51.7% and 52.0%, respectively,
in the prior year period.
CONSUMER FINANCE
----------------
CONSUMER FINANCE OPERATING EARNINGS:
QUARTER: $70.2 MILLION, UP 34% FROM $52.3 MILLION IN 1996 PERIOD
YEAR: $237.0 MILLION, UP 7% FROM $222.4 MILLION IN 1996 PERIOD
The Company's consumer finance business year-over-year increase in earnings
reflects strong receivables growth in all major products, a lower charge-off
rate, as well as the acquisition of Security Pacific Financial Services in July
1997.
At year end, net receivables were up $2.98 billion, or 37%, to a record
$11.1 billion, which excludes $186.0 million in credit card receivables held
for securitization. The Security Pacific acquisition added approximately
$1.2 billion of this increase, and internal sources generated the remainder,
which grew 22% over year-end 1996 levels, largely reflecting investments made
over the last year in marketing, systems and training enhancements. Internal
growth reflected the Primerica Financial Services ("PFS")-generated
portfolio, which grew 49% to $2.3 billion for the year, as well as credit
card outstandings, which grew 28% or $257.5 million. (Including the
receivables held for securitization, credit card growth was $443.5 million,
or 49%.) Receivables originated in the branch system grew 14%, excluding the
impact of Security Pacific.
As of December 31, 1997, Commercial Credit's branches totaled 1,026 --
ranking it as the third largest domestic branch network in the consumer finance
industry.
The average yield, at 14.68%, was lower than the 1996 quarter's yield of
15.00%, mainly because of a shift in the portfolio mix toward lower-risk /
lower-margin real estate loans and credit card receivables.
Delinquencies in excess of 60 days were 2.35% as of December 31, 1997,
compared to 2.17% at September 30, 1997, and 2.38% at the end of the prior year
period. The charge-off rate
4
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of 2.42% was down from 2.50% for the third quarter of 1997 and 2.95% for the
1996 fourth quarter. Quarterly charge-offs reflect a short-term benefit, and
delinquencies a short-term detriment, related to the Security Pacific
acquisition, largely from the transition of that portfolio to the Company's
charge-off policies. As a result, the company expects the charge-off rate to
increase somewhat in the first half of 1998. Reserves as a percentage of net
receivables were 2.91%, down from 3.05% at September 30, 1997 and 2.97% at
December 31, 1996.
LIFE INSURANCE
--------------
PRIMERICA FINANCIAL SERVICES OPERATING EARNINGS:
QUARTER: $90.3 MILLION, UP 30% FROM $69.7 MILLION IN 1996 PERIOD
YEAR: $335.1 MILLION, UP 25% FROM $268.7 MILLION IN 1996 PERIOD
Record quarterly and annual results for PFS principally reflect strong
sales of mutual funds and variable annuities, continued growth in life insurance
in force, as well as favorable mortality experience and disciplined expense
management. Substantial increases in total production and cross-selling
initiatives were achieved as the company continued to benefit from greater
application of the FINANCIAL NEEDS ANALYSIS -- the diagnostic tool that enhances
the ability of the company's Personal Financial Analysts to address client
needs. More than 132,000 FNAs were submitted during the quarter, a 313%
increase over the prior year.
Life insurance in force reached a record $369.9 billion, up from $359.9
billion at December 31, 1996, continuing to reflect good policy persistency and
stable sales levels. New term life insurance sales were $13.4 billion and $52.6
billion for the quarter and year, respectively, up slightly from $13.1 billion
and $52.0 billion in the prior year periods.
Sales of mutual funds increased to $662.1 million and $2.69 billion (at net
asset value) for the quarter and year, respectively, representing increases of
17% and 16% over $566.0 million and $2.33 billion in the prior year periods.
Sales of Smith Barney products -- predominantly THE CONCERT SERIES-Registered
Trademark- -- totaled $178.3 million (at net asset value) in the quarter. Smith
Barney recently acquired the advisory contracts of the Common Sense-Registered
Trademark- Trust from Van Kampen American Capital. This family of funds,
marketed exclusively by PFS and renamed THE CONCERT INVESTMENT SERIES-SM-, has
$5.8 billion in assets in approximately 800,000 accounts. As a result, sales of
all Smith Barney funds during the quarter and the year represent more than half
of PFS's total U.S. mutual fund business.
Variable annuity sales continued to grow significantly, reaching $111.9
million, up 248% from $32.2 million in the 1996 quarter. For the year, sales
increased nearly 245% to $346.5 million versus $100.5 million in 1996.
Net receivables from mortgage loans ($.M.A.R.T. loans-Registered
Trademark-) and personal loans ($.A.F.E.-Registered Trademark- loans) advanced
significantly to $2.3 billion, up 49% from the 1996 fourth quarter. Both
products are underwritten by Commercial Credit and distributed exclusively
through the PFS sales force.
5
<PAGE>
The TRAVELERS SECURE-Registered Trademark- property casualty insurance
product -- issued through Travelers Indemnity -- continues to experience healthy
growth in applications and policies. As of December 31, 1997, this product had
been rolled out in 38 states, and the number of property casualty policies
issued during the fourth quarter grew to 31,287, a 152% increase compared to
12,405 in the prior year period. For the year, sales increased 155% to 95,830
policies versus 37,591 in 1996. This product is sold through approximately
8,700 PFS agents licensed to sell the product.
