The paragraph is an introduction to the Third Quarter Results Teleconference for Travelers, recorded on October 17, 2024. Operator requests attendees to hold questions until the Q&A session after formal remarks. Abbe Goldstein, SVP of Investor Relations, introduces the discussion of Travelers' Q3 2024 results, with materials available on their website. Presenters include Alan Schnitzer (CEO), Dan Frey (CFO), and segment presidents Greg Toczydlowski, Jeff Klenk, and Michael Klein, who will discuss financial results and the market environment with reference to a webcast presentation. Attention is drawn to forward-looking statements and associated risks, as outlined in their earnings release and SEC filings, with no obligation to update them.

In the paragraph, Alan Schnitzer acknowledges the destruction caused by Hurricanes Helene and Milton and expresses sympathy and support for those affected. He highlights Travelers' robust response efforts, including deploying claim professionals and resources, and leveraging advanced analytics to manage claims efficiently. Schnitzer emphasizes the company's goal to resolve 90% of natural catastrophe claims within 30 days to help customers return to normalcy quickly. He also commends the dedication of the claim organization and expresses satisfaction with the company's strong financial performance in the recent quarter.

The paragraph highlights a strong financial performance, with core income exceeding $1.2 billion, driven by increased underwriting and investment income, and favorable reserve development. Underlying underwriting income rose significantly, supported by record net earned premiums and improved combined ratios across all segments—particularly in Personal Insurance, which saw an 11.5-point improvement. Investment income also increased by 16%, boosting book value per share by 4% despite significant capital returns to shareholders. Net written premiums grew by 8% to $11.3 billion, attributed to a strong value proposition and effective execution. Overall, the company successfully executed strategic initiatives and maintained a strong balance sheet.

The paragraph discusses the company's growth in various insurance segments, highlighting a 9% increase in net written premiums to over $5.5 billion in Business Insurance, with strong renewal rates and retention. Bond & Specialty Insurance saw a 7% premium increase to $1.1 billion, driven by high retention and strong surety business production. Personal Insurance also grew by 7% due to strong renewal pricing in auto and home. The company attributes its success to strategic execution, including franchise value investment, attractive product offerings, and a meticulous approach to risk selection, underwriting, and pricing.

The paragraph details the successful growth and financial performance of Travelers, emphasizing their strategic investments in data and analytics, which have led to substantial profits and effective capital deployment. Over the past four years, they've increased their premium base by over $13 billion (a nearly 50% increase), while improving underwriting margins, thereby significantly boosting underwriting income. Their strong earnings come from a combination of solid underwriting and investment income, resulting in a core return on equity of 15.9% over the past year. The positive outlook continues, with the third quarter showing a core income of $1.2 billion and a core return on equity of 16.6%, along with record levels of earned premium and an improved combined ratio.

In the third quarter, the company achieved its highest ever underlying underwriting gain of $1.2 billion, a 74% increase from the previous year, due to premium growth and improved margins. The expense ratio was 28.4% for the quarter, aligning the year-to-date ratio with expectations. Catastrophe losses, largely from Hurricane Helene, amounted to $939 million pre-tax, impacting Georgia and the Carolinas significantly. The company saw a total net favorable prior year reserve development (PYD) of $126 million pre-tax, with favorable outcomes across various insurance segments despite a $242 million asbestos charge. Net investment income rose by 16% to $742 million, driven by higher yields and portfolio growth. The company anticipates around $700 million in after-tax fixed income net investment income for the fourth quarter.

The company expects to achieve its highest after-tax earnings of approximately $2.9 billion in 2025, with earnings starting at $700 million in the first quarter and growing to $760 million by the fourth quarter. It reported record quarterly operating cash flows of $3.9 billion and a year-to-date figure exceeding $7 billion. Decreased interest rates led to a reduction in net unrealized investment losses from $4 billion to $2.1 billion. The adjusted book value per share increased to $131.30, up 7% from year-end and 13% from last year. The company returned $496 million to shareholders, including share repurchases and dividends, and still has $5.3 billion in share repurchase capacity. Preliminary losses from Hurricane Milton are estimated between $75 million and $175 million. The results highlight the company's strong earnings power, growth focus, and solid balance sheet, with impressive underwriting performance and resilience to weather volatility.

In the third quarter, Business Insurance achieved strong financial results, with segment income rising by about 50% to $698 million compared to the previous year. The combined ratio improved to 95.8%, largely due to better prior year development and increased underwriting income. The company experienced record third quarter underlying results and grew net written premiums by 9% to over $5.5 billion. Renewal premium change reached a high of 10.5%, while retention was excellent at 86%. New business was the second highest for a third quarter. Pricing remained strong across most lines, with the exception of workers' compensation.

