Q2 2024 Travelers Companies Inc Earnings Call

Good morning, ladies and gentlemen. Welcome to the second quarter results teleconference for Travelers. We ask that you hold all questions until the completion of formal remarks, at which time you will be given instructions for the question and answer session.

Operator: Wells Teleconference for Travelers We ask that you hold all questions until the completion of formal remarks, at which time you will be given instructions for the question and answer. As a reminder, this conference is being recorded on July 19, 2024. At this time, I would like to turn the conference over to Ms. Abbe Goldstein, Senior Vice President of Investor Relations. Ms. Goldstein, you may begin.

Unknown Executive: Teleconference for travelers. We ask that you hold all questions until the completion of formal remarks, at which time you will be given instructions for the question and answer session. As a reminder, this conference is being recorded on July 19th, 2024.

Speaker Change: As a reminder, this conference is being recorded on July 19th, 2024. At this time, I would like to turn the conference over to Ms. Abbe Goldstein, Senior Vice President of Investor Relations. Ms. Goldstein, you may begin.

Abbe Goldstein: At this time, I would like to turn the conference over to Ms. Abbe Goldstein, Senior Vice President of Investor Relations. Ms. Goldstein, you may begin. Thank you.

Abbe F. Goldstein: Thank you. Good morning, and welcome to Travelers' discussion of our second quarter 2024 results. We released our press release, financial supplement, and webcast presentation earlier this morning. All of these materials can be found on our website at travelers.com under the investor section.

Alan Schnitzer: Good morning, and welcome to Travelers' discussion of our second quarter 2024 results. We released our press release, financial supplement, and webcast presentation earlier this morning. All of these materials can be found on our website at www.travelers.com under the Investor section.

Abbe F. Goldstein: Thank you. Good morning, and welcome to Travelers' discussion of our second quarter 2024 results. We released our press release, financial supplement, and webcast presentation earlier this morning. All of these materials can be found on our website at travelers.com under the Investors section.

Alan Schnitzer: Speaking today will be Alan Schnitzer, Chairman and CEO, Dan Fry, Chief Financial Officer, and our three segment presidents, Greg Toczydlowski of Business Insurance, Jeff Klein, Chief Executive Fund and Specialty Insurance, and Michael Klein of Personal Insurance. They will discuss the financial results of our business and the current market environment. They will refer to the webcast presentation as they go through prepared remarks, and then we will take your questions.

Abbe F. Goldstein: Speaking today will be Alan Schnitzer, Chairman and CEO, Dan Frey, Chief Financial Officer, and our three segment presidents, Greg Toslowski of Business Insurance, Jeff Klenk of Bond and Specialty Insurance, and Michael Klein of Personal Insurance. They will discuss the financial results of our business and the current market environment. They will refer to the webcast presentation as they go through their prepared remarks, and then we will take your questions.

Speaker Change: Speaking today will be Alan Schnitzer, Chairman and CEO , Dan Frey, Chief Financial Officer, and our three segment presidents, Greg Toslowski of Business Insurance, Jeff Klenk of Bond and Specialty Insurance, and Michael Klein of Personal Insurance.

Speaker Change: They will discuss the financial results of our business and the current market environment. They will refer to the webcast presentation as they go through prepared remarks, and then we will take your questions.

Alan Schnitzer: Before I turn the call over to Alan, I'd like to draw your attention to the explanatory note included at the end of the webcast presentation. Our presentation today includes forward-looking statements. The company cautions investors that any forward-looking statement involves risks and uncertainties and is not a guarantee of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described under forward-looking statements in our earnings press release and in our most recent 10-Q and 10-K filed with the SEC. We do not undertake any obligation to update forward-looking statements.

Abbe F. Goldstein: Before I turn the call over to Alan, I'd like to draw your attention to the explanatory note included at the end of the webcast presentation. Our presentation today includes forward-looking statements. The company cautions investors that any forward-looking statement involves risks and uncertainties and is not a guarantee of future performance. actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described in forward-looking statements in our earnings press release and in our most recent 10-Q and 10-K filed with the SEC. We do not undertake any obligation to update forward-looking statements.

Speaker Change: Before I turn the call over to Alan, I'd like to draw your attention to the explanatory note included at the end of the webcast presentation.

Alan: Our presentation today includes forward-looking statements.

Speaker Change: The company cautions investors that any forward-looking statement involves risks and uncertainties and is not a guarantee of future performance.

Speaker Change: Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors.

Speaker Change: These factors are described under forward-looking statements in our earnings press release and in our most recent 10-Q and 10-K filed with the SEC. We do not undertake any obligation to update forward-looking statements.

Alan Schnitzer: Also, in our remarks or responses to questions, we may mention some non-GAAP financial measures. Reconciliation are included in our recent earnings press release, financial supplement, and other materials available in the investor section on our website.

Abbe F. Goldstein: Also, in our remarks or responses to questions, we may mention some non-GAAP financial measures. Reconciliations are included in our recent earnings press release financial supplement and other materials available in the investor section on our website. Now, I'd like to turn the call over to Alan. Thank you, Abbe. Good morning, everyone, and thank you for joining us today.