TRAVELERS LIFE & ANNUITY OPERATING EARNINGS:
QUARTER: $111.5 MILLION, UP 16% FROM $96.2 MILLION IN 1996 PERIOD
YEAR: $424.0 MILLION, UP 18% FROM $359.9 MILLION IN 1996 PERIOD
Higher earnings for the quarter and year were largely driven by strong
investment income as well as by double-digit growth in annuity account balances
and long term care insurance premiums. Positive earnings momentum attributable
to strong sales growth of less capital-intensive products -- including variable
life insurance and annuities -- continues to be partially offset by a gradual
decline in the amount of higher margin business written in prior years.
In deferred annuities, significant sales through The Copeland Companies
("Copeland"), Salomon Smith Barney Financial Consultants, and a nationwide
network of independent agents, combined with favorable market returns from
variable annuities, drove account balances to $16.1 billion at December 31,
1997, up 22%, or $2.8 billion, from a year ago. Net written premiums and
deposits for the quarter and year totaled $778.5 million and $2.55 billion,
representing increases of 51% and 28% over the respective 1996 periods. The
strong sales reflect a fourth quarter marketing initiative at Salomon Smith
Barney, as well as Copeland's successful penetration of the small company
segment of the 401(k) market.
Payout and group annuity account balances and benefit reserves reached
$11.9 billion at December 31, 1997, up 10%, or $1.08 billion, from a year ago.
The 1997 revitalization of the payout and group annuities business reflects a
doubling of sales of new payout annuities and guaranteed investment contracts.
Net written premiums and deposits (excluding Travelers Group employee pension
plan deposits) were $789.0 million for the quarter and $2.42 billion for the
year, up more than 200% from $244.6 million in the 1996 quarter, and up 95% from
$1.24 billion for 1996.
For individual life insurance, direct premiums and deposits (excluding
single premium policies) were $79.1 million for the quarter, up 6% from $74.8
million in the prior year period, and were $290.4 million for the year,
marginally ahead of $285.3 million in 1996. Life insurance in force was $51.6
billion at December 31, 1997, up from $50.4 billion.
Net written premiums for the growing long term care insurance line
increased 56% to $54.3 million for the quarter, and 44% to $183.8 million for
the year.
6
<PAGE>
PROPERTY AND CASUALTY INSURANCE
(Travelers Property Casualty Corp. is 83.4% owned by Travelers Group.)
The following segment earnings exclude Aetna's property and casualty
operations prior to its acquisition on April 2, 1996. Certain production
statistics related to Aetna's operations prior to the acquisition are provided
for comparative purposes.
PROPERTY CASUALTY OPERATING EARNINGS:
$287.9 MILLION FOR QUARTER; $1.13 BILLION FOR YEAR,
BEFORE MINORITY INTEREST
TRAVELERS GROUP'S SHARE:
QUARTER: $240.2 MILLION, UP 12% FROM $214.5 MILLION IN 1996 PERIOD
Year: $932.1 MILLION, UP 35% FROM $691.5 MILLION IN 1996 PERIOD
Travelers Property Casualty Corp.'s results for the quarter and year were
strong with net investment income, expense savings, and a lower level of
catastrophe losses as significant contributors to earnings growth. Operating
earnings in the 1997 fourth quarter also reflect financing and other corporate
costs of $30.6 million, and were further reduced by minority interest of $47.7
million.
COMMERCIAL LINES OPERATING EARNINGS (before minority interest):
QUARTER: $218.9 MILLION, UP 14% FROM $192.5 MILLION IN 1996 PERIOD
Year: $845.6 MILLION, UP 31% FROM $646.9 MILLION IN 1996 PERIOD
Operating results for the quarter reflect market conditions characterized
by difficult pricing and increased competition. The impact of this trend
partially offsets the positive results achieved from strong net investment
income, significantly reduced operating expenses and a continued disciplined
approach to underwriting and risk management. There were no catastrophe losses
in the quarter, and totaled $5.1 million for the year, after taxes and
reinsurance. This compares with catastrophe losses of $8.4 million and $31.0
million in the comparable 1996 periods.
The statutory combined ratio for the quarter was 108.4%, compared with
108.1% in the 1996 period, excluding net acquisition-related charges. For the
year, on the same basis, it was 109.0% versus 109.3% in 1996.
On a combined basis, total net written premiums for the quarter and year
were $1.10 billion and $4.76 billion, respectively, compared to $1.13 billion
and $4.69 billion in the 1996 periods.
7
<PAGE>
PERSONAL LINES OPERATING EARNINGS (before minority interest):
QUARTER: $99.6 MILLION, UP 2% FROM $98.1 MILLION IN 1996 PERIOD
Year: $403.8 MILLION, UP 58% FROM $255.8 MILLION IN 1996 PERIOD
Operating results for the quarter reflect growth in premium income and
somewhat lower catastrophe losses, offset by investments in service centers and
market expansions. Catastrophe losses for the quarter and year, respectively,
were $5.3 million and $9.8 million, after taxes and reinsurance, versus $6.6
million and $58.1 million in the comparable 1996 periods.
The statutory combined ratio for the quarter was 92.9%, compared with 95.2%
in the 1996 period, excluding net acquisition-related adjustments. For the
year, on the same basis, it was 92.2% versus 100.1% in 1996, primarily as a
result of lower catastrophe losses and improved underwriting results.
On a combined basis, total net written premiums for the quarter and year
were $779.6 million and $3.07 billion, respectively, compared to $674.1 million
and $2.67 billion in the 1996 periods.
CORPORATE AND OTHER
OPERATING EXPENSE:
QUARTER: ($56.6 MILLION) VERSUS ($50.6 MILLION) IN 1996 PERIOD
Year: ($215.2 MILLION) VERSUS ($200.9 MILLION) IN 1996 PERIOD
Net corporate expenses for the quarter and year increased over the prior
year periods. Corporate expenses for the year 1997 as a percentage of operating
earnings were slightly lower than in the prior year.
