The operator introduces the conference and reminds participants to hold questions until the end. Ms. Goldstein, Senior Vice President of Investor Relations, will lead the discussion with CEO Alan Schnitzer, CFO Dan Frey, and three segment presidents. The presentation includes forward-looking statements, and the company cautions investors about potential risks and uncertainties. The company will not update forward-looking statements.

The speaker, Alan Schnitzer, reported on the excellent financial results for the quarter, including a core income of $1.1 billion and a core return on equity of 15.4%. This was driven by record net earned premiums and an excellent combined ratio of 93.9%. Despite elevated catastrophe activity, the underlying combined ratio improved by 2.9 points. The investment portfolio also performed well, generating $698 million in after-tax net investment income.

The company had a successful quarter with strong underwriting and investment results, leading to a 8% growth in net written premiums. They also returned excess capital to shareholders and made important investments in their business. The board of directors declared a 5% increase in the quarterly cash dividend, marking 20 consecutive years of dividend increases. All three segments contributed to the top line success, with Business Insurance growing by 9% and Bond & Specialty Insurance by 6%. The company's deliberate execution and disciplined marketplace led to strong pricing and retention. The segment also saw record new business and strong production in their management liability and surety businesses.

In the Personal Insurance segment, strong pricing led to a 9% increase in net written premiums. The company recently hosted its annual Travelers leadership conference, where they received positive feedback from their top distribution partners. The company values its relationships with over 15,000 agent broker firms and is committed to being an indispensable partner by investing in innovative products, services, and experiences.

The company conducted a survey among agents and brokers and ranked first in all 10 categories. Their specialization and broad range of products make them stand out in the market. They have digitized their value chain to create value and efficiency for their partners. Examples include a loss data exchange and multi-line digital submission capabilities.

Travelers offers digital capabilities and advanced technology to their agents and brokers, including a new quote and issue platform and aerial image reviewer. They also have a strong local presence and invest in training programs for their partners' workforces. This has led to strong profitability and production in all three segments and they continue to invest in strategic initiatives.

In the first quarter, the company saw a 13% increase in core income and a 15.4% core return on equity. This growth was driven by higher net investment income and an improved underlying underwriting income, despite higher catastrophe losses. The underlying combined ratio was among the company's best ever, with strong results in all segments. The expense ratio remained flat year-over-year and the company expects it to be between 28% to 28.5% for the full year. There was also net favorable prior year reserve development of $91 million pre-tax.

The Bond & Specialty and Personal Insurance lines had a net favorable PYD of $24 million and $67 million pre-tax respectively, while net investment income increased by 25%. The company's fixed income NII was in line with expectations and is expected to continue to grow in the coming quarters. The effective tax rate was higher due to a one-time tax benefit in the previous year. The company's operating cash flows were strong and they ended the quarter with a holding company liquidity of $1.6 billion. The net unrealized investment loss increased due to higher interest rates, but this does not impact how the company manages its investment portfolio. The quality of the portfolio remains high and changes in unrealized gains and losses have little impact on the company's financials.

The first quarter of 2024 was a strong one for Business Insurance, with segment income of $764 million, a 9% increase in net written premiums, and an exceptionally low underlying combined ratio of 89.2%. Renewal premium change was historically high at 10.6%, retention remained at 86%, and new business reached an all-time first quarter high of $691 million. The strong pricing environment continued, with renewal rate change remaining at 7% or higher for the fourth consecutive quarter.

The paragraph discusses the renewal rates and premium changes in various lines of business for the company in the first quarter of 2023. Overall, renewal rates were consistent and strong, with double-digit changes in umbrella, property, and auto lines. Retention rates were also healthy and there was growth in top line and attractive margins. The select and core middle market businesses showed consistent renewal rates and strong retention. The company also saw success with their new front end rate interface platform and BOP 2.0 product.

Business Insurance had a successful start to the year, with growth in their profitable book and investments in enhancing their position as the top choice for customers and partners. The Fund & Specialty segment also had a strong quarter, with profitable net written premium growth and a combined ratio of 84.5%. The underlying loss ratio improved and new business production increased, driven by the Corvus acquisition. Net written premiums in the surety business also grew. Overall, Business Insurance delivered strong top and bottom line results.

In the first quarter, Personal Insurance had a segment income of $220 million and a combined ratio of 96.9%, which is a significant improvement from the previous year. The underlying combined ratio improved by 6.8 points due to higher earned pricing in both auto and home insurance. Net written premiums increased by 9%, driven by continued price increases in both auto and home insurance. The combined ratio for auto insurance improved by 10 points, while the combined ratio for homeowners and other was impacted by higher catastrophe losses. The company remains focused on balancing profitability and growth through disciplined execution of rate and non-rate measures. Retention and renewal premium change remained strong for domestic automobile, and new business premium was consistent with the previous year.

The company has seen growth in new business volumes in states where they have achieved written rate adequacy. Retention rates remain strong and renewal premiums have increased due to higher renewal rates. Efforts to improve underlying fundamentals and profitability are ongoing, with progress being made in the auto insurance sector. The company has also launched new products in the US and Canada to improve customer and distributor experience and modernize their products and platforms.

The speaker is pleased with the positive start to the year in Personal Insurance and thanks their team. They will now open up for questions. A question is asked about recent accident year reserve increases in Business Insurance and liability lines. The speaker, Dan, clarifies that they are talking about more recent years, not 2015-2019, and that there have been small adverse movements. The company is being reactive to the information and trying to account for uncertainty. The CEO, Alan, adds that there are no significant new developments, just more of the same trends they have been seeing.