Speaker Change: Also, in our remarks or responses to questions, we may mention some non-GAAP financial measures. Reconciliations are included in our recent earnings press release, financial supplement, and other materials available in the investor section on our website. And now, I'd like to turn the call over to Alan.

Alan Schnitzer: And now I'd like to turn the call over to Alan. Thank you, Abby. Good morning, everyone, and thank you for joining us today. We are pleased to have generated a strong bottom line result in the quarter that included a record number of severe convective storms across the United States. Excellent underlying results, favorable net prior year reserve development, and higher net investment income contributed to core income of $585 million, or $2.51 per diluted share. Underlying underwriting income of $1.2 billion per tax was up 55% over the prior year quarter. This year's exceptional result was driven by record net earned premiums of $10.2 billion, and a consolidated underlying combined ratio that improved 3.4 points to an excellent 87.7%.

Alan: Thank you, Abbe. Good morning, everyone, and thank you for joining us today. We are pleased to have generated a strong bottom line result in the quarter that included a record number of severe convective storms across the United States.

Alan David Schnitzer: We are pleased to have generated a strong bottom-line result in the quarter that included a record number of severe convective storms across the United States. Excellent underlying results, favorable net prior year reserve development, and higher net investment income contributed to core income of $585 million, or $2.51 per diluted share. Underwriting income of $1.2 billion pre-tax was up 55% over the prior year quarter. This year's exceptional result was driven by record net earned premiums of $10.2 billion and a consolidated underlying combined ratio that improved 3.4 points to an excellent 87.7%.

Alan: Excellent underlying results, favorable net prior year reserve development, and higher net investment income contributed to core income of $585 million or $2.51 per diluted share.

Alan: Underwriting income of $1.2 billion pre-tax was up 55% over the prior year quarter.

Alan: This year's exceptional result was driven by record net earned premiums of $10.2 billion and a consolidated underlying combined ratio that improved 3.4 points to an excellent 87.7%.

Alan Schnitzer: Net earned premiums were higher in all three of our business segments. The underlying combined ratio in our business insurance segment was an excellent 89.2%. And the underlying combined ratio in our bond and specialty business improved 1.7 points to a very strong 86.1%. Looking at our two commercial segments together, the aggregate BI BFI underlying combined ratio was an outstanding 88.7% for the quarter. The underlying combined ratio in personal insurance improved by nearly eight points to a terrific 86.3%. Turning to the top line, we could net written premiums by 8% to $11.1 billion in the quarter. Outstanding execution by our colleagues in the field across all three segments contributed to our top line success.

Alan David Schnitzer: Entering premiums for hire in all three of our business segments. The underlying combined ratio in our business insurance segment was an excellent 89.2%, and the underlying combined ratio in our bond and specialty business improved 1.7 points to a very strong 86.1%. Looking at our two commercial segments together, the aggregate BI-BSI underlying combined ratio was an outstanding 88.7% for the quarter.

Alan: Interim premiums were higher in all three of our business segments.

Alan: The underlying combined ratio in our business insurance segment was an excellent 89.2% and the underlying combined ratio in our bond and specialty business improved 1.7 points to a very strong 86.1%.

Alan: Looking at our two commercial segments together, the aggregate BI-BSI underlying combined ratio was an outstanding 88.7% for the quarter.

Alan David Schnitzer: The underlying combined ratio in personal insurance improved by nearly 8 points to a terrific 86.3%. Turning to the top line, we grew net written premiums by 8% to $11.1 billion in the quarter. Outstanding execution by our colleagues in the field across all three segments contributed to our top-line success. We are very pleased to report terrific production results in our commercial segments, where, as you've heard, margins are attractive. In business insurance, we grew net written premiums by 7% to more than $5.5 billion.

Alan: The underlying combined ratio in personal insurance improved by nearly 8 points to a terrific 86.3%.

Alan: Turning to the top line, we grew net written premiums by 8% to $11.1 billion in the quarter. Outstanding execution by our colleagues in the field across all three segments contributed to our top line success.

Alan Schnitzer: We are very pleased to report terrific production results in our commercial segments, whereas you've heard margins are attractive. In business insurance, we were netwritten premiums by 7% to more than $5.5 billion. We know premium change remained very strong at 10.1%, or retention remained high at 85%. The combination of strong pricing and retention reflects deliberate execution on our part and a marketplace that continues to be generally disciplined. New business increased 9% to a record $732 million, a reflection of the fact that our customers and distribution partners value the products and services that we offer and the experiences that we provide.

Alan: We are very pleased to report terrific production results in our commercial segments, where as you've heard, margins are attractive.

Alan: In business insurance, we grew net written premiums by 7% to more than $5.5 billion.

Alan David Schnitzer: Renewal premium change remained very strong at 10.1%, while retention remained high at 85%. A combination of strong pricing and retention reflects deliberate execution on our part and a marketplace that continues to be generally disciplined. New business increased 9% to a record $732 million.

Alan: We know premium change remained very strong at 10.1%, while retention remained high at 85%.