INVESTMENT PORTFOLIO
The Company's $61.8 billion investment portfolio consists primarily of
fixed income investments with average quality ratings of A+/A1. The effective
duration of the fixed income portfolio, including short-term fixed income
investments, is 5.0 years.
______________________________
The Company, which as of December 31, 1997 had assets of $386 billion, is a
diversified, integrated financial services company engaged in investment
services, including asset management, consumer finance and life and property
casualty insurance services. Book value per share at quarter-end was $16.98 --
which includes unrealized gains in the investment portfolio of $1.16 billion.
Excluding the mark-to-market requirement for the investment portfolio, the book
value for the period would have been $15.97 per share.
8
<PAGE>
<TABLE>
<CAPTION>
TRAVELERS GROUP - SUMMARY OF EARNINGS
(In millions of dollars)
For the quarter ended For the year ended
December 31, December 31,
----------------- ----------------- ----------------- -----------------
1997 1996 1997 1996
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
REVENUES $ 9,765.0 $ 8,560.8 $ 37,608.6 $ 32,414.4
- -------- ================= ================= ================= =================
INCOME AFTER TAX AND MINORITY INTEREST:
OPERATING EARNINGS $ 728.7 $ 836.9 $ 3,359.1 $ 3,106.4
Portfolio gains 144.0 60.6 240.6 27.4
Gain/(loss) on sale of subsidiaries and affiliates - (290.0) - 160.6
Restructuring charge (496.0) - (496.0) -
Increase in insurance reserves and other
adjustments resulting from the
acquisition of Aetna P&C - (25.8) - (346.4)
----------------- ----------------- ----------------- -----------------
NET INCOME $ 376.7 $ 581.7 $ 3,103.7 $ 2,948.0
================= ================= ================= =================
BASIC EARNINGS PER SHARE:
OPERATING EARNINGS $ 0.63 $ 0.73 $ 2.92 $ 2.68
Portfolio gains 0.13 0.05 0.22 0.02
Gain/(loss) on sale of subsidiaries and affiliates - (0.26) - 0.15
Restructuring charge (0.45) - (0.45) -
Increase in insurance reserves and other
adjustments resulting from the
acquisition of Aetna P&C - (0.02) - (0.32)
----------------- ----------------- ----------------- -----------------
NET INCOME $ 0.31 $ 0.50 $ 2.69 $ 2.53
================= ================= ================= =================
TOTAL AVERAGE COMMON SHARES OUTSTANDING 1,104.7 1,102.5 1,102.6 1,097.6
================= ================= ================= =================
DILUTED EARNINGS PER SHARE:
OPERATING EARNINGS $ 0.60 $ 0.69 $ 2.76 $ 2.56
Portfolio gains 0.12 0.05 0.20 0.02
Gain/(loss) on sale of subsidiaries and affiliates - (0.25) - 0.14
Restructuring charge (0.42) - (0.42) -
Increase in insurance reserves and other
adjustments resulting from the
acquisition of Aetna P&C - (0.02) - (0.30)
----------------- ----------------- ----------------- -----------------
NET INCOME $ 0.30 $ 0.47 $ 2.54 $ 2.42
================= ================= ================= =================
TOTAL AVERAGE COMMON
AND EQUIVALENT SHARES OUTSTANDING 1,178.4 1,177.3 1,179.9 1,170.6
================= ================= ================= =================
COMMON SHARES ISSUED AND
OUTSTANDING AT PERIOD END 1,145.1 1,141.2 1,145.1 1,141.2
================= ================= ================= =================
PREFERRED DIVIDENDS - BASIC $ (34.9) $ (33.8) $ (139.4) $ (161.6)
================= ================= ================= =================
PREFERRED DIVIDENDS - DILUTED $ (27.4) $ (24.5) $ (102.8) $ (111.0)
================= ================= ================= =================
</TABLE>
Note: All data has been restated to reflect the merger with
Salomon Inc, accounted for as a pooling of interests.
9
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<TABLE>
<CAPTION>
TRAVELERS GROUP - SEGMENT REVENUES
(In millions of dollars)
For the quarter ended For the year ended
December 31, December 31,
------------------------------------------------------------------------------
1997 1996 1997 1996
----------------- ----------------- ----------------- -----------------
REVENUES
<S> <C> <C> <C> <C>
INVESTMENT SERVICES
Salomon Smith Barney $ 5,447.3 $ 4,764.7 $ 21,507.4 $ 18,871.5
----------------- ----------------- ----------------- -----------------
CONSUMER FINANCE SERVICES 483.0 363.9 1,687.8 1,410.7
----------------- ----------------- ----------------- -----------------
LIFE INSURANCE SERVICES
Travelers Life and Annuity 890.3 640.7 2,889.9 2,339.3
Primerica Financial Services 401.4 367.2 1,536.2 1,425.5
----------------- ----------------- ----------------- -----------------
Total Life Insurance Services 1,291.7 1,007.9 4,426.1 3,764.8
----------------- ----------------- ----------------- -----------------
PROPERTY AND CASUALTY INSURANCE SERVICES
Commercial lines 1,669.4 1,608.3 6,556.9 5,527.7
Personal lines 868.3 782.0 3,340.9 2,685.4
Other 4.3 1.5 13.1 10.8
----------------- ----------------- ----------------- -----------------
Total P&C Insurance Services 2,542.0 2,391.8 9,910.9 8,223.9
----------------- ----------------- ----------------- -----------------
CORPORATE AND OTHER 1.0 32.5 76.4 143.5
----------------- ----------------- ----------------- -----------------
Total revenues $ 9,765.0 $ 8,560.8 $ 37,608.6 $ 32,414.4
================= ================= ================= =================
</TABLE>
Note: Financial data for Travelers Casualty and Surety Company (formerly
The Aetna Casualty and Surety Company) and The Standard Fire Insurance
Company (collectively, Aetna P&C) is included from the date of acquisition
(April 2, 1996).
