ADD to BW1054.--(BUSINESS WIRE)--ADD to BW1054 (CITIGROUP Citigroup U.S. holding company formed in 1998 from the merger of Citicorp (itself a holding company incorporated in 1967) and Travelers Group, Inc. The $70 billion merger included one of the largest U.S. investment banks, Salomon Smith Barney Inc. ) after last graph graph, figure that shows relationships between quantities. The graph of a function y=f (x) is the set of points with coordinates [x, f (x)] in the xy-plane, when x and y are numbers. xxx down 14% from $12.8 billion in 1997.
Global Relationship Third Quarter % Nine Months %
Banking
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars) (A) (A)
Adjusted Revenue $ 759 $902 (16) $2,841 $2,693 5
Adjusted Operating 893 768 16 2,589 2,204 17
Expense
Operating Margin (134) 134 NM 252 489 (48)
Credit Costs (Benefits) 19 (38) NM (52) (137) 62
Income (Loss) Before ($153) $172 NM $ 304 $ 626 (51)
Taxes (B)
Core Business Income ($108) $137 NM $167 $432 (61)
(Loss) (B)
Net Income (Loss ) ($108) $1 NM $167 $296 (44)
Average Assets (In $92 $83 11 $90 $81 11
Billions of Dollars)
Return on Assets (B) - 0.65 - 0.25 0.71 -
(%)
(A) Reclassified to conform to the latest quarter's presentation,
including the reclassification of Citicorp's venture capital
activities to a new business segment called "Investment
Activities."
(B) Excludes the 1997 third quarter restructuring charge of $227
million pretax ($136 million after-tax).
NM Not meaningful, as percentage equals or exceeds 100%.
The Global Relationship Banking business in North America,
Europe, and Japan reported a loss of $108 million in the 1998 third
quarter, compared with Core Business income of $137 million in the
1997 third quarter. Loss before taxes totaled $153 million and
declined from $172 million (excluding a restructuring charge of $227
million) in the 1997 third quarter. The 1998 third quarter included a
loss of $83 million attributable to the financial market turmoil in
Russia, which affected revenue and credit costs. Average assets of $92
billion rose $9 billion from the 1997 third quarter, primarily
reflecting an increase in the fair value of trading assets, including
derivative and foreign exchange contracts.
Adjusted revenue of $759 million declined $143 million or 16%
from the 1997 third quarter. The decline is attributable to a $183
million decline in trading-related revenue resulting from the
volatility experienced in global capital markets during the quarter
(including $30 million attributable to Russia and a $138 million
write-down of fixed income inventories), partially offset by moderate
growth in transaction banking services revenue. Trading- related
revenue reflects double-digit growth in foreign exchange products more
than offset by lower results in fixed income and other trading
products.
Adjusted operating expense of $893 million grew $125 million or
16% compared with the 1997 third quarter, primarily from increased
spending on technology, including costs related to the Year 2000 and
the European EMU, volume-related growth in transaction banking
services, and increases in asset management, partially offset by a
decline in incentive compensation.
Credit costs in the quarter of $19 million compared with a net
benefit of $38 million in the 1997 third quarter, and included
write-offs of $53 million attributable to the financial market turmoil
in Russia, partially offset by real estate recoveries.
Investment Activities Third Quarter % Nine Months % (A) (In Millions of 1998 1997 Change 1998 1997 Change Dollars) Revenue $117 $348 (66) $1,024 $802 28 Operating Expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. 11 9 22 34 26 31 Operating Margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: 106 339 (69) 990 776 28 Credit Benefits - (5) NM (10) (64) (84) Income Before Taxes 106 344 (69) 1,000 840 19 Income Taxes 35 85 (59) 212 175 21 Core Income $ 71 $259 (73) $ 788 $665 18 Average Assets (In $8 $9 (11) $9 $9 - Billions of Dollars) Return on Assets Return on assets (ROA) Indicator of profitability. Determined by dividing net income for the past 12 months by total average assets. Result is shown as a percentage. ROA can be decomposed into return on sales (net income/sales) multiplied by asset utilization (sales/assets). (%) 3.52 11.42 - 11.75 9.88 - (A) Investment Activities comprises Citicorp's venture capital activities, certain Corporate investments, and the results of certain investments in the former refinancing Refinancing An extension and/or increase in amount of existing debt. countries. NM Not meaningful, as percentage equals or exceeds 100%. Adjusted revenue from Investment Activities of $117 million declined $231 million or 66% from the 1997 third quarter. The decline reflected a $266 million reduction in venture capital revenue primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the in the U.S. equity markets during the quarter, and a $129 million decline in securities transactions, partially offset by a $165 million net gain on investments in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . Revenue in the 1997 quarter included a $23 million investment writedown writedown A reduction in the value of an asset carried on a firm's financial statements. For example, the firm's accountants, believing the inventory is overvalued, may decide to take a writedown by reducing inventory valuation. in Latin America. The increase in the effective income tax rate to 33% from 25% reflects changes in the nature and geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. mix of earnings.