Alan: A combination of strong pricing and retention reflects deliberate execution on our part and a marketplace that continues to be generally disciplined.

Alan: New business increased 9% to a record $732 million.

Alan David Schnitzer: This is a reflection of the fact that our customers and distribution partners value the products and services that we offer and the experiences that we provide. In bond and specialty insurance, we grew net written premiums by 8% to more than a billion dollars, driven by very strong retention of 90% in our high-quality management liability business. An excellent production in a market-leading surety business where we grew net written premiums by 11%. At Year End 2023, we shared that across our two commercial segments, our E&S writings had reached $2.5 billion for the year, double the level from 2021.

Alan: A reflection of the fact that our customers and distribution partners value the products and services that we offer and the experiences that we provide.

Alan Schnitzer: In bond and specialty insurance, we were net written premiums by 8% to more than a billion dollars, given by very strong retention of 90% in our high quality management liability business, an excellent production in our market leading surety business, where we grew net written premiums by 11%. At year in 2023, we shared that across our two commercial segments, our ENS writings had reached $2.5 billion per year, double the level from 2021. Year to date, we've grown ENS netwritten premiums by 16%. The margins continue to be quite attractive. In personal insurance, continued strong pricing grew of 9% growth in net written premiums, with growth of 10% in auto and 8% in home.

Alan: In bond and specialty insurance, we grew net written premiums by 8% to more than a billion dollars, driven by very strong retention of 90% in our high-quality management liability business.

Alan: An excellent production in a market-leading surety business, where we grew net written premiums by 11%.

Alan: At year-end 2023, we shared that across our two commercial segments, our E&S writings had reached $2.5 billion for the year, double the level from 2021.

Alan David Schnitzer: Year-to-date, we've grown E&S net written premiums by 16%. The margins continue to be quite attractive. In personal insurance, continued strong pricing drove 9% growth in net written premium, with growth of 10% in auto and 8% in home. You'll hear more shortly from Greg, Jeff, and Michael about our segment results.

Alan: Year-to-date, we've grown E&S net written premiums by 16%. The margins continue to be quite attractive.

Alan: In personal insurance, continued strong pricing drove 9% growth in net written premiums, with growth of 10% in auto and 8% in home.

Alan Schnitzer: We'll hear more shortly from Greg, Jeff, and Michael about our segment results. Turning to investments, our high quality investment portfolio continued to perform well, generating after-tax net investment income of $727 million, driven by strong and reliable turns from our growing fixed income portfolio and higher returns from our non-fixed income portfolio. Our investment results benefit from the strong cash flow we've generated over a sustained period. This quarter marks the 7th consecutive quarter in which we've generated more than a billion dollars in operating cash flow. This is to measure that we are the industry talk a lot about, but it's important.

Speaker Change: You'll hear more shortly from Greg, Jeff, and Michael about our segment results.

Alan David Schnitzer: Turning to investments, our high-quality investment portfolio continues to perform well, generating after-tax net investment income of $727 million. Driven by strong and reliable terms from our growing fixed income portfolio and higher returns from our non-fixed income portfolio, our investment results benefit from the strong cash flow we've generated over a sustained period. This quarter marks the 17th consecutive quarter in which we've generated more than a billion dollars in operating cash flow.

Speaker Change: Turning to investments, our high-quality investment portfolio continued to perform well, generating after-tax net investment income of $727 million, driven by strong and reliable terms from our growing fixed income portfolio and higher returns from our non-fixed income portfolio.

Speaker Change: Our investment results benefit from the strong cash flow we've generated over a sustained period.

Speaker Change: This quarter marks the 17th consecutive quarter in which we've generated more than a billion dollars in operating cash flow.

Alan David Schnitzer: This is the measure that we or the industry talk a lot about, but it's important. Cashflow is what enables us to make strategic investments in our business, return excess capital to shareholders, and grow our investment portfolio. Since 2016, we've invested $11 billion in important technology initiatives, returned more than $20 billion of excess capital to our shareholders, and grown our investment portfolio by more than $25 billion. It's a virtuous cycle, as well-conceived and executed strategic initiatives, an effective capital management strategy, and a thoughtful investment strategy contribute to attractive returns and growth in adjusted book value per share.

Speaker Change: It's just a measure that we or the industry talk a lot about, but it's important.

Alan Schnitzer: Cash flow is what enables us to make strategic investments in our business, return excess capital to shareholders, and grow our investment portfolio. Since 2016, we've invested $11 billion in important technology initiatives, returned more than $20 billion of access capital to our shareholders, and grown our investment portfolio by more than $25 billion. It's a virtuous cycle, as well conceived and executed strategic initiatives, an effective capital management strategy, and a thoughtful investment strategy contribute to attractive returns and growth in adjusted both value for share. Strong underwriting is the flywheel that sets it all in motion. Thanks to exceptional franchise value and excellent marketplace execution, we've profitably grown our premium base from about $25 billion in 2016 to more than $40 billion today.

Speaker Change: Cash Flow is what enables us to make strategic investments in our business, return excess capital to shareholders, and grow our investment portfolio.