10
<PAGE>
<TABLE>
<CAPTION>
TRAVELERS GROUP - SEGMENT OPERATING EARNINGS
(In millions of dollars)
For the quarter ended For the year ended
December 31, December 31,
------------------------------------------------------------------------------
1997 1996 1997 1996
----------------- ----------------- ----------------- -----------------
OPERATING EARNINGS
<S> <C> <C> <C> <C>
INVESTMENT SERVICES
Salomon Smith Barney $ 273.1 $ 454.8 $ 1,646.1 $ 1,764.8
----------------- ----------------- ----------------- -----------------
CONSUMER FINANCE SERVICES 70.2 52.3 237.0 222.4
----------------- ----------------- ----------------- -----------------
LIFE INSURANCE SERVICES
Travelers Life and Annuity 111.5 96.2 424.0 359.9
Primerica Financial Services 90.3 69.7 335.1 268.7
----------------- ----------------- ----------------- -----------------
Total Life Insurance Services 201.8 165.9 759.1 628.6
----------------- ----------------- ----------------- -----------------
PROPERTY AND CASUALTY INSURANCE SERVICES
Commercial lines 218.9 192.5 845.6 646.9
Personal lines 99.6 98.1 403.8 255.8
----------------- ----------------- ----------------- -----------------
318.5 290.6 1,249.4 902.7
Financing costs and other (30.6) (29.0) (123.2) (87.2)
Minority interest (47.7) (47.1) (194.1) (124.0)
----------------- ----------------- ----------------- -----------------
Total P&C Insurance Services 240.2 214.5 932.1 691.5
----------------- ----------------- ----------------- -----------------
Total business income 785.3 887.5 3,574.3 3,307.3
----------------- ----------------- ----------------- -----------------
CORPORATE AND OTHER (56.6) (50.6) (215.2) (200.9)
----------------- ----------------- ----------------- -----------------
Total operating earnings $ 728.7 $ 836.9 $ 3,359.1 $ 3,106.4
================= ================= ================= =================
</TABLE>
Note: Financial data for Travelers Casualty and Surety Company (formerly
The Aetna Casualty and Surety Company) and The Standard Fire Insurance
Company (collectively, Aetna P&C) is included from the date of acquisition
(April 2, 1996).
11
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT SERVICES -- Page 1
(In millions of dollars)
As of, or for the quarter As of, or for the year
ended December 31, ended December 31,
------------------------------------------------------------------------------
1997 1996 1997 1996
----------------- ----------------- ----------------- -----------------
SALOMON SMITH BARNEY
Revenues:
<S> <C> <C> <C> <C>
Commissions $ 781.5 $ 672.5 $ 2,966.9 $ 2,611.5
Asset management and administration fees 479.2 369.4 1,715.1 1,390.2
Investment banking 562.4 518.3 2,118.2 2,001.2
Principal transactions 243.2 663.7 2,504.2 3,027.6
Other income 42.9 77.7 159.8 178.3
----------------- ----------------- ----------------- -----------------
Total revenues before interest 2,109.2 2,301.6 9,464.2 9,208.8
----------------- ----------------- ----------------- -----------------
Interest and dividends 3,338.1 2,463.1 12,043.2 9,662.7
Interest expense 2,942.8 2,117.1 10,530.4 8,174.9
----------------- ----------------- ----------------- -----------------
Net interest revenue 395.3 346.0 1,512.8 1,487.8
----------------- ----------------- ----------------- -----------------
Total revenues, net of interest expense 2,504.5 2,647.6 10,977.0 10,696.6
----------------- ----------------- ----------------- -----------------
Expenses:
Compensation and benefits 1,488.8 1,369.1 6,037.2 5,558.4
Communications 122.6 124.5 494.7 486.0
Occupancy and equipment 107.9 107.7 432.3 435.1
Floor brokerage and other production 117.7 76.7 389.0 301.9
Advertising and market development 73.1 60.0 275.5 218.1
Professional services 69.7 48.6 210.2 190.1
Other operating and administrative expenses 108.3 127.3 470.1 604.9
----------------- ----------------- ----------------- -----------------
Total expenses 2,088.1 1,913.9 8,309.0 7,794.5
----------------- ----------------- ----------------- -----------------
Operating income before income taxes 416.4 733.7 2,668.0 2,902.1
Provision for income taxes 143.3 278.9 1,021.9 1,137.3
----------------- ----------------- ----------------- -----------------
Operating earnings 273.1 454.8 1,646.1 1,764.8
----------------- ----------------- ----------------- -----------------
Gain on sale of subsidiaries and affiliates, net of
tax - - - 31.0
Restructuring charge, net of tax (496.0) - (496.0) -
Loss on sale of Basis Petroleum, net of tax benefit - (290.0) - (290.0)
----------------- ----------------- ----------------- -----------------
Net income (loss) $ (222.9) $ 164.8 $ 1,150.1 $ 1,505.8
================= ================= ================= =================
Total assets (in billions) $ 276.4 $ 246.1 $ 276.4 $ 246.1
Total equity (in billions) $ 8.5 $ 7.6 $ 8.5 $ 7.6
Return on equity (1) 12.5% 26.0% 20.5% 28.0%
Pre-tax profit margin (1) 16.6% 27.7% 24.3% 27.1%
Non-compensation expenses as a
percent of net revenue (1) 23.9% 20.6% 20.7% 20.9%
</TABLE>
(1) On operating earnings before restructuring charge.