Corporate Items Third Quarter % Nine Months %
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars) (A) (A)
Revenue $283 $277 2 $779 $731 7
Operating Expense 81 77 5 263 228 15
Income Before Taxes (B) $202 $200 1 $516 $503 3
Core Income (Loss) (B) $109 ($61) NM $ - ($234) NM
Net Income (Loss) $109 ($98) NM $ - ($271) NM
Average Assets (In $7 $5 40 $7 $6 17
Billions of Dollars)
(A) Reclassified to conform to the latest quarter's presentation,
including the reclassification of certain Corporate investments
and the results of certain investments inevenue derived from charging
businesses
for funds employed, based upon a marginal cost of funds concept,
unaear ago. The increase in the
effective rate charged to the businesses resulted in a reduction in
the tax offset expense held in Corporate Items. The effective rate
allocated to the businesses was 29% and 25% for the 1998 and 1997 nine
moreserve as
of September 30, 1998. The utilization after-tax at September
30, 1998, down from net unrealized gains of $308 million at June 30,
1998.
The Tier 1 capital ratio at September 30, 1998 was estimated ates 17 (for
a total of $412
million).
The $103 $104 (1) $324 $286 13
Operating Expense 98 86 14 280 238 18
Income Before Taxes 5 18 (72) 44 48 (8)
Income Taxes (Benefit) (2) - NM 2 2 -
Core Business Income $ 7 $ 18 (61) $ 42 $ 46 (9)
(In Billions of
Dollars)
Assets Under Management $126 $107 18 $126 $107 18
NM Not meaningful, as percentage equals or exceeds 100%.
Although included in the results of Global Consumer and Global Corporate Banking, this division is focused upon as a separate Core Business. Citibank CITIBANK First National City Bank Global Asset Management (CGAM CGAM Centre for Global Atmospheric Modelling (UK) CGAM Computer Generated Images for Advertising & Marketing (conference) ) manages $126 billion of assets worldwide for major institutional clients as well as for high net worth individuals and other retail mutual fund shareholders. CGAM offers a broad range of equity, fixed-income, and liquidity products through its investment centers in twenty countries. CGAM's $126 billion in assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. are comprised of 14% in money market funds, 42% in mutual and institutional commingled funds Commingled Fund A type of mutual fund consisting of assets from several accounts that are blended together. Sometimes called a "pooled fund." Notes: They are "commingled" to reduce the costs of managing them separately. , and 44% in accounts managed for high net worth individuals, pension funds, corporations, and other institutions. Declines in market prices depressed Depressed A description of a market, security, or product that is experiencing weak demand and lowering prices. Notes: A depressed market, security, or product implies that prices and volume are low. There are many reasons for a depressed market, security, or product. third quarter revenue growth. Revenue of $324 million for the 1998 nine months is up 13% from 1997 reflecting an 18% increase in assets under management since last year. Expense growth reflects CGAM's continuing build-up build·up also build-up n. 1. The act or process of amassing or increasing: a military buildup; a buildup of tension during the strike. 2. of its fundamental research and quantitative analysis Quantitative Analysis A security analysis that uses financial information derived from company annual reports and income statements to evaluate an investment decision. Notes: investment teams, as well as incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. technology costs, including costs associated with Year 2000 and EMU emu or emeu (both: ē`my  ), common name for a large, flightless bird of Australia, related to the cassowary and the ostrich. .In the 1998 nine months, CGAM raised over $2 billion from 32 new funds distributed worldwide through the Global Consumer and Global Corporate Banking channels. TRAVELERS Travelers Group reports third quarter Core Income of $199.2 million
Summary of Earnings
(In Millions of Third Quarter % Nine Months %
Dollars,
Except Per Share 1998 1997 Change 1998 1997 Change
Amounts)
Gross Revenue $8,221.9 $9,960.1 (17) $28,685.5 $27,843.6 3
Revenue, Net of 4,927.6 6,880.1 (28) 18,880.9 19,593.9 (4)
Interest Expense
Core Income (A) 199.2 1,028.7 (81) 2,242.0 2,727.0 (18)
(A) Represents net income for all periods presented, adjusted to
exclude the reversal of $191.2 million after-tax ($324.1 million
pretax) of the 1997 restructuring charge in the 1998 second
quarter.
