The paragraph is an introduction to the Fourth Quarter Results Teleconference for Travelers, held on January 22, 2025. The operator prompts attendees to hold questions until the formal remarks are completed. Abbe Goldstein, the Senior Vice President of Investor Relations, introduces the event and notes that materials, including a press release, financial supplement, and webcast presentation, are available on the company's website. Presentations will be made by Alan Schnitzer, Chairman and CEO; Dan Frey, CFO; and three segment Presidents. The discussion will focus on the company’s financial results and the market environment. The presentation will include forward-looking statements with a caution that such statements involve risks, and actual results may vary.

The paragraph discusses a company conference call led by Alan Schnitzer, who begins by acknowledging the impact of recent wildfires in Los Angeles and the company's efforts to assist affected customers. The company has used aerial imagery and live contact to expedite claim payments and has set up mobile claim offices. Schnitzer then reports on the company's financial success in 2024, highlighting a 64% increase in core income to over $5 billion and a core return on equity of 17.2%, driven by strong fundamentals, underwriting profitability, and net investment income. The company is optimistic about continuing this momentum into 2025.

In the fourth quarter, the company achieved exceptional financial results, with a record core income of $2.1 billion. Net earned premiums rose by 9% to $10.9 billion, and the combined ratio improved to 83.2%, indicating strong profitability across all segments. The business insurance combined ratio improved to 85.2%, Bond & Specialty to 82.7%, and personal insurance to 80.7%. Investment income for the year increased by 21% to $3 billion, boosting the company's book value per share by 13% to $139.04. Net written premiums grew by 8% over the year to over $43 billion, driven by effective marketplace execution and strong customer value propositions, with significant growth in business insurance premiums.

The paragraph highlights the company's strong financial performance, marked by an 85% retention rate, and growth in various insurance segments. Bond & Specialty insurance saw a 7% increase in net-written premiums to $1.1 billion, with high retention in management liability and significant growth in surety premiums. Personal Insurance premiums grew by 7% to $4.3 billion, with notable contributions from homeowners' policies. As the year concludes, the company reflects on its 2024 results and strategic investments. These investments focus on risk expertise, customer experiences, and operational efficiency, aiming to drive long-term growth and returns. This strategy has significantly increased net-written premiums by over 70% in eight years to over $43 billion and improved the combined ratio by nearly 7 points.

The paragraph highlights the company's success in achieving high-quality growth with strong underwriting profitability through a low-risk strategy focused on organic growth, price increases, and strategic partnerships. It emphasizes improvements in operating leverage, allowing for increased investments in strategic technology initiatives, which now comprise nearly half of their tech expenditure. The company has carefully managed routine tech expenses while improving its expense ratio by over 10%. This operational efficiency provides flexibility for investment and competitive advantage. Additionally, strong and predictable underwriting income has significantly contributed to their financial performance.

The company's underlying underwriting income has significantly increased over the past eight years, reaching $4.5 billion after tax in 2024. This growth has led to a record-high cash flow from operations of $9.1 billion, enabling strategic investments, shareholder returns, and portfolio growth. The investment portfolio reached nearly $100 billion, enhancing predictable net investment income. The strong financial performance supports the company’s commitment to its customers and shareholders, instilling confidence in its future outlook. Core income for the fourth quarter was $2.1 billion, with a core return on equity of 27.7%, contributing to a full-year core income of $5 billion and a core ROE of 17.2%. The company achieved record levels of earned premium and favorable combined ratios.

The paragraph discusses the strong financial performance of a company, highlighting a record quarterly and year-to-date underwriting income of $1.4 billion and $4.5 billion, respectively, with a significant 40% increase compared to the previous year. The company's expense ratio for the fourth quarter was 28.2% and 28.5% for the full year, aligning with expectations. It mentions the company's strategy of investing in people and technology to maintain competitive advantages. Catastrophe losses were modest, and there was a net favorable prior year reserve development of $262 million, with positive contributions from all segments. Additionally, after-tax net investment income rose by 22% to $785 million from the previous year.