Note: All data has been restated to reflect the merger with
Salomon Inc, accounted for as a pooling of interests.
12
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT SERVICES -- PAGE 2
(In millions of dollars)
As of, or for the quarter As of, or for the year
ended December 31, ended December 31,
------------------------------------------------------------------------------
1997 1996 1997 1996
----------------- ----------------- ----------------- -----------------
SALOMON SMITH BARNEY
<S> <C> <C> <C> <C>
RETAIL BROKERAGE
Registered Financial Consultants 10,319 10,397 10,319 10,397
Annualized retail gross production per FC (000) $ 416 $ 356 $ 399 $ 354
Domestic retail offices 430 450 430 450
ASSET MANAGEMENT
Assets under fee-based management (in billions):
Money market funds $ 46.5 $ 41.6 $ 46.5 $ 41.6
Mutual funds 51.9 40.4 51.9 40.4
Managed accounts 54.1 44.5 54.1 44.5
Financial consultant managed assets 11.6 7.9 11.6 7.9
----------------- ----------------- ----------------- -----------------
Total internally managed assets 164.1 134.4 164.1 134.4
Consulting Group externally managed assets 59.7 44.1 59.7 44.1
----------------- ----------------- ----------------- -----------------
Total fee-based assets under management $ 223.8 $ 178.5 $ 223.8 $ 178.5
================= ================= ================= =================
CONSOLIDATED TRAVELERS GROUP
ASSETS UNDER MANAGEMENT (IN BILLIONS)
Salomon Smith Barney $ 164.1 $ 134.4 $ 164.1 $ 134.4
Travelers Life and Annuity (1) 23.8 21.5 23.8 21.5
----------------- ----------------- ----------------- -----------------
Total assets managed for third parties $ 187.9 $ 155.9 $ 187.9 $ 155.9
================= ================= ================= =================
</TABLE>
(1) Part of the Life Insurance Services segment.
Note: All data has been restated to reflect the merger with
Salomon Inc, accounted for as a pooling of interests.
13
<PAGE>
CONSUMER FINANCE SERVICES
(In millions of dollars)
<TABLE>
<CAPTION>
As of, or for the quarter As of, or for the year
ended December 31, ended December 31,
------------------------------------------------------------------------------
1997 1996 1997 1996
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
REVENUES $ 483.0 $ 363.9 $ 1,687.8 $ 1,410.7
OPERATING EARNINGS $ 70.2 $ 52.3 $ 237.0 $ 222.4
Net receivables:
Real estate-secured loans (1) $ 5,107.6 $ 3,456.7 $ 5,107.6 $ 3,456.7
Personal loans (2) 3,922.2 3,199.6 3,922.2 3,199.6
Credit cards (3) 1,164.6 907.1 1,164.6 907.1
Sales finance and other 857.0 507.7 857.0 507.7
--------------- ----------------- ----------------- -----------------
Consumer finance receivables,
net of unearned finance charges 11,051.4 8,071.1 11,051.4 8,071.1
Accrued interest receivable 85.6 52.7 85.6 52.7
Allowance for credit losses (321.4) (239.3) (321.4) (239.3)
----------------- ----------------- ----------------- -----------------
Consumer finance receivables, net $ 10,815.6 $ 7,884.5 $ 10,815.6 $ 7,884.5
================= ================= ================= =================
Number of branches 1,026 859 1,026 859
Number of credit card accounts 983,600 790,800 983,600 790,800
Average yield 14.68% 15.00% 14.58% 15.24%
Average net interest margin 8.31% 8.45% 8.14% 8.64%
Charge-off rate 2.42% 2.95% 2.65% 2.91%
60+ days past due as % of receivables 2.35% 2.38% 2.35% 2.38%
Reserves as % of net receivables 2.91% 2.97% 2.91% 2.97%
Finance insurance premiums earned $ 47.6 $ 40.7 $ 176.6 $ 155.3
(1) Includes fully secured $.M.A.R.T. receivables,
as follows: $ 1,887.9 $ 1,138.5 $ 1,887.9 $ 1,138.5
(2) Includes $.A.F.E. and partially secured
$.M.A.R.T. receivables, as follows: $ 375.8 $ 385.5 $ 375.8 $ 385.5
</TABLE>
(3) At December 31, 1997, excludes $186 million held for securitization.
Note: Financial data for Security Pacific Financial Services is
included from the date of acquisition (July 31, 1997).