Gregory Peters asks about the competitive environment in the Business Insurance segment, noting that the renewal rate has been above 7% for four consecutive quarters and retention has remained strong. He asks why there hasn't been more aggressive action from competitors, and Alan Schnitzer responds that it's hard to comment on their actions but believes that the pricing and retention rates reflect the competitive environment. He speculates that everyone is reacting to the same factors.

The speaker discusses the state of returns and improvements in the insurance industry, mentioning factors such as social and economic inflation, a tight labor market, and geopolitical issues. They then pivot to talking about the company's ROE targets for 2023 and 2024, stating that they will not share the specific target for 2024 but consider interest rates and cost of equity in their planning. The next question is about the personal auto sector, and the speaker mentions that Q1 is typically the lowest combined ratio quarter but there is still a good amount of rate earning in the book, potentially obscuring some of the seasonality.

The speaker discusses the seasonality of auto insurance and how it is affected by factors such as earned effective pricing and mild winter weather. They also mention a liability reserve increase and state that they will not be providing specific numbers for individual accident years. They note that there was improvement in the underlying combined ratio and loss ratio in Business Insurance.

In the paragraph, the speaker discusses the company's performance in the current quarter and mentions the impact of uncertainty on their results. They also mention their strategy for growth in the personal auto and home insurance markets, with a focus on profitability. The speaker also mentions that they have achieved written adequacy in certain states and have seen a small increase in policies in force over the past few years.

Alan and Greg are discussing the competitive landscape of large, middle, and small markets. Alan believes that all markets are always competitive and does not see any significant changes. Greg mentions that there is more dislocation in the small commercial market, but they have strong new business results in both small and middle markets. They are confident in their returns and are actively pursuing new business opportunities.

Ryan Tunis from Autonomous Research asks about the impact of exposure acting as rates on margins, specifically in the workers' comp line. Gregory Toczydlowski explains that while exposure remains strong, there has been a decrease in workers' comp NPW due to rate reductions and disciplined underwriting. He also mentions that there is still positive exposure in the property line, but it is slightly lower than in 2023 due to inflation adjustments. Alan Schnitzer adds that it's important to look at the exposure over a longer period of time rather than just recent periods.

The speaker discusses the healthy number of the economy over time and how it is consistent with the current state of the economy. They then address a question about property pricing and explain that there is no seasonal element to it, but rather it depends on the exposures at hand. They also mention that there is some seasonality in the mix of commercial property written, with higher levels in the second and third quarters. The speaker then addresses the topic of workers' compensation reserve releases and states that there were $900 million in releases in 2023, but less than $100 million this quarter. They decline to break it down by accident year and instead focus on the overall trend.

The Business Insurance segment has shown improvement in the underlying combined ratio despite adding to reserves on recent vintages. The company has a disciplined review process every quarter and makes necessary adjustments based on data. The company also considers uncertainty in their thought process.

The executives of the company discussed the various factors that contribute to their margins, including pricing, mix, and other small items. They also mentioned that the investment community tends to focus on specific metrics, but it is important to consider all factors. The strong pricing environment has led to high retention rates and improved margins in the homeowners' personal lines.

Michael Klein, speaking on behalf of the company, discusses the trends in the industry and changes being made in terms and conditions for roof replacement. He mentions eligibility based on exposure and age of roof, as well as underwriting restrictions on roof condition and tree overhang. The company's primary approach to risk sharing is through increased deductibles in states with severe convective storms. They are also managing distribution and appetite to control exposure aggregation within specific geographies. In response to a question about the Florida homeowners market, Klein says that the company is evaluating the market and the recent reforms.

The speaker believes that reforms in Florida have improved the state's insurance market, but it is still a high-risk area. The potential assigned risk obligation in the event of a catastrophe is a concern, and the company is hesitant to reopen for new business in Florida. Another speaker adds that regulatory reform is needed for affordability in insurance and home ownership. In terms of personal auto, there is concern about higher attorney involvement in bodily injury claims, but it is too early to draw conclusions.

The executive team at the insurance company discussed the impact of social inflation and litigation abuse on personal insurance, but noted that bodily injury loss trends were in line with expectations. They also mentioned that the growth in commercial auto was mainly due to increased pricing and the implementation of a new automobile product. The company also incurred modest charges in general liability, with an implication that it was likely less than the previous year.

During the first quarter, we saw a decrease in premium growth compared to last year, but we will continue to evaluate and adjust our strategies based on the data. There has not been a significant change in competitive dynamics or pricing in the E&S market. We are currently integrating Corvus into our business and are pleased with the quality and profitability of their book of business. We have also implemented their technology to our existing book of business and are satisfied with the results.

Paul Newsome asks Michael Klein about the expected changes in renewal premium in auto and home insurance. Klein explains that the rate of change in auto insurance will moderate but not sharply decline due to 12-month policies. In contrast, the rate of change in property insurance will remain consistent as the company continues to drive rate increases. Klein also notes that the drop in renewal premium change in property insurance from Q4 to Q1 is due to progress made in insurance to value.

In the paragraph, the speaker discusses the reasons for the 13.4% increase in property RPC. They mention that the increase is due to both rate and coverage limit changes, specifically in 2022 and 2023. The speaker also notes that the increase in RPC reflects an improvement in rate from the previous quarter. They clarify that there will not be further changes in RPC due to the coverage limit dynamic and that the outlook for rate in property for 2024 is to keep it consistent. The speaker concludes by thanking the participants and inviting them to reach out for any follow-up questions.

This summary was generated with AI and may contain some inaccuracies.