The paragraph discusses the company's positive financial outcomes, highlighting an increase in fixed maturity net investment income (NII) due to higher yields and portfolio growth, projecting around $3 billion in after-tax fixed income NII for 2025. It also outlines the January 1st reinsurance renewals, with improved catastrophe and casualty reinsurance programs. The company secured $3.7 billion in coverage with a stable deductible, reduced ceded premiums, and enhanced coverage for casualty reinsurance. However, the additional ceded premium will minimally affect the growth rate of consolidated net written premium for 2025, with more notable impacts in the first quarter.

The paragraph discusses the financial outlook and plans for 2025, highlighting a pre-tax catastrophe plan with a 6.9 combined ratio point, and provides insights into the historical seasonality of catastrophic losses, noting the second quarter as the most significant. It mentions the impact of the recent January wildfires in California on first-quarter earnings and the ongoing collaboration with Fidelis, renewing a 20% quota share with a consistent loss ratio cap. The paragraph also covers capital management achievements, reporting strong operating cash flows of $2.1 billion for the quarter and $9.1 billion for the year, with an increase in net unrealized investment loss due to rising interest rates. The adjusted book value per share rose 13% from the previous year, reaching $139.04.

The company returned $494 million to shareholders this quarter through $252 million in share repurchases and $242 million in dividends. They have approximately $5 billion left for share repurchases authorized by the Board. For 2024, the company achieved core income of over $5 billion, a core ROE of 17.2%, and record levels in several financial metrics, positioning itself well for the future. Greg Toczydlowski reported that the Business Insurance segment had a strong quarter with a record segment income of $1.2 billion, up 25% from the previous year. The segment saw improvements in net investment income, underwriting income, and reserve development, with an impressive combined ratio of 85.2% and a low expense ratio of 28.8%. Net written premiums grew by 8% to a quarterly high of over $5.4 billion, with strong pricing and renewal rates.

The company achieved an 85% retention rate and $641 million in new business in the fourth quarter, marking their second highest quarterly result. They sustained strong pricing levels, with renewal rate increases in umbrella and auto being in double digits, while increases in CMP and GL remained stable, and property rates moderated slightly. Despite the pricing, strong retention reflects the company’s value proposition and awareness of environmental trends. In the Select business, renewal premium change was strong at 12%, with a 5.6% renewal rate change, and retention intentionally moderated to optimize risk/return in some areas. The middle market saw nearly a 10% renewal premium change. Overall, the company remains pleased with its pricing and underwriting strategies driving profitable growth.

The paragraph discusses the company's impressive financial and operational performance for the year, highlighting record results in several areas such as segment income, combined ratio, and top-line earnings. They achieved positive rate changes in almost 80% of their middle market accounts and had the highest fourth-quarter new business figure ever. The company's success is attributed to their strong value proposition, strategic execution, and enhancements in risk models, loss analytics, and customer relationship management. The paragraph concludes by expressing pride in the team's achievements and confidence in their strategic positioning for future growth, before handing the call over to Jeff Klenk.

The paragraph highlights Bond & Specialty's strong financial performance in the fourth quarter, reporting a segment income of $228 million and a combined ratio of 82.7%. The company achieved a 7% growth in net written premiums, with high retention rates in its domestic management liability business due to Corvus transitioning from an MGA. The management liability renewal premium improved and surety business net written premiums grew by 19%. The company achieved record net written premiums in surety and management liability, while investing in cyber capabilities and technology upgrades. Michael Klein then takes over, announcing Personal Insurance's segment income of $798 million and a combined ratio of 80.7% for the same period, which surpassed last year's results.

PI achieved record financial performance for the full year, with segment income of $1.25 billion and a combined ratio of 94.4%. Net written premiums increased by 8% annually, reaching nearly $17.2 billion. The Automobile segment's full-year combined ratio improved to 95%, with contributing factors including higher earned pricing and lower loss frequency. In the Homeowners and Other segment, the fourth quarter combined ratio improved to 67.8%, driven by favorable non-weather losses and pricing benefits, despite the impact of higher catastrophes. While progress has been made, PI aims to further enhance accident year profitability and achieve target returns consistently.