14
<PAGE>
<TABLE>
<CAPTION>
LIFE INSURANCE SERVICES -- Page 1
(In millions of dollars)
As of, or for the quarter As of, or for the year
ended December 31, ended December 31,
------------------------------------------------------------------------------
1997 1996 1997 1996
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
REVENUES $ 1,291.7 $ 1,007.9 $ 4,426.1 $ 3,764.8
OPERATING EARNINGS
Travelers Life and Annuity $ 111.5 $ 96.2 $ 424.0 359.9
Primerica Financial Services 90.3 69.7 335.1 268.7
----------------- ----------------- ----------------- -----------------
Total $ 201.8 $ 165.9 $ 759.1 $ 628.6
================= ================= ================= =================
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
LIFE INSURANCE SERVICES -- Page 2
(In millions of dollars)
As of, or for the quarter As of, or for the year
ended December 31, ended December 31,
------------------------------------------------------------------------------
1997 1996 1997 1996
----------------- ----------------- ----------------- -----------------
TRAVELERS LIFE AND ANNUITY
<S> <C> <C> <C> <C>
REVENUES $ 890.3 $ 640.7 $ 2,889.9 $ 2,339.3
OPERATING EARNINGS $ 111.5 $ 96.2 $ 424.0 $ 359.9
DEFERRED ANNUITIES:
Number of annuities in force (000)
Fixed 408.9 399.1 408.9 399.1
Variable 381.0 270.5 381.0 270.5
----------------- ----------------- ----------------- -----------------
Total 789.9 669.6 789.9 669.6
================= ================= ================= =================
Number of annuities issued (000)
Fixed 6.7 7.3 29.9 26.5
Variable 34.4 19.9 129.4 79.0
----------------- ----------------- ----------------- -----------------
Total 41.1 27.2 159.3 105.5
================= ================= ================= =================
Net written premiums & deposits:
Fixed $ 250.7 $ 145.7 $ 778.9 $ 620.4
Variable 527.8 370.2 1,775.4 1,370.4
----------------- ----------------- ----------------- -----------------
Total $ 778.5 $ 515.9 $ 2,554.3 $ 1,990.8
================= ================= ================= =================
Policyholder account balances & benefit
reserves (1):
Fixed $ 7,358.7 7,242.7 7,358.7 7,242.7
Variable 8,704.9 5,975.9 8,704.9 5,975.9
----------------- ----------------- ----------------- -----------------
Total $ 16,056.6 $ 13,218.6 $ 16,063.6 $ 13,218.6
================= ================= ================= =================
PAYOUT ANNUITIES:
Net written premiums & deposits $ 138.0 $ 42.3 $ 309.9 $ 142.0
Policyholder account balances & benefit
reserves $ 4,522.2 $ 4,395.5 $ 4,522.2 $ 4,395.5
GIC and other annuities:
Net written premiums & deposits (2) $ 651.0 $ 202.3 $ 2,108.7 $ 1,100.3
Policyholder account balances & benefit
reserves (1),(3) $ 7,419.0 $ 6,462.5 $ 7,419.0 $ 6,462.5
INDIVIDUAL LIFE INSURANCE:
Life insurance in force
(in billions, face amt.):
Term $ 30.1 $ 29.5 $ 30.1 $ 29.5
Permanent (universal and whole life) 21.5 $ 20.9 21.5 20.9
----------------- ----------------- ----------------- -----------------
Total $ 51.6 $ 50.4 $ 51.6 $ 50.4
================= ================= ================= =================
Number of life policies in force (000) 528.3 545.7 528.3 545.7
Life insurance issued (in billions, face amt.) $ 2.0 $ 1.7 $ 6.5 6.6
Number of life policies issued (000) 8.2 6.5 24.5 26.1
Direct periodic premiums and deposits $ 79.1 $ 74.8 $ 290.4 285.3
Policyholder account balances & benefit
reserves $ 2,283.4 $ 2,179.8 $ 2,283.4 $ 2,179.8
LONG TERM CARE:
Number of policies in force (000) 102.1 76.3 102.1 76.3
Net written premiums $ 54.3 $ 34.8 $ 183.8 $ 127.7
OTHER INDIVIDUAL ACCIDENT AND HEALTH:
Net written premiums (4) $ 3.6 $ 4.9 $ 15.5 $ 34.2
ALL BUSINESSES:
Net investment income $ 472.1 $ 431.8 $ 1,835.1 1,711.2
Interest credited to contractholders $ 217.7 $ 207.4 $ 829.5 829.7
</TABLE>
(1) Includes general account, separate accounts and managed funds.
(2) Excludes deposits of $2.0 and $353.0 in the 1997 fourth quarter
and full year, respectively, and $86.0 and $146.0 in the 1996 fourth
quarter and full year, respectively, related to the transfer in-house
of old Travelers pension fund assets previously managed externally.
(3) Includes $2,367.6 and $1,495.2 in guaranteed investment contracts at
December 31, 1997 and 1996, respectively.
(4) Includes $9.5 for the 1996 full year in premiums related to the
business transferred to Travelers Property Casualty Corp.
16
<PAGE>
<TABLE>
<CAPTION>
LIFE INSURANCE SERVICES -- Page 3
(In millions of dollars)
As of, or for the quarter As of, or for the year
ended December 31, ended December 31,
-----------------------------------------------------------------------------
1997 1996 1997 1996
----------------- ----------------- ----------------- ----------------
PRIMERICA FINANCIAL SERVICES
<S> <C> <C> <C> <C>
REVENUES $ 401.4 $ 367.2 $ 1,536.2 $ 1,425.5
OPERATING EARNINGS $ 90.3 $ 69.7 $ 335.1 $ 268.7
Face value (in billions) of:
Life insurance issued $ 13.4 $ 13.1 $ 52.6 $ 52.0
Life insurance in force $ 369.9 $ 359.9 $ 369.9 $ 359.9
Number of life policies issued (000) 55.1 61.2 228.9 247.6
Number of life policies in force (000) 2,146.2 2,141.8 2,146.2 2,141.8
Annualized issued premiums $ 43.1 $ 45.3 $ 176.6 $ 180.7
Direct premiums $ 305.8 $ 301.6 $ 1,213.7 $ 1,192.7
Earned premiums:
PFS Individual term life $ 240.1 $ 238.4 $ 967.1 $ 953.9
Other 19.1 22.1 67.6 76.3
----------------- ----------------- ----------------- -----------------
Total $ 259.2 $ 260.5 $ 1,034.7 $ 1,030.2
================= ================= ================= =================
Mutual fund sales at NAV (1) $ 662.1 $ 566.0 $ 2,689.4 $ 2,326.9
Net new cash on $.M.A.R.T. and
$.A.F.E. loans (2) $ 354.7 $ 235.9 $ 1,297.8 $ 726.3
TRAVELERS SECURE net written premiums (3) $ 28.2 $ 7.5 $ 72.6 $ 18.8
</TABLE>
(1) Includes mutual fund sales in Canada of $129.1 million and $108.4
million during the 1997 and 1996 quarters and $587.5 million and
$416.4 million during the 1997 and 1996 full year, respectively.