Travelers Group
Segment Revenues Third Quarter % Nine Months %
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars)
Investment Services
Investment Banking $3,690.1 $5,660.4 (35) $15,104.6 $15,467.3 (2)
and Brokerage
Asset Management 244.2 213.1 15 695.9 592.8 17
Total Investment 3,934.3 5,873.5 (33) 15,800.5 16,060.1 (2)
Services
Consumer Finance 542.3 448.1 21 1,541.5 1,204.8 28
Services
Life Insurance Services
Travelers Life and 721.0 716.0 1 2,292.5 1,999.6 15
Annuity
Primerica Financial 414.5 384.2 8 1,236.9 1,134.8 9
Services
Total Life Insurance 1,135.5 1,100.2 3 3,529.4 3,134.4 13
Services
Property and Casualty
Insurance Services
Commercial Lines 1,654.9 1,651.1 - 4,971.5 4,887.5 2
Personal Lines 943.5 852.7 11 2,746.7 2,472.6 11
Other 2.0 2.9 (31) 8.6 8.8 (2)
Total Property and
Casualty Insurance 2,600.4 2,506.7 4 7,726.8 7,368.9 5
Services
Corporate and Other 9.4 31.6 (70) 87.3 75.4 16
Total Gross Revenue 8,221.9 9,960.1 (17) 28,685.5 27,843.6 3
Interest Expense 3,294.3 3,080.0 7 9,804.6 8,249.7 19
Total Revenue,
Net of Interest $4,927.6 $6,880.1 (28) $18,880.9 $19,593.9 (4)
Expense
Travelers Group
Segment Core Income (A) Third Quarter % Nine Months %
(In Millions of 1998 1997 Change 1998 1997 Change
Dollars)
Investment Services
Investment Banking and ($395.4) $449.0 NM $394.7$1,220.6 (68)
Brokerage
Asset Management 70.5 59.4 19 193.3 152.4 27
Total Investment (324.9) 508.4 NM 588.0 1,373.0 (57)
Services
Consumer Finance 83.3 65.4 27 211.9 166.8 27
Services
Life Insurance Services
Travelers Life and 123.3 106.5 16 371.5 312.5 19
Annuity
Primerica Financial 98.8 84.7 17 297.0 244.8 21
Services
Total Life Insurance 222.1 191.2 16 668.5 557.3 20
Services
Property and Casualty
Insurance Services
Commercial Lines 230.6 223.9 3 683.1 626.7 9
Personal Lines 90.3 95.4 (5) 306.0 304.2 1
Total Insurance-Related 320.9 319.3 1 989.1 930.9 6
Financing Costs and (26.9) (29.3) 8 (84.9) (92.6) 8
Other
Minority Interest (49.1) (48.0) (2) (151.1) (146.4) (3)
Total Property and
Casualty Insurance 244.9 242.0 1 753.1 691.9 9
Services
Total Core Business 225.4 1,007.0 (78) 2,221.5 2,789.0 (20)
Investment Portfolio 25.4 82.0 (69) 139.7 96.6 45
Gains
Corporate and Other (51.6) (60.3) 14 (119.2) (158.6) 25
Total Core Income $199.2$1,028.7 (81)$2,242.0$2,727.0 (18)
(A) Represents net income for all periods presented, adjusted to
exclude the reversal of $191.2 million after-tax ($324.1 million
pretax) of the 1997 restructuring charge in the 1998 second
quarter.
(B) The 1998 third quarter effective tax rate for Travelers Group is
approximately 18%, reflecting the impact of municipal bond
interest at Travelers Property Casualty and Salomon Smith Barney
on a lower overall level of earnings, plus lower state tax
expense at Salomon Smith Barney.
NM Not meaningful, as percentage equals or exceeds 100%.