The paragraph discusses the company's strategic focus on growth and profitability in its auto and property insurance lines. In auto insurance, there's been consistent retention, with a moderation in renewal premium changes, indicating profitability. An increase in new auto business premiums, especially in states unaffected by property constraints, contributed to growth. For domestic homeowners insurance, retention increased, and renewal premium changes remained strong, with expectations for further increases in 2025 due to rate hikes and adjustments in insured values. There was a deliberate reduction in homeowners policies to enhance profitability. Overall, the company reported record net written premiums and significant income growth in 2024, attributing success to strategic actions and investment in new capabilities like telematics, AI-enabled imaging, and infrastructure modernization. The company credits its team and partners for their roles in achieving these results in a challenging environment.

The paragraph is part of a corporate earnings call where various executives are discussing financial aspects related to pricing and catastrophe (cat) impacts. Acknowledgement is given to the claims team currently active in California supporting customers. The discussion includes a question from Robert Cox of Goldman Sachs regarding renewal rate changes in business insurance pricing. Greg Toczydlowski responds, indicating stability without significant changes. Cox also inquires about the financial impact of catastrophic events, including a $100 million increase related to recent events like Helene and the potential impacts of California fires. Dan Frey provides further details on prior catastrophes, noting that the impact of Milton was around $60 million, slightly lower than previous estimates.

The paragraph discusses the impact of a significant event, driven by Helene, on the company's financials. This event caused more damage in Georgia and the Carolinas than in Florida, and due to its timing at the end of the quarter, there were challenges in predicting claims using historical models. The speaker indicates that the event will affect first-quarter earnings, especially in California. During the Q&A, Gregory Peters from Raymond James asks about select retention and changes in the company's CMP profile, wanting insight into business insurance retention ratios. Dan Frey responds, explaining that non-renewals happen when they can't achieve the right price-to-risk ratio through the regulatory process, especially concerning severe convective storms.

The paragraph discusses the recent challenges and strategies of a company's business insurance sector, particularly focusing on non-renewals and retention rates. The company anticipates improvement in retention by the latter half of 2025. Gregory Peters inquires about the company's technology investments, particularly their impact and details. Alan Schnitzer responds, explaining that while specific numbers aren't disclosed, the technology investment exceeded $1.5 billion last year. The investments focus on digitizing the value chain, enhancing customer experience, modernizing infrastructure, and incorporating advanced analytics, AI, and third-party data to improve pricing and market speed.

The paragraph details a discussion in a financial call, where Mike Zaremski from BMO Capital Markets asks about reserve releases in commercial business insurance, specifically workers' compensation. Dan Frey responds, noting that workers' comp has been consistently favorable, though fluctuations can occur quarterly due to data developments. Frey mentions that prior year development (PYD) isn't indicative of future trends and notes minor unfavorable development related to abuse and molestation claims. Zaremski then inquires about workers' comp pricing trends, to which Alan Schnitzer responds that pricing is largely stable.

In the paragraph, Dan Frey responds to David Motemaden's question about the business insurance underlying loss ratio, clarifying that there aren't any non-recurring or unusual factors influencing the 57.3% figure. The results are attributed to earned pricing benefits, with a decision to slightly increase the Incurred But Not Reported (IBNR) reserves in the casualty line due to uncertainty. Frey mentions the company's decision to add more reinsurance protection for the casualty book, which seems to be a proactive measure to ensure added protection as they focus on growth, differentiating their approach from others in the industry.

In the paragraph, Alan Schnitzer discusses the company's strategy regarding reinsurance treaties, emphasizing a careful and rewarding decision-making process. He highlights the strong margins and stability in their business, mentioning a high retention rate and favorable market conditions. However, Schnitzer refrains from predicting future margins. In response to Brian Meredith’s inquiry about the current tort environment, Schnitzer acknowledges its significance but does not provide specific details on potential improvements or challenges.

The paragraph discusses the insurance industry's focus on the tort environment, highlighting its significance both as a public policy issue and its impact on businesses and consumers. It notes the challenging insurance markets in certain states and mentions legislative developments regarding third-party litigation financing disclosure, which is seen positively by the industry. The conversation then shifts to Wes Carmichael asking about the assumptions in the 2025 catastrophe plan, specifically regarding California wildfires. Alan Schnitzer explains that their planning takes into account recent years' data but does not assume that recent high levels of catastrophes are the new normal, aiming for a balance that would cover significant losses in seven out of the last ten years.