Speaker Change: Since 2016, we have invested $11 billion in important technology initiatives, returned more than $20 billion of excess capital to our shareholders, and grown our investment portfolio by more than $25 billion.

Speaker Change: It's a virtuous cycle, as well-conceived and executed strategic initiatives, an effective capital management strategy, and a thoughtful investment strategy contribute to attractive returns and growth in adjusted book value per share.

Alan David Schnitzer: Strong underwriting is the flywheel that sets it all in motion. Thanks to exceptional franchise value and excellent marketplace execution, we've profitably grown our premium base from about $25 billion in 2016 to more than $40 billion today. Our growth over this period of time has been largely organic.

Speaker Change: Strong underwriting is the flywheel that sets it all in motion.

Alan Schnitzer: Our growth over this period of time has been largely organic, selling products in which we have deep expertise through distribution partners with whom we have longstanding relationships and in geographies where we have a thorough understanding of the regulatory environment and other market dynamics. In other words, our competitive advantages have enabled us to effectively execute a relatively low risk-grow strategy. The success of that strategy is evidenced by a return on equity that is averaged about 900 basis points over the 10-year Treasury over that period at industry low volatility. But all this boils down to is steady, consistent growth in the adjusted look value per share.

Alan David Schnitzer: Selling products in which we have deep expertise through distribution partners with whom we have longstanding relationships, and in geographies where we have a thorough understanding of the regulatory environment and other market dynamics. In other words, our competitive advantages have enabled us to effectively execute a relatively low-risk growth strategy. The success of that strategy is evidenced by a return on equity that has averaged about 900 basis points over the 10-year treasury over that period at industry-low volatility.

Speaker Change: Our growth over this period of time has been largely organic.

Speaker Change: selling products in which we have deep expertise through distribution partners with whom we have long-standing relationships and in geographies where we have a thorough understanding of the regulatory environment and other market dynamics.

Speaker Change: In other words, our competitive advantages have enabled us to effectively execute a relatively low-risk growth strategy.

Speaker Change: The success of that strategy is evidenced by a return on equity that has averaged about 900 basis points over the 10 year treasury over that period at industry low volatility.

Alan David Schnitzer: What all this boils down to is steady, consistent growth and adjusted book value per share after making important investments in our business and returning substantial excess capital to shareholders, and as a leader in the US PNC market with broad product capability, demonstrating success with innovation and plenty of market share headroom.

Speaker Change: But all this boils down to is steady, consistent growth and adjusted book value per share after making important investments in our business and returning substantial excess capital to shareholders.

Alan Schnitzer: After making important investments in our business, and returning substantial access capital to shareholders, and as a leader in the USPNC market with broad product capability, demonstrated success with innovation and plenty of market share headroom, we're confident there's a lot more opportunity in front of us. Sum it up, we continue to be very confident in the outlook for our business. Our results for the first half of the year include strong premium growth, an excellent bottom line result, record operating cash flow, and steadily rising investment returns in our growing fixed income portfolio. With a strong and diversified business and balance sheet, we delivered 13.6% core return on equity over the last 12 months, despite substantial industry-wide catastrophe losses.

Speaker Change: And as a leader in the US PNC market with broad product capability, demonstrated success with innovation, and plenty of market share headroom, we're confident there's a lot more opportunity in front of us.

Alan David Schnitzer: We're confident there's a lot more opportunity in front of us. To sum it up, we continue to be very confident in the outlook for our business. Our results for the first half of the year include strong premium growth, an excellent bottom-line result, record operating cash flow, and steadily rising investment returns in our growing fixed income portfolio. With a strong and diversified business and balance sheet, we delivered 13.6% core return on equity over the last 12 months, despite substantial industry-wide catastrophe losses. With this momentum, we remain well positioned for success this year and beyond. And with that, I'm pleased to turn the call over to Dan. Thank you, Alan.

Speaker Change: To sum it up, we continue to be very confident in the outlook for our business.

Speaker Change: Our results for the first half of the year include strong premium growth, an excellent bottom line result, record operating cash flow, and steadily rising investment returns in our growing fixed income portfolio.

Speaker Change: With a strong and diversified business and balance sheet, we delivered 13.6% core return on equity over the last 12 months.

Alan Schnitzer: With this momentum, we remain well positioned for success this year and beyond.

Speaker Change: despite substantial industry-wide catastrophe losses.

Speaker Change: With this momentum, we remain well-positioned for success this year and beyond. And with that, I'm pleased to turn the call over to Dan.

Dan Fry: And with that, I'm pleased to turn the call over to Dan. Thank you, Alan. We're pleased to have generated record levels of earned premium this quarter, and an underlying combined ratio of 87.7%, a 340 basis point improvement from last year's strong result, and the third consecutive quarter below 88%. This led to one of our strongest ever underlying underwriting gains of $952 million after tax, up $337 million, or 55%, from the prior year quarter. The expense ratio for the second quarter was 28.8%. In line with our expectations, and once again, benefiting from the combination of our focus on productivity and efficiency, coupled with strong top-line growth, we continue to expect 2024's full-year expense ratio to be 28 to 28.5%.