Investment Services
Salomon Smith Barney reports net loss of $324.9 million
Salomon Smith Barney Third Quarter % Nine Months %
(In Billions of 1998 1997 Change 1998 1997 Change
Dollars)
Revenue,
Net of Interest $ 921.0$3,032.8 (70)$6,797.4$8,472.5 (20)
Expense (In Millions)
Net Income (A) (In (324.9) 508.4 - 779.2 1,373.0 (43)
Millions)
Return on Equity (B) % - 25.3 - 8.8 24.3 -
Pretax Profit Margin - 27.4 - 13.7 26.6 -
Assets Under Fee-Based
Management
Internally Managed
Salomon Smith Barney
Asset Management $169.6 $146.7 16 $169.6 $146.7 16
Financial Consultant
Managed Accounts 13.8 11.1 24 13.8 11.1 24
Externally Managed
Consulting Group 63.9 58.4 9 63.9 58.4 9
Managed Assets
Total Assets Under on per FC (In $431
$428 1 $441 $393 12
Thousands)
Underwriting (Full pretax) of the 1997 restructuring charge
in the 1998 second
quarter.
(B) Based on income excluding restructuring charge.
Salomon Smith Barney reported a lrformance continued at high levels.
Total revenues, net of interest expense, were $921 million in the
1ded September 30, 1998
commission revenues increased over the comparable 1997 period due to
an increase in listed, OTC, and mutual fund commissions.
Investment banknderwriting for the
third quarter of 1998. For the nine months of 1998, Salomon Smith
Barney held its number two ranking in overall U.S. debt and equity
underwriting. Foude
losses due to risk reduction of U.S. fixed income arbitrage, losses in
other Global Arbitrage, and losses in the customer business. These
were partially offset by an increased to a record $563 million and
$1.614 billion in the 1998 quarter and nine months ended September 30 benefits
of $711 million, largely related to
performance based compensation accruals.
As of October 1, 1998, Salomon Smith Barney had mark-to-market
exposure to hellateral held. The
total exposure to hedge funds with mark-to-market deficits in excess
of collateral held is $48 million. No single hedge fund had a
mark-to-market defio hedge funds. Salomon Smith Barney has no investments in
hedge funds other than the previously disclosed investment in
Long-Term Capital Management, LP, made in concert In Millions) $244.2
$213.1 15 $695.9 $
Asset Management 171 525 NM
TL&A ceeds 100%.
Although included in Salomon, and distribution fees rose
16% to $217.3 millwhat is expected to be the sixth largest investm they account
for an increasing percentage -- 29e Smith Barney Mid-Cap Blend Fund which helps
to round out the
unit's group of style pure funds.
During the quarter, the division successfully offered the 1998
Uncommon Values Unit Investment Trust Series, comprised of three
portfolios, Uncommon Values, Aggressive Growth, and Growth and Income,
raising over $2.1 billion in assets.
In addition, in mid September, Citicorp Investment Services began
distributing Salomon Brothers mutual funds. This initiative is the
division's first rollout of several planned Citigroup cross-sell
opportunities.
Consumer Finance Consumer Finance earns $83.3 million in the third quarter, Up 27% from year-ago quarter Consumer Finance Third Quarter % Nine Months % Services (In Millions of 1998 1997 Change 1998 1997 Change Dollars) Revenue $542.3 $448.1 21 $1,541.5 $1,204.8 28 Core Business Income 83.3 65.4 27 211.9 166.8 27 Receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed Owned 12,669.9 10,652.4 19 12,669.9 10,652.4 19 Average Yield % 14.21 14.57 - 14.18 14.55 - Charge-off Eliminate or write off. The term charge-off is used to describe the process of removing from the records of a company something that was once regarded as an asset but has subsequently become worthless. Rate % 2.39 2.50 - 2.60 2.74 - Average Assets $14,350.7 $11,075.5 29 $13,654.7 $9,956.8 37 Return on Assets % 2.32 2.35 - 2.07 2.24 -
This excellent performance reflects continued internal
receivables growth in all major products, an improved charge-off rate,
and the integration of Security Pacific Financial Services into the
Commercial Credit branch system since July 1997.