The paragraph discusses strong performance in various insurance sectors, particularly in Umbrella and Auto, which continue to see double-digit rate increases and high retention rates. In the Select segment, renewal premium change rose to 12.3%, with a renewal rate change of 5.5%. Retention slightly decreased due to strategic risk optimization, but new business remained near historical highs. Middle market saw a 10.6% renewal premium change, driven by an 8% renewal rate change, with broad-based rate increases across accounts. Retention remained high despite price hikes, and new business reached a record $364 million for the third quarter. Overall, the Business Insurance segment reported strong financial and production results, focusing on long-term growth.

Bond & Specialty posted strong financial results this quarter, with $222 million in segment income and a combined ratio of 82.5%. The underlying combined ratio was 85.6%, which increased by 4.9 points compared to the previous year, mainly due to the Corvus acquisition and earned pricing impacts. The expense ratio is expected to remain high for a few more quarters due to integration efforts. The company grew net written premiums by 7% to $1.1 billion, with strong retention and renewal in its domestic management liability business. New business increased by over 80%, fueled by the Corvus acquisition. Corvus' capabilities are being integrated into Travelers' cyber portfolio, enhancing risk control and customer support. The partnership with Corvus is positively affecting renewal retention. Additionally, the company's surety business also saw a 7% increase in net written premiums. Overall, the Corvus acquisition is viewed as a valuable addition to Travelers.

The paragraph discusses the strong third-quarter performance in the Bond & Specialty Insurance and Personal Insurance segments of a company. Bond & Specialty Insurance reported strong top and bottom line results due to a robust construction environment, high demand for surety products, and effective team execution. In Personal Insurance, the company achieved significantly improved segment income and a better combined ratio due to positive underwriting results and favorable reserve development. The improvement in profitability was primarily driven by higher earned pricing in auto and home insurance, as well as favorable weather conditions. Additionally, there was strong growth in net written premiums and improved profitability in auto insurance, despite losses from Hurricane Helene. The underlying results also benefited from re-estimations of prior quarters.

The article discusses the positive financial progress made, particularly in the auto and homeowners insurance segments. The year-to-date underlying combined ratio of 93.7% indicates a return to profitability in auto insurance, although the fourth quarter is expected to have higher loss ratios due to seasonal factors. Homeowners insurance saw significant improvement, with a third-quarter combined ratio of 91.5%, thanks to reduced catastrophe losses and favorable prior-year developments. The company is focusing on profitable growth with a state-specific strategy, maintaining strong auto insurance retention at 83%. Although new auto business premiums slightly declined, this is attributed to strategic focus areas and managing property exposure in high-risk areas. The overall approach balances profitability with growth.

The article discusses the performance and strategy of a company's Personal Insurance segment, focusing on homeowners insurance. The company appears confident in its long-term growth potential, maintaining strong retention rates and renewal premium changes. They anticipate the renewal premium change to stay consistent in the fourth quarter. There has been an intentional decline in new business premiums and policies, especially in high-risk areas, to manage exposure and volatility through various measures such as improved risk selection and higher deductibles. The segment is described as performing well, with disciplined execution and progress towards a profitable personalized business portfolio. The article then transitions to a Q&A session, where Gregory Peters asks about the outlook for renewal premium changes in domestic business insurance, given strong recent performance. Alan Schnitzer responds, noting the existence of headwinds like inflation but refraining from specific forecasts.

The conversation involves Gregory Peters questioning Alan Schnitzer about capital management strategies, particularly given the company's strong third-quarter results and cash flow. Schnitzer emphasizes that their first priority is to reinvest capital in the business, whether through organic growth, enhancing talent, or potential mergers and acquisitions (M&A), always with the goal of creating shareholder value. If they can't find a way to generate a return through reinvestment, they opt to return capital to shareholders. The operator then introduces David Motemaden, who acknowledges the previous question and comments on the renewal rate change in business insurance, noting its acceleration after a period of deceleration.

In the paragraph, Alan Schnitzer discusses the sustainability of the current rate environment and the potential impact of recent hurricanes on property lines, which have been a challenge for RRC. He expects renewal pricing to remain positive and strong, although he is uncertain about the exact direction. Schnitzer emphasizes that property pricing should be viewed in conjunction with returns and are reasonable given the circumstances. He also notes the volatility caused by storms and the need for careful capital commitment. David Motemaden asks about the liability rates in auto and umbrella lines, mentioning recent reserve changes, and notes no significant issues this quarter following those changes.