Daniel Stephen Frey: We're pleased to have generated record levels of earned premium this quarter and an underlying combined ratio of 87.7%, a 340 basis point improvement from last year's strong results, in the third consecutive quarter below 88 percent. This led to one of our strongest ever underlying underwriting gains of $952 million after tax, up $337 million, or 55% from the prior year quarter. The expense ratio for the second quarter was 28.8%, in line with our expectations, and once again benefiting from the combination of our focus on productivity and efficiency, coupled with strong top-line growth. We continue to expect 2024's full-year expense ratio to be 28 to 28 and a half percent.

Dan: Thank you, Alan.

Dan: We are pleased to have generated record levels of earned premium this quarter and an underlying combined ratio of 87.7%.

Dan: A 340 basis point improvement from last year's strong result, and the third consecutive quarter below 88%.

Dan: This led to one of our strongest ever underlying underwriting gains of $952 million after tax, up $337 million, or 55% from the prior year quarter.

Dan: The expense ratio for the second quarter was 28.8% in line with our expectations and once again benefiting from the combination of our focus on productivity and efficiency coupled with strong top line growth.

Dan: We continue to expect 2024's full year expense ratio to be 28 to 28 and a half percent.

Dan Fry: As Alan mentioned, the industry experienced a very active cat quarter, and our second quarter results include $1.5 billion of pre-tax catastrophe losses, driven by a record number of severe convective storms. That disclosed in the significant events table in our 10-Q, we had five events surpassed the $100 million mark in Q2, all in the month of May. Turning to prior year reserve development, we had total net favorable development of $230 million pre-tax. In business insurance, net favorable PID of $34 million resulted from approximately $300 million of better than expected loss experience in workers comp across a number of accident years, largely offset by about $250 million of strengthening and general liability driven by umbrella for accident years, 2021 through 2023.

Daniel Stephen Frey: As Alan mentioned, the industry experienced a very active cat quarter, and our second quarter results include $1.5 billion of pre-tax catastrophe losses driven by a record number of severe convective storms. As disclosed in the significant events table in our 10-Q, we had five events surpass the $100 million mark in Q2, all in the month of May. Turning to prior year reserve development, we had total net favorable development of $230 million pre-tax.

Dan: As Alan mentioned, the industry experienced a very active cat quarter, and our second quarter results include $1.5 billion of pre-tax catastrophe losses, driven by a record number of severe convective storms.

Speaker Change: As disclosed in the significant events table in our 10Q, we had 5 events surpass the $100 million mark in Q2, all in the month of May.

Speaker Change: Turning to prior year reserve development.

Dan: We had total net favorable development of $230 million pre-tax.

Daniel Stephen Frey: In business insurance, a net favorable PYD of $34 million resulted from approximately $300 million of better-than-expected loss experience in workers' comp across a number of accident years, largely offset by about $250 million of strengthening and general liability, driven by Umbrella for accident years 2021 through 2023. Under terms of the umbrella law.

Speaker Change: In business insurance, net favorable PYD of $34 million resulted from approximately $300 million of better-than-expected loss experience in workers' comp across a number of accident years.

Speaker Change: Largely offset by about $250 million of strengthening and general liability driven by Umbrella for accident years 2021 through 2023.

Dan Fry: In terms of the umbrella line, these are very young accident years, made up almost entirely of IBNR. But we will obviously continue to evaluate loss activity as it comes in. We believe we have been proactive and decisive in addressing the latest observed loss activity and adjusting our view of loss development factors to allow for the prospect of rising settlement costs and lengthening settlement patterns. Importantly, our picks for accident years 2015 through 2020 did not require much adjustment in the first half of this year. It's also worth noting that our returns in the umbrella line for the impacted accident years remain attractive.

Daniel Stephen Frey: These are very young accident years, made up almost entirely of IBNR. Well, we will obviously continue to evaluate loss activity as it comes in. We believe we have been proactive and decisive in addressing the latest observed loss activity and adjusting our view of loss development factors to allow for the prospect of rising settlement costs and lengthening settlement patterns. Importantly, our picks for accident years 2015 through 2020 did not require much adjustment in the first half of this year.

Speaker Change: In terms of the umbrella line...

Speaker Change: These are very young accident years, made up almost entirely of IBNR.

Speaker Change: Well, we will obviously continue to evaluate loss activity as it comes in.

Speaker Change: We believe we have been proactive and decisive in addressing the latest observed loss activity and adjusting our view of loss development factors to allow for the prospect of rising settlement costs and lengthening settlement patterns.

Speaker Change: Importantly, our picks for accident years 2015 through 2020 did not require much adjustment in the first half of this year.

Daniel Stephen Frey: It's also worth noting that our returns in the umbrella line for the impacted accident hitters remain attractive. As we saw five years ago, when we were the first to call out a change in loss levels tied to an increase in attorney's fees, Sharpening our view of lost costs early in the development of immature accident ears and long tail lines positions us to enhance our risk selection, pricing, and claim strategy, ultimately setting us up to outperform in terms of growth and profitability. And on a related note, with court backlogs from the COVID shutdown now largely resolved. That element of uncertainty is, to a large degree, behind us.