In the paragraph, Wes Carmichael asks about the favorable reserve development concerning workers' compensation, to which Dan Frey responds, indicating a positive development of approximately $250 million in the fourth quarter. Alex Scott, from Barclays, then questions if there are changes in strategy in the Personal lines business, specifically in Homeowners, given recent results. Michael Klein explains that despite some positive returns, particularly with favorable frequency in property lines, there is still a need to focus on improving profitability and achieving target returns, as current outcomes are below desired levels. He highlights the uncertainty in favorable frequency continuation and underlines the ongoing focus on property improvement. Alex Scott further inquires about the company's exposure to wildfires in California, particularly around Pacific Palisades, and seeks insight into related living expenses and exposure management, acknowledging the company's reluctance to provide specific quantification at this point.

In the paragraph, Alan Schnitzer discusses the company's limited ability to share detailed insights about their market share in wildfire-prone areas, acknowledging that they have made efforts to manage their exposure, as have other companies. Elyse Greenspan from Wells Fargo inquires about the Business Insurance underlying loss ratio, noting a shift from a 180 basis point improvement in the third quarter to a 60 basis point improvement in the fourth quarter, despite consistent conservatism in casualty selections throughout the year. Dan Frey responds, emphasizing the importance of comparing performance year-over-year for the same quarter, as opposed to sequential quarterly changes, to understand the run rate and margin changes, suggesting there might not be anything unusually affecting the starting point other than pricing considerations.

The paragraph discusses the impact of quarterly changes and market share considerations in the context of California fires and insurance coverage. Elyse Greenspan poses questions about Travelers' market share relative to the fires and reinsurance coverage. Alan Schnitzer explains that estimating market share based on industry loss provides only a rough reference point due to the evolving nature of insured losses and the outdated nature of publicly available market share data. Additionally, local market share may differ from statewide market share, affecting the accuracy of such estimates. Dan is expected to address the specifics of reinsurance coverage in relation to these fires.

In the paragraph, Dan Frey discusses the 2025 cat treaty, highlighting its aggregate cover feature. He mentions that while the California wildfires likely won't impact first quarter earnings significantly due to the per event deductible, they will contribute towards the $4 billion retention. If there are active second or third quarters for catastrophe events, recoveries might be possible under the treaty. Yaron Kinar from Jefferies inquires about the impact of the California wildfires on the company's approach to its Home and Property business in the state. Alan Schnitzer responds by stating that future decisions will depend on market reactions and potential reforms. Michael Klein adds that the company has been reducing its presence in California and is seeking a rate increase for property that doesn't account for recent wildfire losses.

The discussion centers on the potential impact of tariffs on the Auto insurance business and the approach to growth. Michael Klein explains that while they cannot predict the specifics of potential tariffs, such as which countries or at what levels, they feel confident about their business margins and are actively pursuing Auto growth. They plan to adjust pricing if and when tariffs are enacted. The conversation then shifts to Travelers' property policies in California, where Michael Klein clarifies that they offer a standard policy in areas where they choose to provide coverage and these policies do include wildfire coverage.

The paragraph is part of a discussion about Travelers Insurance's policies and market strategy. Michael Klein states that Travelers has limited appetite and exposure to $5 million homes in California, focusing instead on middle market and mass affluent business rather than high net worth individuals. Meanwhile, Greg Toczydlowski comments on the growth in Commercial Auto insurance, highlighting that the growth is driven primarily by renewal premium changes, which include rate and exposure adjustments rather than new policy sales.

In the paragraph, Michael Klein discusses the current competitive environment in the Personal Auto sector, noting that it has remained consistent over the past few quarters. He highlights that their company continues to make progress in growing auto business, with a 6% increase in new business compared to the fourth quarter of the previous year, marking a record for them. Growth is particularly strong in states not limited by property actions, with increases in both new policies and new business premiums. The session concludes with Abbe Goldstein thanking participants and inviting follow-up with Investor Relations.

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