Travelers Reports Excellent First Quarter Results

First Quarter 2024 Net Income per Diluted Share of $4.80, up 16%, and Return on Equity of 18.0%

First Quarter 2024 Core Income per Diluted Share of $4.69, up 14%, and Core Return on Equity of 15.4%

Board of Directors Declares 5% Increase in Regular Quarterly Cash Dividend to $1.05 per Share

• First quarter net income of $1.123 billion and core income of $1.096 billion.
• Quarter included an elevated level of catastrophe losses of $712 million pre-tax, compared to $535 million pre-tax in the prior year quarter.
• Excellent consolidated combined ratio of 93.9% improved 1.5 points; outstanding underlying combined ratio of 87.7% improved 2.9 points.
• Net written premiums of $10.182 billion, up 8% compared to the prior year quarter, with growth in all three segments.
• Total capital of $620 million returned to shareholders, including $388 million of share repurchases.
• Book value per share of $109.28, up 9% over March 31, 2023; adjusted book value per share of $125.53, up 8% over March 31, 2023.

NEW YORK–(BUSINESS WIRE)–The Travelers Companies, Inc. today reported net income of $1.123 billion, or $4.80 per diluted share, for the quarter ended March 31, 2024, compared to $975 million, or $4.13 per diluted share, in the prior year quarter. Core income in the current quarter was $1.096 billion, or $4.69 per diluted share, compared to $970 million, or $4.11 per diluted share, in the prior year quarter. Core income increased primarily due to higher net investment income and a higher underlying underwriting gain (i.e., excluding net prior year reserve development and catastrophe losses), partially offset by higher catastrophe losses. The underlying underwriting gain was higher than in the prior year quarter, notwithstanding that the prior year quarter included a $211 million one-time tax benefit. Net realized investment gains in the current quarter were $35 million pre-tax ($27 million after-tax), compared to $6 million pre-tax ($5 million after-tax) in the prior year quarter. Per diluted share amounts benefited from the impact of share repurchases.

“We are very pleased to report excellent top- and bottom-line results for the first quarter,” said Alan Schnitzer, Chairman and Chief Executive Officer. “Core income for the quarter was $1.1 billion, or $4.69 per diluted share, generating core return on equity of 15.4%. Strong core income was driven by record net earned premiums of $10.1 billion, up 14% compared to the prior year period, and an excellent combined ratio of 93.9%. The combined ratio improved 1.5 points, notwithstanding elevated catastrophe activity, primarily in the central and eastern regions of the United States. The underlying combined ratio improved 2.9 points to an outstanding 87.7%, driven by strong underlying results in each of our three segments. Our high-quality investment portfolio generated after-tax net investment income of $698 million for the quarter, driven by strong and reliable returns from our growing fixed income portfolio and higher returns from our non-fixed income portfolio. During the quarter, we returned $620 million of capital to shareholders, including $388 million of share repurchases. In recognition of our strong financial position and confidence in the outlook for our business, I am pleased to share that our Board of Directors declared a 5% increase in our quarterly cash dividend to $1.05 per share, marking 20 consecutive years of dividend increases with a compound annual growth rate of 8% over that period.

“Through terrific marketplace execution across all three segments, we grew net written premiums in the quarter by 8% to $10.2 billion. In Business Insurance, we grew net written premiums by 9% to $5.6 billion. Renewal premium change in the segment remained very strong at 10.6%, while retention remained high at 86% and new business increased 8% to a record $691 million. In Bond & Specialty Insurance, we grew net written premiums by 6% to more than $940 million with strong retention and new business in our high-quality management liability business. In our industry-leading surety business, we grew net written premiums by 15%. Given the attractive returns, we are very pleased with the strong production results in both of our commercial business segments. In Personal Insurance, continued strong pricing drove 9% growth in net written premiums. Renewal premium change was 16.6% in our Auto business and 13.4% in our Homeowners and Other business.

“The year is off to a terrific start with strong profitability and production in all three segments, as well as higher investment income. In short, we’re firing on all cylinders. We also continue to invest in important strategic initiatives. We have demonstrated success in executing our innovation strategy, which has contributed to superior returns with industry-low volatility, growth in our premium base and higher adjusted book value per share. With this momentum and the best talent in the industry, we remain well positioned for success this year and beyond.”

First Quarter 2024 Results

(All comparisons vs. first quarter 2023, unless noted otherwise)

Net income of $1.123 billion increased $148 million, due to higher core income and higher net realized investment gains. Core income of $1.096 billion increased $126 million, primarily due to higher net investment income and a higher underlying underwriting gain, partially offset by higher catastrophe losses. The underlying underwriting gain benefited from higher business volumes. The underlying underwriting gain in the prior year quarter included a one-time tax benefit of $211 million due to the expiration of the statute of limitations with respect to a tax item. Net realized investment gains were $35 million pre-tax ($27 million after-tax), compared to $6 million pre-tax ($5 million after-tax) in the prior year quarter.