Speaker Change: It's also worth noting that our returns in the umbrella line for the impacted accident hitters remain attractive.

Dan Fry: As we saw five years ago, when we were the first to call out a change in loss levels tied to an increase in attorney rep rates, sharpening our view of loss costs early in the development of immature accident years and long tail lines, positions us to enhance our risk selection, pricing, and claim strategies, ultimately setting us up to outperform in terms of growth and profitability. And on a related note, with court backlogs from the COVID shutdown now largely resolved, that element of uncertainty is, to a large degree, behind us. In bond and specialty, net favorable PID was $24 million pre-tax.

Speaker Change: As we saw five years ago, when we were the first to call out a change in loss levels tied to an increase in attorney rep rates,

Speaker Change: Sharpening our view of lost costs early in the development of immature accident years and long tail lines positions us to enhance our risk selection, pricing, and claim strategies.

Speaker Change: Ultimately, setting us up to outperform in terms of growth and profitability.

Speaker Change: And on a related note, with court backlogs from the COVID shutdown now largely resolved, that element of uncertainty is, to a large degree, behind us.

Daniel Stephen Frey: In bond and specialty, net favorable PYD was $24 million pre-tax. Personal insurance had a significant net favorable PYD of $172 million pre-tax, with good news from recent accident years in both home and auto. After-tax net investment income of $727 million increased by 22% from the prior year quarter.

Speaker Change: In bond and specialty, net favorable PYD was $24 million pre-tax.

Dan Fry: Personal insurance had significant net favorable PID of $172 million pre-tax, with good news from recent accident years in both home and auto. After-tax net investment income of $727 million increased by 22% from the prior year quarter. As expected, fixed maturity NII was again higher than the prior year quarter, reflecting both the benefit of higher average yields and higher invested assets. Returns in the non-fixed income portfolio were also up from the prior year quarter. Our outlook for fixed income NII, including earnings from short-term securities, has increased slightly. We now expect approximately $675 million after tax in the third quarter, and $695 million after tax in the fourth quarter.

Speaker Change: Personal insurance had significant net favorable PYD of $172 million pre-tax, with good news from recent accident years in both home and auto.

Speaker Change: After tax net investment income of $727 million increased by 22% from the prior year quarter.

Daniel Stephen Frey: As expected, fixed maturity NII was again higher than the prior year quarter, reflecting both the benefit of higher average yields and higher invested assets. Returns in the non-fixed income portfolio were also up from the prior year quarter. Our outlook for fixed income NII, including earnings from short-term securities, has increased slightly. We now expect approximately $675 million after tax in the third quarter and $1,695,000,000 after tax in the fourth quarter.

Speaker Change: As expected, fixed maturity NII was again higher than the prior year quarter, reflecting both the benefit of higher average yields and higher invested assets.

Speaker Change: Returns in the non-fixed income portfolio were also up from the prior year quarter.

Speaker Change: Our outlook for fixed income NII, including earnings from short-term securities, has increased slightly. We now expect approximately $675 million after tax in the third quarter and $695 million after tax in the fourth quarter.

Dan Fry: New money rates as of June 30th are still above the yields embedded in the portfolio. So fixed income NII should continue to improve beyond 2024, as the portfolio gradually turns over and continues to grow. Turning to capital management, operating cash flows for the quarter of $1.7 billion were again very strong, and we ended the quarter with holding company liquidity of approximately $1.7 billion. Interest rates increased during the quarter, and as a result, our net unrealized investment loss increased modestly. from $3.7 billion after tax at March 31st to $4 billion after tax at June 30th. Adjusted book value per share, which excludes net unrealized investment gains and losses, was $126.52 at quarter-end, up 3% from year-end and up 10% from a year ago.

Daniel Stephen Frey: New money rates as of June 30th are still above the yields embedded in the portfolio, so fixed income NII should continue to improve beyond 2024 as the portfolio gradually turns over and continues to grow. Turning to capital management, operating cash flows for the quarter of $1.7 billion were again very strong, and we ended the quarter withholding company liquidity of approximately $1.7 billion. Interest rates increased during the quarter, and as a result, our net unrealized investment loss increased modestly from $3.7 billion after tax on March 31st. $4 billion after tax on June 30th. Adjusted book value per share, which excludes net unrealized investment gains and losses, was $126.52 at quarter end, up 3% from year end, and up 10% from a year ago.

Speaker Change: New money rates as of June 30th are still above the yields embedded in the portfolio. So fixed income NII should continue to improve beyond 2024 as the portfolio gradually turns over and continues to grow.

Speaker Change: Turning to capital management. Operating cash flows for the quarter of $1.7 billion were again very strong, and we ended the quarter withholding company liquidity of approximately $1.7 billion.

Speaker Change: Interest rates increased during the quarter and as a result our net unrealized investment loss increased modestly from 3.7 billion dollars after tax at March 31st to 4 billion dollars after tax at June 30th.

Speaker Change: Adjusted book value per share, which excludes net unrealized investment gains and losses, was $126.52 at quarter end, up 3% from year end, and up 10% from a year ago.

