Travelers 2012 Annual Report Download - page 86

CONSOLIDATED OVERVIEW
Consolidated Results of Operations
(for the year ended December 31, in millions except per share amounts) 2012 2011 2010
Revenues
Premiums .............................................. $22,357 $22,090 $21,432
Net investment income ..................................... 2,889 2,879 3,059
Fee income ............................................. 323 296 287
Net realized investment gains ................................ 51 55 264
Other revenues .......................................... 120 126 70
Total revenues ........................................ 25,740 25,446 25,112
Claims and expenses
Claims and claim adjustment expenses .......................... 14,676 16,276 13,210
Amortization of deferred acquisition costs ....................... 3,910 3,876 3,802
General and administrative expenses ........................... 3,610 3,556 3,406
Interest expense .......................................... 378 386 388
Total claims and expenses ............................... 22,574 24,094 20,806
Income before income taxes ................................ 3,166 1,352 4,306
Income tax expense (benefit) ................................ 693 (74) 1,090
Net income ............................................ $ 2,473 $ 1,426 $ 3,216
Net income per share
Basic ................................................ $ 6.35 $ 3.40 $ 6.69
Diluted .............................................. $ 6.30 $ 3.36 $ 6.62
GAAP combined ratio
Loss and loss adjustment expense ratio ....................... 64.9% 72.9% 61.0%
Underwriting expense ratio ................................ 32.2 32.2 32.2
GAAP combined ratio ................................. 97.1% 105.1% 93.2%
Incremental impact of direct to consumer initiative on GAAP
combined ratio .................................... 0.8% 0.9% 0.8%
The following discussions of the Company’s net income and segment operating income (loss) are
presented on an after-tax basis. Discussions of the components of net income and segment operating
income are presented on a pretax basis, unless otherwise noted. Discussions of earnings per common
share are presented on a diluted basis.
Overview
Diluted net income per share in 2012 was $6.30, an increase of 88% over diluted net income per
share of $3.36 in 2011. Net income in 2012 was $2.47 billion, an increase of 73% over net income of
$1.43 billion in 2011. The higher rate of increase in diluted net income per share reflected the impact
of common share repurchases. The improvement in net income in 2012 compared with 2011 primarily
reflected the pretax impact of (i) higher underwriting margins excluding catastrophe losses and prior
year reserve development (‘‘underlying underwriting margins’’) primarily resulting from lower
non-catastrophe weather-related losses in the Business Insurance and Personal Insurance segments and
the impact of earned pricing that exceeded loss cost trends in the Business Insurance and Financial,
Professional & International Insurance segments, (ii) a decline in catastrophe losses and (iii) higher net
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