Receivables owned reached a record $12.67 billion, up 19% from
the prior year period, and up $1.62 billion or 15% since year-end
1997. This excludes $255.1 million in credit card receivables
securitized on March 6, 1998. Much of the growth in real estate-
secured loans resulted from the continued strong performance of the
$.M.A.R.T. program, as well as solid sales in the branch network. On a
managed basis, including securitized assets, receivables totaled
$13.01 billion, an increase of $1.77 billion since year-end 1997.
The average yield on owned receivables at 14.21%, was down from
14.57% in the 1997 quarter, reflecting the shift in the portfolio mix
toward lower-risk real estate-secured loans, which have lower prices.
At quarter-end, the owned portfolio consisted of 48% real
estate-secured loans, 34% personal loans, 11% credit cards, and 7%
sales finance and other.
The charge-off rate on owned receivables continued to improve to
2.39%, down from 2.50% in the 1997 period and from 2.66% in the
previous quarter. Delinquencies over 60 days on owned receivables were
2.27% of receivables, down from 2.35% at year-end 1997, but up from
2.17% at the end of the comparable quarter last year, which contained
a short-term benefit from the transition of Security Pacific's
portfolio to Commercial Credit's charge-off policies.
Life Insurance Primerica Financial Services Primerica Financial Services, a wholly owned subsidiary of Citigroup, is a multi-level marketing[1] company headquartered in Duluth, Georgia. It is the largest financial services marketing organization in North America, with more than 100,000 licensed independent earns $98.8 million in the third quarter, Up 17% from a year-ago Primerica Financial Third Quarter % Nine Months % Services (In Millions of 1998 1997 Change 1998 1997 Change Dollars) Revenue $414.5 $384.2 8 $1,236.9 $1,134.8 9 Core Business Income Life Insurance 76.8 67.5 14 232.4 200.2 16 Other Financial 22.0 17.2 28 64.6 44.6 45 Products (A) Total Core Business $ 98.8 $ 84.7 17 $297.0 $244.8 21 Income Financial Needs Analyses (FNA's) 132,791 132,141 - 403,957 331,633 22 Submitted (B) Life Insurance Issued (In Billions of $ 14.2 $ 13.1 8 $43.0 $39.2 10 Dollars) Other Financial Products Mutual Fund Sales at 725.0 635.9 14 2,326.9 2,027.3 15 NAV See navigation system and navigation bar. Cash Advanced on $.M.A.R.T. and 351.1 315.5 11 1,078.3 943.1 14 $.A.F.E. Loans (C) Variable Annuity Variable Annuity An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio. Net Written Premiums 171.9 100.6 71 473.4 234.6 NM SECURE Net Written 60.8 19.5 NM 154.6 44.4 NM Premiums (D) (A) Earnings reflect commissions earned from cross marketing sister company products and other non-life In the physical sciences, non-life is an umbrella term set to distinguish or characterize those inanimate chemical precursors found in the primeval soup of the early years of planetary evolution from which life, theoretically, evolved or came into existence. products. (B) 1997 FNA's were adjusted to be consistent with 1998. (C) The $.M.A.R.T. and $.A.F.E. loan products are marketed by PFS PFS, n post facilitation stretch; therapeutic approach utilized during proprioceptive neuromuscular facilitation in which the patient begins the stretch midway between the fully relaxed and fully stretched position and uses maximum level of effort to , and the receivables are reflected in the assets of Consumer Finance Services. (D) The SECURE property casualty insurance products are marketed by PFS, and the premiums are reflected in the operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before of Travelers Property Casualty Corp. NM Not meaningful, as percentage equals or exceeds 100%.
Core business income for the quarter advanced 17% over last
year's period, reflecting PFS's continued success at cross-selling a
range of products, growth in life insurance in force, favorable
mortality experience, and disciplined expense management.
New term life insurance sales were $14.2 billion in face value,
up from $13.1 billion in the 1997 quarter. Although the number of
policies issued were basically flat quarter-over-quarter, the average
face amount per policy issued rose 11% to $223,485.
Life insurance in force reached a record $380.6 billion, up 3%
from the prior year quarter, reflecting good policy persistency and
stable sales growth.
Cross-selling initiatives continued to enhance the company's
earnings. Distribution of non-life insurance products accounted for
$22.0 million or 22% of the company's operating earnings, an increase
of 28% from the prior year quarter.
Sales of mutual funds rose more than 14% to $725.0 million (at
net asset value), despite significant market volatility in both the
U.S. and Canada. Salomon Smith Barney funds accounted for almost 61%
of PFS's U.S. sales and approximately 53% of total sales.