Dan Fry: We returned $498 million of capital to our shareholders this quarter, comprising share repurchases of $253 million in dividends of $245 million. We have approximately $5.5 billion of capacity remaining under the share repurchase authorization from our Board of Directors. Turning to re-insurance, page 19 of the webcast presentation shows the summary of our report. We increased coverage when we renewed our Northeast Property Cat XOL treaty, which now provides $1 billion of coverage above the attachment point of $2.75 billion. A year ago, we purchased $850 million of coverage, and the attachment point was $2.5 billion. We also renewed the personal insurance hurricane cat excess of loss treaty for coastal exposure, which continues to provide 50% coverage for the $1 billion layer above an attachment point of $2 billion.

Daniel Stephen Frey: We returned $498 million of capital to our shareholders this quarter, comprising share repurchases of $253 million and dividends of $245 million. We have approximately $5.5 billion of capacity remaining under the share repurchase authorization from our Board of Directors. Turning to reinsurance, page 19 of the webcast presentation shows a summary of our July 1st reinsurance placement, increased coverage when we renewed our Northeast property CAT XOL treaty, which now provides $1 billion of coverage above the attachment point of $2.75 billion.

Speaker Change: We returned $498 million of capital to our shareholders this quarter, comprising share repurchases of $253 million and dividends of $245 million.

Speaker Change: We have approximately $5.5 billion of capacity remaining under the share repurchase authorization from our Board of Directors.

Speaker Change: Turning to reinsurance, page 19 of the webcast presentation shows a summary of our July 1st reinsurance placements.

Speaker Change: We increased coverage when we renewed our Northeast Property CAT XOL Treaty.

Speaker Change: which now provides $1 billion of coverage above the attachment point of $2.75 billion.

Daniel Stephen Frey: A year ago, we purchased $850 million of coverage, and the attachment point was $2.5 billion. We also renewed the Personal Insurance Hurricane Kat Excessive Loss Treaty for coastal exposure, which continues to provide 50% coverage for the $1 billion layer above an attachment point of $2 billion.

Speaker Change: A year ago, we purchased $850 million of coverage, and the attachment point was $2.5 billion.

Speaker Change: We also renewed the Personal Insurance Hurricane Cat Excessive Loss Treaty for coastal exposure, which continues to provide 50% coverage for the $1 billion layer above an attachment point of $2 billion.

Dan Fry: Re-capping our results, Q2 was another quarter of strong premium growth, excellent underwriting, underlying underwriting profitability, and continued growth in net investment income, all of which vote well for our future returns. Our ability to absorb $1.5 billion of pre-tax cat losses and still deliver $585 million of core income for the quarter is a testament to the overall strength of our diversified franchise and the fundamentals of our business. To give a little more color on that, underlying underwriting income has become an increasingly reliable and important component of our earnings power. Going back to the combination of travelers in St.

Daniel Stephen Frey: Recapping our results, Q2 was another quarter of strong premium growth, excellent underwriting, and underlying underwriting profitability. Continued Growth in Net Investment, All of which bodes well for our future return. Our ability to absorb $1.5 billion of pre-tax catastrophe losses and still deliver $585 million of core income for the quarter is a testament to the overall strength of our diversified franchise and the fundamentals of our business. To give a little more color on that, underlying underwriting income has become an increasingly reliable and important component of our earnings power. Going back to the combination of Travelers 2005 through 2019.

Speaker Change: Recapping our results, Q2 was another quarter of strong premium growth, excellent underwriting, underlying underwriting profitability.

Speaker Change: and Continued Growth in Net Investment Income.

Speaker Change: All of which bode well for our future returns.

Speaker Change: Our ability to absorb 1.5 billion dollars of pre-tax CAT losses and still deliver 585 million dollars of core income for the quarter is a testament to the overall strength of our diversified franchise and the fundamentals of our business.

Speaker Change: to give a little more color on that.

Speaker Change: Underlying, underwriting income has become an increasingly reliable and important component of our earnings power.

Dan Fry: Paul, from 2005 through 2019, annual underlying underwriting income averaged $1.2 billion after tax. Our focus on profitable premium growth, which began accelerating around 2016, resulted in underlying underwriting income surpassing $2 billion for the first time ever in 2020, and we stayed above $2 billion through 2022. We then surpassed $3 billion in 2023, and through the first half of 2024, underlying underwriting income of just over $1.9 billion is up by 32% compared to the first half of 2023. In short, underlying underwriting income has become a significant and growing contributor to our ability to continue generating industry-leading returns with industry low volatility.

Speaker Change: Going back to the combination of Travelers and St. Paul.

Daniel Stephen Frey: Annual underlying underwriting income averaged $1.2 billion after tax. Our focus on profitable premium growth, which began accelerating around 2016, resulted in underlying underwriting income surpassing $2 billion for the first time ever in 2020, and we stayed above $2 billion through 2022. We then surpassed $3 billion in 2023, and through the first half of 2024, underlying underwriting income of just over $1.9 billion was up by 32% compared to the first half of 2023.

Speaker Change: from 2005 through 2019.