Combined ratio:

• The combined ratio of 93.9% improved 1.5 points due to an improvement in the underlying combined ratio (2.9 points), partially offset by higher catastrophe losses (1.1 points) and lower net favorable prior year reserve development (0.3 points).

• The underlying combined ratio of 87.7% improved 2.9 points. See below for further details by segment.

• Net favorable prior year reserve development occurred in Personal Insurance and Bond & Specialty Insurance. There was no net prior year reserve development in Business Insurance. See below for further details by segment.

• Catastrophe losses primarily resulted from severe wind and hail storms in the central and eastern regions of the United States.

Net investment income of $846 million pre-tax ($698 million after-tax) increased 28%. Income from the fixed income investment portfolio increased over the prior year quarter due to a higher average yield and growth in fixed maturity investments. Income from the non-fixed income investment portfolio increased over the prior year quarter primarily due to higher private equity partnership returns. Non-fixed income returns are generally reported on a one-quarter lagged basis and directionally follow the broader equity markets.

Net written premiums of $10.182 billion increased 8%. See below for further details by segment.

Shareholders’ Equity

Shareholders’ equity of $25.022 billion increased slightly over year-end 2023, primarily due to net income of $1.123 billion, largely offset by higher net unrealized investment losses, common share repurchases and dividends to shareholders. Net unrealized investment losses included in shareholders’ equity were $4.720 billion pre-tax ($3.721 billion after-tax), compared to $3.970 billion pre-tax ($3.129 billion after-tax) at year-end 2023. The increase in net unrealized investment losses was driven by higher interest rates. Book value per share of $109.28 increased slightly over year-end 2023. Adjusted book value per share of $125.53, which excludes net unrealized investment gains (losses), increased 2% over year-end 2023.

The Company repurchased 1.2 million common shares in the open market during the first quarter under its share repurchase authorizations for a total cost of $250 million. The average cost per share repurchased was $217.31. In addition, the Company acquired 0.6 million common shares for a total cost of $138 million in connection with employee share-based compensation. At March 31, 2024, the Company had $5.790 billion of capacity remaining under its share repurchase authorizations approved by the Board of Directors.

At the end of the quarter, statutory capital and surplus was $25.329 billion, and the ratio of debt-to-capital was 24.3%. The ratio of debt-to-capital excluding after-tax net unrealized investment gains (losses) included in shareholders’ equity was 21.8%, within the Company’s target range of 15% to 25%.

The Board of Directors declared a 5% increase in the regular quarterly dividend to $1.05 per share. The dividend is payable June 28, 2024, to shareholders of record at the close of business on June 10, 2024.

First Quarter 2024 Results

(All comparisons vs. first quarter 2023, unless noted otherwise)

Segment income for Business Insurance was $764 million after-tax, an increase of $8 million. Segment income increased primarily due to higher net investment income, partially offset by a lower underlying underwriting gain. The underlying underwriting gain benefited from higher business volumes. The underlying underwriting gain in the prior year quarter included a one-time tax benefit of $171 million due to the expiration of the statute of limitations with respect to a tax item.

Combined ratio:

• The combined ratio of 93.3% improved 0.3 points due to a lower underlying combined ratio (0.4 points) and lower catastrophe losses (0.3 points), partially offset by no net prior year reserve development compared with net favorable prior year reserve development in the prior year quarter (0.4 points).

• The underlying combined ratio improved 0.4 points to a very strong 89.2%.

• There was no net prior year reserve development in the current quarter, as better than expected loss experience in the domestic operations’ workers’ compensation product line for multiple accident years was offset primarily by higher than expected loss experience in the general liability product line for recent accident years, as well as an addition to reserves related to run-off operations.

Net written premiums of $5.596 billion increased 9%, reflecting strong renewal premium change and retention, as well as higher levels of new business.

First Quarter 2024 Results

(All comparisons vs. first quarter 2023, unless noted otherwise)

Segment income for Bond & Specialty Insurance was $195 million after-tax, a decrease of $12 million. Segment income decreased primarily due to lower net favorable prior year reserve development, partially offset by higher net investment income. The underlying underwriting gain benefited from higher business volumes. The underlying underwriting gain in the prior year quarter included a one-time tax benefit of $9 million due to the expiration of the statute of limitations with respect to a tax item.

Combined ratio:

• The combined ratio of 84.5% increased 4.5 points due to lower net favorable prior year reserve development (4.2 points) and a higher underlying combined ratio (0.4 points), partially offset by a smaller impact from catastrophe losses (0.1 points).

• The underlying combined ratio of 86.5% increased 0.4 points.

• Net favorable prior year reserve development was primarily driven by better than expected loss experience in multiple product lines within domestic operations.

Net written premiums of $943 million increased 6%, reflecting strong production in both surety and management liability.