Variable annuity sales continued to show momentum, reaching net
written premiums and deposits of $171.9 million, increasing 71% over
last year's period.
Cash advanced on $.M.A.R.T. and $.A.F.E. Loans underwritten by
Commercial Credit was up 11% to $351.1 million. The Secure line of
property casualty insurance products showed strong growth, with net
written premiums up almost three-fold to $60.8 million, and the number
of policies sold in the quarter up 60% to 41,483. The number of agents
licensed to sell auto and homeowners insurance jumped 59% to 12,683
people.
One of the primary factors in PFS's cross-selling success, the
Financial Needs Analysis, continues to help the company's Personal
Financial Analysts define and address their client's needs. They
submitted more than 132,000 FNA's in the quarter bringing the nine
month total to nearly 404,000, indicating the potential that more than
one-half million people will have an analysis done for them before
year-end 1998.
Travelers Life & Annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. earns $123.3 million in the third quarter, Up 16% from year-ago quarter Travelers Life & Third Quarter % Nine Months % Annuity (In Millions of 1998 1997 Change 1998 1997 Change Dollars) Revenue $721.0 $716.0 1 $2,292.5 $1,999.6 15 Total Core Business $123.3 $106.5 16 $371.5 $312.5 19 Income Pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern Contribution by Source Deferred and Payout pay·out n. 1. The act or an instance of paying out. 2. A percentage of corporate earnings that is paid as dividends to shareholders. $ 82.0 $ 74.7 10 $263.4 $224.4 17 Annuities Group Annuities 36.4 26.2 39 96.2 75.5 27 Life and Long Term Care 34.6 35.0 (1) 111.8 106.1 5 Insurance Subtotal subtotal /sub·to·tal/ (sub-to´t'l) less than, but often almost, complete. 153.0 135.9 13 471.4 406.0 16 Other (Principally Return on Excess 37.6 26.9 40 99.3 70.4 41 Capital and Run-off run-off n (in contest, election) → desempate m (= extra race); carrera de desempate run-off n (in contest, election) → Business) Total Core Business $190.6 $162.8 17 $570.7 $476.4 20 Income Pretax Cross Marketing % Percent of Deferred Annuities 78 78 - 78 77 - Sold Through Citigroup Affiliates Percent of New Individual Life and Long Term Care 40 38 - 43 38 - Sales Sold Through Citigroup Affiliates
Earnings growth for the quarter reflects strong double-digit
business volume growth in annuity account balances and life and long
term care premiums. A decline in investment income yields for the
quarter, which vary by product line, results primarily from
participation in partnership investment interests being negatively
impacted by the downturn in marketplace conditions. This decline was
substantially offset by a favorable reserve settlement in the runoff
group life and health business.
In deferred annuities, significant sales through established
Citigroup distribution channels, Salomon Smith Barney Financial
Consultant's, and The Copeland Companies, were complemented by the
successful third quarter launches of the Primerica Financial Services
and Citibank branch network cross-selling initiatives. Total premium
deposits for the quarter increased 52% to $872.9 million. Account
balances aggregated $17.5 billion at September 30, 1998, up 12% from a
year ago, but down 3% since June 30, reflecting the downturn in the
market value of the variable annuity account balances.
Payout and group annuity account balances and benefit reserves
reached $13.3 billion at September 30, 1998, up 14% from a year ago.
The revitalization of this business is reflected in the 208% increase
in net written premiums and deposits (excluding old Travelers Group
employee pension plan deposits) to $1.082 billion for the quarter
ended September 30, 1998.
For individual life insurance, net premiums and deposits were
$78.5 million, up 13%. Single deposits rose to $17.1 million, and new
periodic premium sales increased 73%, reflecting a 30% increase in
sales at Salomon Smith Barney. For the quarter, Salomon Smith Barney
life sales increased to over 33% of new periodic premium and single
deposits. Life insurance in force was $54.2 billion at September 30,
1998, up $3.3 billion from a year ago.
Earned premiums for the growing long term care insurance product
line increased 26% to $51.8 million.
Strong sustained operating performance over the past several
quarters was recognized by Standard & Poor's in their September 1998
upgrade of Travelers Insurance Company's claims paying rating to AA
(Excellent).