(2) These loans are marketed by PFS; the receivables are reflected in
the assets of Consumer Finance Services.
(3) The TRAVELERS SECURE property casualty insurance products
are marketed by PFS; the premiums are reflected in the operating
earnings of Travelers Property Casualty Corp.
17
<PAGE>
<TABLE>
<CAPTION>
PROPERTY & CASUALTY INSURANCE SERVICES -- Page 1
(In millions of dollars)
For the quarter For the year
ended December 31, ended December 31,
------------------------------------------------------------------------------
1997 1996 1997 1996
----------------- ----------------- ----------------- -----------------
TOTAL P&C INSURANCE
<S> <C> <C> <C> <C>
REVENUES
Commercial Lines $ 1,669.4 $ 1,608.3 $ 6,556.9 $ 5,527.7
Personal Lines 868.3 782.0 3,340.9 2,685.4
Other 4.3 1.5 13.1 10.8
----------------- ----------------- ----------------- -----------------
Total $ 2,542.0 $ 2,391.8 $ 9,910.9 $ 8,223.9
================= ================= ================= =================
OPERATING EARNINGS
Commercial Lines $ 218.9 $ 192.5 $ 845.6 $ 646.9
Personal Lines 99.6 98.1 403.8 255.8
----------------- ----------------- ----------------- -----------------
318.5 290.6 1,249.4 902.7
Financing costs and other (30.6) (29.0) (123.2) (87.2)
Minority interest (47.7) (47.1) (194.1) (124.0)
----------------- ----------------- ----------------- -----------------
Total $ 240.2 $ 214.5 $ 932.1 $ 691.5
================= ================= ================= =================
GAAP CONSOLIDATED STATEMENT OF OPERATIONS
REVENUES:
Premiums $ 1,807.8 $ 1,717.5 $ 7,225.5 $ 6,039.3
Net investment income 515.8 494.0 2,048.4 1,656.3
Fee income 85.9 97.3 364.7 391.6
Realized investment gains 111.0 48.9 169.0 24.8
Other revenues 17.2 32.6 90.2 101.1
----------------- ----------------- ----------------- -----------------
Total revenues 2,537.7 2,390.3 9,897.8 8,213.1
----------------- ----------------- ----------------- -----------------
Claims and expenses:
Claims and claim adjustment expenses* 1,357.0 1,289.0 5,433.3 5,242.8
Policyholder dividends 15.9 14.8 50.2 37.9
Amortization of deferred acquisition costs 278.7 257.2 1,127.0 905.7
General and administrative expenses 337.0 414.5 1,346.2 1,377.9
----------------- ----------------- ----------------- -----------------
Total expenses 1,988.6 1,975.5 7,956.7 7,564.3
----------------- ----------------- ----------------- -----------------
Income before federal income taxes 549.1 414.8 1,941.1 648.8
Federal income taxes 158.0 124.2 581.5 152.6
----------------- ----------------- ----------------- -----------------
Net income from property casualty operations 391.1 290.6 1,359.6 496.2
Financing costs and other (30.6) (28.9) (123.2) (87.4)
----------------- ----------------- ----------------- -----------------
Total net income ** $ 360.5 $ 261.7 $ 1,236.4 $ 408.8
================= ================= ================= =================
* Includes pre-tax:
Catastrophe losses, net of reinsurance $ 8.2 $ 23.1 $ 23.0 $ 137.1
** Includes, net of taxes:
Net investment income $ 370.1 $ 344.9 $ 1,441.1 $ 1,163.3
Realized investment gains $ 72.6 $ 31.6 $ 110.2 $ 15.8
Net charges related to the acquisition and
integration of Aetna P&C $ - $ (31.5) $ - $ (422.5)
STATUTORY COMBINED RATIO (1):
Loss and loss adjustment expense ratio 71.5% 74.6% 72.4% 85.2%
Other underwriting expense ratio 30.6% 31.0% 29.9% 31.2%
----------------- ----------------- ----------------- -----------------
Combined ratio 102.1% 105.6% 102.3% 116.4%
================= ================= ================= =================
STATUTORY COMBINED RATIO, EXCLUDING NET
CHARGES RELATED TO THE ACQUISITION AND
INTEGRATION OF AETNA P&C (1):
Loss and loss adjustment expense ratio 71.5% 72.7% 72.4% 75.9%
Other underwriting expense ratio 30.6% 30.5% 29.9% 30.1%
----------------- ----------------- ----------------- -----------------
Combined ratio 102.1% 103.2% 102.3% 106.0%
================= ================= ================= =================
</TABLE>
(1) Before policyholder dividends.
Note: Except where otherwise noted, financial data for Travelers Casualty
and Surety Company (formerly The Aetna Casualty and Surety Company) and
The Standard Fire Insurance Company (collectively, Aetna P&C) is included
from the date of acquisition (April 2, 1996).
Certain reclassifications have been made to prior year financial
information to conform to the current year's presentation.