First Quarter 2024 Results

(All comparisons vs. first quarter 2023, unless noted otherwise)

Segment income for Personal Insurance was $220 million after-tax, an increase of $137 million. Segment income increased primarily due to a higher underlying underwriting gain, higher net favorable prior year reserve development and higher net investment income, partially offset by higher catastrophe losses. The underlying underwriting gain benefited from higher business volumes. The underlying underwriting gain in the prior year quarter included a one-time tax benefit of $31 million due to the expiration of the statute of limitations with respect to a tax item.

Combined ratio:

• The combined ratio of 96.9% improved 4.6 points due to an improvement in the underlying combined ratio (6.8 points) and higher net favorable prior year reserve development (0.8 points), partially offset by higher catastrophe losses (3.0 points).

• The underlying combined ratio of 86.1% improved 6.8 points, reflecting improvement in both Automobile and Homeowners and Other.

• Net favorable prior year reserve development was primarily driven by better than expected loss experience in the domestic operations’ automobile product line for recent accident years.

Net written premiums of $3.643 billion increased 9%, reflecting strong renewal premium change in both Domestic Automobile and Homeowners and Other.

Financial Supplement and Conference Call

The information in this press release should be read in conjunction with the financial supplement that is available on our website at Travelers.com. Travelers management will discuss the contents of this release and other relevant topics via webcast at 9 a.m. Eastern (8 a.m. Central) on Wednesday, April 17, 2024. Investors can access the call via webcast at investor.travelers.com or by dialing 1.888.440.6281 within the United States or 1.646.960.0218 outside the United States. Prior to the webcast, a slide presentation pertaining to the quarterly earnings will be available on the Company’s website.

Following the live event, replays will be available via webcast for one year at investor.travelers.com and by telephone for 30 days by dialing 1.800.770.2030 within the United States or 1.647.362.9199 outside the United States. All callers should use conference ID 5449478.

About Travelers

The Travelers Companies, Inc. (NYSE: TRV) is a leading provider of property casualty insurance for auto, home and business. A component of the Dow Jones Industrial Average, Travelers has more than 30,000 employees and generated revenues of more than $41 billion in 2023. For more information, visit Travelers.com.

Travelers may use its website and/or social media outlets, such as Facebook and X, as distribution channels of material Company information. Financial and other important information regarding the Company is routinely accessible through and posted on our website at investor.travelers.com, our Facebook page at facebook.com/travelers and our X account (@Travelers) at twitter.com/travelers. In addition, you may automatically receive email alerts and other information about Travelers when you enroll your email address by visiting the Email Notifications section at investor.travelers.com.

Travelers is organized into the following reportable business segments:

Business Insurance – Business Insurance offers a broad array of property and casualty insurance products and services to its customers, primarily in the United States, as well as in Canada, the United Kingdom, the Republic of Ireland and throughout other parts of the world, including as a corporate member of Lloyd’s.

Bond & Specialty Insurance – Bond & Specialty Insurance offers surety, fidelity, management liability, professional liability, and other property and casualty coverages and related risk management services to its customers, primarily in the United States, and certain surety and specialty insurance products in Canada, the United Kingdom and the Republic of Ireland, as well as Brazil through a joint venture, in each case utilizing various degrees of financially-based underwriting approaches.

Personal Insurance – Personal Insurance offers a broad range of property and casualty insurance products and services covering individuals’ personal risks, primarily in the United States, as well as in Canada. Personal Insurance’s primary products of automobile and homeowners insurance are complemented by a broad suite of related coverages.

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Forward-Looking Statements

This press release contains, and management may make, certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. Words such as “may,” “will,” “should,” “likely,” “probably,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “views,” “ensures,” “estimates” and similar expressions are used to identify these forward-looking statements. These statements include, among other things, the Company’s statements about:

• the Company’s outlook, the impact of trends on its business, such as the impact of elevated industrywide loss costs in Personal Insurance, and its future results of operations and financial condition;
• the impact of legislative or regulatory actions or court decisions;
• share repurchase plans;
• future pension plan contributions;
• the sufficiency of the Company’s asbestos and other reserves;
• the impact of emerging claims issues as well as other insurance and non-insurance litigation;
• the cost and availability of reinsurance coverage;
• catastrophe losses and modeling;
• the impact of investment, economic and underwriting market conditions, including interest rates and inflation;
• the Company’s approach to managing its investment portfolio;
• the impact of changing climate conditions;
• strategic and operational initiatives to improve profitability and competitiveness;
• the Company’s competitive advantages and innovation agenda, including executing on that agenda with respect to artificial intelligence;
• the Company’s cybersecurity policies and practices;
• new product offerings;
• the impact of developments in the tort environment;
• the impact of developments in the geopolitical environment; and
• the impact of the Company’s acquisition of Corvus Insurance Holdings, Inc.

Contacts

Media:

Patrick Linehan

917.778.6267

Institutional Investors:

Abbe Goldstein

917.778.6825

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