Travelers Property Casualty Corp. (83.4% owned by Travelers Group) Travelers Property Casualty earns $294.0 million before Minority Interest, With Travelers Group's share $244.9 million Property Casualty Third Quarter % Nine Months % Insurance Services (In Millions of 1998 1997 Change 1998 1997 Change Dollars) Revenues Commercial Lines $1,654.9 $1,651.1 - $4,971.5 $4,887.5 2 Personal Lines 943.5 852.7 11 2,746.7 2,472.6 11 Other 2.0 2.9 (31) 8.6 8.8 (2) Total Revenues $2,600.4 $2,506.7 4 $7,726.8 $7,368.9 5 Core Business Income (Loss) Commercial Lines $230.6 $223.9 3 $ 683.1 $ 626.7 9 Personal Lines 90.3 95.4 (5) 306.0 304.2 1 Financing Costs and (26.9) (29.3) 8 (84.9) (92.6) 8 Other Minority Interest (49.1) (48.0) (2) (151.1) (146.4) (3) Total Core Business $244.9 $242.0 1 $ 753.1 $ 691.9 9 Income Statutory Combined Ratio, As Adjusted (A) (B) (%) Loss and Loss Adjustment 74.8 71.8 73.7 72.7 Expense Ratio Other Underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. 28.2 30.8 28.7 30.0 Expense Ratio Combined Ratio 103.0 102.6 102.4 102.7 Cross-Marketing, Net Written Premiums SECURE (C) $60.8 $19.5 NM $154.6 $44.4 NM (A) The 1997 nine month net written premiums include an increase of $142.4 million due to a change to conform Aetna Aetna, volcano: see Etna, Italy. P&C's and Travelers P&C's methods of recording net written premiums, and an increase of $68.7 million due to an adjustment associated with a reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. transaction in the 1997 first quarter. The statutory combined ratio, as adjusted, excludes these transactions. (B) Before policyholder Policyholder An individual who owns an insurance policy. dividends. (C) The SECURE property casualty insurance products are marketed by PFS. NM Not meaningful, as percentage equals or exceeds 100%. Results for the quarter were solid compared to the third quarter of 1997, especially in view of the current quarter's catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). losses, after taxes and reinsurance, of $36.7 million and unusually high losses from other weather-related claims. Contributing to earnings were lower expenses and growth in Personal Lines agency distribution. Commercial Lines earns $230.6 million (before Minority Interest), Up 3% from the 1997 third quarter The 3% rise in core business income reflects continued expense savings and, as anticipated, a decline in asbestos asbestos, mineral asbestos, common name for any of a variety of silicate minerals within the amphibole and serpentine groups that are fibrous in structure and more or less resistant to acid and fire. and environmental incurred losses. Catastrophe losses, after taxes and reinsurance, were $14.9 million versus none in the prior-year quarter. Pricing remains very soft in Commercial Lines. However, through a combination of disciplined underwriting and good customer retention, net written premiums of $1.168 billion stayed level with last year's quarter. The statutory combined ratio improved to 108.0% from 109.2% as a result of continued expense savings, partially offset by higher catastrophes and weather-related losses. Personal Lines earns $90.3 million (before Minority Interest), Down 5% from the year-ago quarter Core business income reflects catastrophe losses of $21.8 million, after taxes and reinsurance, compared with no catastrophe losses in the prior-year quarter. Excluding catastrophes, core income increased as a result of expense management, higher net investment income, and increased production. Net written premiums rose 17% to $908.7 million as a result of strong sales through both the independent agent and alternative distribution systems. The statutory combined ratio rose to 96.3% from 93.0% in the 1997 third quarter due to higher catastrophe losses, partially offset by expense efficiencies. Financing Costs and Other was ($26.9) million, down from ($29.3) million in the year-ago quarter The primary component of Financing Costs and Other operating expense for the quarter was interest expense of $26.0 million. Travelers Group Investment Portfolio The Investment Portfolio, which consists largely of the fixed income securities holdings in the Travelers Life & Annuity and Travelers Property Casualty portfolios, reported gains of $25.4 million in the quarter, down from $82.0 million in the year-earlier quarter. Travelers Group's $67 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 Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. fixed income investments, is 4.8 years. Travelers Group Corporate and Other Operating Expense was ($51.6) million, versus ($60.3) million in the year-ago quarter Corporate expenses include a reduction in incentive compensation accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. and an increase in net treasury expense. |
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