18
<PAGE>
<TABLE>
<CAPTION>
PROPERTY & CASUALTY INSURANCE SERVICES -- Page 3
(In millions of dollars)
For the quarter For the year
ended December 31, ended December 31,
------------------------------------- -------------------------------------
1997 1996 1997 1996
----------------- ----------------- ----------------- -----------------
COMMERCIAL LINES
<S> <C> <C> <C> <C>
NET WRITTEN PREMIUMS BY MARKET (1):
National accounts $ 134.6 $ 186.8 $ 657.0 $ 713.9
Commercial accounts 470.3 452.6 1,986.1 1,485.3
Select accounts 345.1 336.3 1,432.3 1,191.1
Specialty accounts 151.9 151.6 682.0 604.9
----------------- ----------------- ----------------- -----------------
Total net written premiums $ 1,101.9 $ 1,127.3 $ 4,757.4 $ 3,995.2
================= ================= ================= =================
STATUTORY COMBINED RATIO (2):
Loss and loss adjustment expense ratio 76.7% 86.1% 78.4% 95.6%
Other underwriting expense ratio 31.7% 32.2% 30.6% 32.5%
----------------- ----------------- ----------------- -----------------
Combined ratio 108.4% 118.3% 109.0% 128.1%
================= ================= ================= =================
STATUTORY COMBINED RATIO, EXCLUDING NET
CHARGES RELATED TO THE ACQUISITION AND
INTEGRATION OF AETNA P&C (2):
Loss and loss adjustment expense ratio 76.7% 76.8% 78.4% 78.6%
Other underwriting expense ratio 31.7% 31.3% 30.6% 30.7%
----------------- ----------------- ----------------- -----------------
Combined ratio 108.4% 108.1% 109.0% 109.3%
================= ================= ================= =================
Catastrophe losses, net of
reinsurance (after-tax) $ - $ 8.4 $ 5.1 $ 31.0
PERSONAL LINES
NET WRITTEN PREMIUMS BY PRODUCT LINE:
Auto $ 503.8 $ 452.3 1,950.6 1,645.0
Homeowners and other 275.8 221.8 1,123.6 713.8
----------------- ----------------- ----------------- -----------------
Total net written premiums $ 779.6 $ 674.1 $ 3,074.2 $ 2,358.8
================= ================= ================= =================
STATUTORY COMBINED RATIO:
Loss and loss adjustment expense ratio 64.0% 57.2% 63.5% 68.7%
Other underwriting expense ratio 28.9% 29.1% 28.7% 28.9%
----------------- ----------------- ----------------- -----------------
Combined ratio 92.9% 86.3% 92.2% 97.6%
================= ================= ================= =================
STATUTORY COMBINED RATIO, EXCLUDING NET
ADJUSTMENTS RELATED TO THE ACQUISITION AND
INTEGRATION OF AETNA P&C:
Loss and loss adjustment expense ratio 64.0% 66.1% 63.5% 71.2%
Other underwriting expense ratio 28.9% 29.1% 28.7% 28.9%
----------------- ----------------- ----------------- -----------------
Combined ratio 92.9% 95.2% 92.2% 100.1%
================= ================= ================= =================
Catastrophe losses, net of
reinsurance (after-tax) $ 5.3 $ 6.6 $ 9.8 $ 58.1
</TABLE>
(1) The 1997 full year net written premiums include an increase of
$142.4 million due to a change to conform Aetna P&C's and Travelers
P&C's methods of recording net written premiums in the 1997 first
quarter. The 1996 full year net written premiums include an
adjustment associated with a reinsurance transaction, which reduced
premiums by $89.0 million.
(2) Before policyholder dividends.
Note: Financial data for Travelers Casualty and Surety Company (formerly
The Aetna Casualty and Surety Company) and The Standard Fire Insurance
Company (collectively, Aetna P&C) is included from the date of acquisition
(April 2, 1996).
Certain reclassifications have been made to prior year financial
information to conform to the current year's presentation.
19
<PAGE>
<TABLE>
<CAPTION>
SELECTED INVESTMENT DATA
(In millions of dollars)
At December 31, At December 31,
1997 1996
----------------- -----------------
INVESTMENT PORTFOLIO (AT CARRYING VALUE) (1)
<S> <C> <C>
Fixed-income investments:
Available for sale, at market:
Mortgage-backed securities - principally
obligations of U.S. Government agencies $ 8,998 $ 8,524
U.S. Treasury securities and obligations of U.S.
Government corporations and agencies 3,962 3,848
Corporates (including redeemable preferreds) 27,025 25,028
Obligations of states and political subdivisions 8,110 5,347
Debt securities issued by foreign governments 1,326 1,198
Held to maturity, at amortized cost 41 53
----------------- -----------------
Total fixed income 49,462 43,998
Equity securities, at market 1,624 1,157
Mortgage loans and real estate held for sale 3,799 4,507
Policy loans 1,872 1,910
Short-term and other 5,077 5,173
----------------- -----------------
Total invested assets $ 61,834 $ 56,745
================= =================
After tax unrealized gains on invested assets $ 1,157 $ 469
================= =================
DETAIL OF MORTGAGE LOANS & REAL ESTATE
Performing mortgages $ 3,541 $ 3,721
Performing real estate (2) 607 728
----------------- -----------------
Total $ 4,148 $ 4,449
Yield 10.7% 10.2%
Underperforming mortgages $ 19 91
Underperforming real estate (2) 31 134
----------------- -----------------
Total $ 50 $ 225
Yield 3.5% 4.1%
Total (2) $ 4,198 $ 4,674
================= =================
Yield 10.5% 9.5%
================= =================
Proceeds from sales (year to date) $ 944 $ 457
================= =================
</TABLE>
(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.
20
<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.
TRAVELERS GROUP INC.
Dated: January 28, 1998 By /s/ William T. Bozarth
------------------------
William T. Bozarth
Vice President
21