In the paragraph, Alan Schnitzer discusses the company's confidence in their umbrella insurance returns, even after taking a charge. He emphasizes their strategic approach of responding quickly to loss cost trends and pricing, which they believe offers an advantage in terms of growth and profitability. David Motemaden and Michael Zaremski ask questions, with Dan Frey responding that the quarter's results are straightforward without any notable one-time items affecting the underlying business insurance loss ratio. Michael Zaremski then inquires about changes in personal lines, specifically regarding deductibles, noting that some regional insurers are considering significant adjustments like increasing deductibles and altering roof depreciation schedules.

The paragraph provides insights from a conversation involving Michael Klein, Michael Zaremski, and Rob Cox regarding Travelers' adjustments to their terms and conditions for property insurance, particularly in catastrophe-prone areas. Michael Klein stated that Travelers is actively revising deductibles and eligibility criteria to better manage exposure in certain states, especially in the Midwest. Michael Zaremski mentioned that these changes could affect how loss ratios and catastrophe ratios are modeled. Furthermore, Rob Cox asked about observed pressure on new business growth and retention in the Select segment, to which Gregory Toczydlowski responded by highlighting Travelers' ongoing efforts to optimize their business to balance risk and reward while maintaining high retention rates in 2023.

The paragraph features a discussion during a conference call where Robert Cox asks Alan Schnitzer about estimating annual expected catastrophe losses, noting that there is no explicit guidance provided by the company. Schnitzer responds by mentioning that their proxy statement includes information on the previous year's catastrophe losses and explains that recent heavy catastrophe losses are factored more heavily into their future considerations. However, they have not provided a new outlook for catastrophe losses. Elyse Greenspan from Wells Fargo then inquires about whether any reserving actions were taken with NGL during the quarter, and Dan Frey simply confirms that no such actions were taken.

The paragraph is a discussion between Elyse Greenspan, Michael Klein, and Brian Meredith about financial results in different insurance sectors. Elyse inquires about the sustainability of the run rate margin in personal auto insurance, given a favorable year-to-date performance. Michael Klein responds that the results indicate they are currently rate adequate across their auto insurance book and are pleased with returns, but notes potential seasonality impacts. Brian Meredith then asks if this rate adequacy could lead to policy count growth. Michael confirms they are working on auto growth, observing new business in various states while addressing rate adequacy challenges in others.

The paragraph discusses the company's efforts to balance growth and profitability in their auto and home portfolios, emphasizing a strong focus on improving profitability in the home segment and growing profits in the auto segment. It also touches on the workers' compensation (workers' comp) pricing outlook. Greg Toczydlowski suggests that workers' comp pricing will likely remain steady, based on current strong performance and forecasts from rating bureaus, such as CCI, indicating similar loss cost recommendations for 2025 as seen in 2024. The paragraph concludes with a transition to another question directed to Michael about the favorable development in the Personal Lines segment.

In the discussion, Dan Frey addresses the favorable prior year reserve development (PYD) in Personal Insurance, highlighting that the end of 2023 showed strong profits, especially in the fourth quarter, although uncertainties remain about claims severity. Over the past 10 years, favorable developments have been consistent each year. Michael Klein responds to a question about possibly overreacting to pricing, stating that the current rates are adequate, supported by a year-to-date combined ratio of 97.4%, indicating no significant pricing missteps. Joshua Shanker notes that there have been two consecutive quarters of favorable prior year development in the Personal Lines segment, suggesting that deviations from certain trends can lead to this favorable outcome.

In the paragraph, Dan Frey addresses a question from Josh regarding the sustainability of favorable development trends in prior year reserve development. He emphasizes that trends or run rates do not apply to reserve development, as they evaluate data thoroughly every quarter to ensure accuracy. Frey mentions that, in previous years, elevated uncertainty levels were considered when setting reserves due to high loss costs in 2022 and 2023. With inflationary pressures normalizing and previous years' data maturing, the current situation reflects these changes. Frey expresses that he cannot predict whether prior year reserve development will increase, decrease, or remain the same in upcoming quarters. After his response, Joshua Shanker thanks him, and Michael Phillips from Oppenheimer asks a new question regarding business insurance casualty renewal price changes.

In the paragraph, Alan Schnitzer and Michael Phillips discuss concerns about rate changes and core margins, with Schnitzer stating they're not more concerned now compared to previous years. Schnitzer emphasizes looking forward and ensuring pricing aligns with positive loss trends, feeling confident about actions taken so far. Jeffrey Klenk addresses a question on management liability, noting no specific updates on loss trends but highlighting that pricing strategy reflects rate adequacy and renewal retention is strong at 90%. The discussion concludes with Abbe Goldstein thanking the participants.

The paragraph concludes a conference call, inviting participants to contact Investor Relations for any follow-up questions, and then signals the end of the call, thanking participants and allowing them to disconnect.

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