Speaker Change: Annual underlying underwriting income averaged $1.2 billion after tax.

Speaker Change: Our focus on profitable premium growth, which began accelerating around 2016,

Speaker Change: resulted in underlying underwriting income surpassing $2 billion for the first time ever in 2020.

Speaker Change: And we stayed above $2 billion through 2022.

Speaker Change: We then surpassed $3 billion in 2023.

Speaker Change: And through the first half of 2024, underlying underwriting income of just over 1.9 billion dollars is up by 32 percent compared to the first half of 2023.

Daniel Stephen Frey: In short, underlying underwriting income has become a significant and growing contributor to our ability to continue generating industry-leading returns with industry-low volatility. And now, for more color on each segment's results, I'll turn the call over to Greg to begin with a discussion of business and shopping. Thanks, Dan.

Speaker Change: In short, underlying underwriting income has become a significant and growing contributor to our ability to continue generating industry-leading returns with industry-low volatility.

Greg Toczydlowski: And now, for more color on each segment results, I'll turn the call over to Greg to begin with a discussion of business insurance. Thanks, Dan. Business insurance had another strong quarter in terms of both top and bottom-line results. Segment income with $656 million, up more than 60% from the prior year quarter, driven by prior year reserve development, higher net investment income, and higher underlying underwriting income. We're once again particularly pleased with the quarter's exceptionally strong underlying combined ratio of 89.2%, our best second quarter result ever. For modeling purposes, property losses for this quarter were about a point favorable to our expectations.

Speaker Change: And now, for more color on each segment's results, I'll turn the call over to Greg to begin with a discussion of business insurance.

Gregory Cheshire Toczydlowski: Business insurance had another strong quarter in terms of both top and bottom line results. Segment income was $656 million, up more than 60% from the prior year quarter, driven by prior year reserve development, higher net investment income, and higher underlying underwriting income. We're once again particularly pleased with the quarter's exceptionally strong underlying combined ratio of 89.2%, our best second quarter result ever. For modeling purposes, property losses for this quarter were about a point favorable to our expectations. Net written premiums increased 7% to an all-time second quarter high of more than $5.5 billion.

Greg: Thanks Dan. Business Insurance had another strong quarter in terms of both top and bottom line results.

Greg: Segment income was $656 million, up more than 60% from the prior year quarter, driven by prior year reserve development, higher net investment income, and higher underlying underwriting income.

Greg: We're once again particularly pleased with the quarter's exceptionally strong underlying combined ratio of 89.2%, our best second quarter result ever.

Greg: For modeling purposes, property losses for this quarter were about a point favorable to our expectations.

Greg Toczydlowski: Net written premiums increased 7% to an all-time second quarter high of more than $5.5 billion. Renewal premium change was once again historically high at 10.1%, with renewal rate change of 6.5% driving the majority of the strong pricing. Retention remained excellent at 85%, and new business was up 9% to a record quarterly high of $732 million. In terms of pricing, we're pleased to sustain strong levels of renewal premium change, which was double digits for the fifth quarter in a row. The strong pricing was broad-based, with renewal premium change in every line other than workers comp at or pretty close to double digits.

Greg: Net written premiums increased 7% to an all-time second quarter high of more than $5.5 billion.

Gregory Cheshire Toczydlowski: Renewal premium change was once again historically high at 10.1%, with renewal rate change of 6.5% driving the majority of the strong prices. Retention remained excellent at 85%, and new business was up 9% to a record quarterly high of $732 million. In terms of pricing, we're pleased to sustain strong levels of renewal premium change, which was double digits for the fifth quarter in a row. The strong pricing was broad-based, with renewal premium change in every line, other than workers' comp, at or pretty close to double-digits.

Greg: Renewal premium change was once again historically high at 10.1%.

Greg: with renewal rate change of 6.5% driving the majority of the strong pricing.

Greg: Retention remained excellent at 85% and new business was up 9% to a record quarterly high of $732 million.

Greg: In terms of pricing, we're pleased to sustain strong levels of renewal premium change, which was double digits for the fifth quarter in a row.

Greg: A strong pricing was broad-based, with renewal premium change in every line other than workers comp at or pretty close to double digits.

Greg Toczydlowski: In terms of pure renewal rate change, we're pleased that the exceptional granular execution by our field organization reflects and appropriately balances the current return profile in environmental trends for each line. In terms of sequential rate movement from the first quarter, CMP, auto, umbrella, and workers comp all increased. Umbrella and auto led the way with double-digit rate increases. Renewal rate change in our property line moderated driven by the national property business, reflecting strong returns after several years of substantial compounding rate and improvements in terms of conditions. Even with these strong pricing levels, retention was improved or flat in every line other than property, where some large accounts in our national property business in particular traded away to the subscription market this quarter on terms we weren't willing to accept.

Gregory Cheshire Toczydlowski: In terms of pure renewal rate change, we're pleased that the exceptional granular execution by our field organization reflects and appropriately balances the current return profile in terms of environmental trends for each line. In terms of sequential rate movement from the first quarter, CMP, Auto, Umbrella, and Workers' Comp all increased.

Greg: In terms of pure renewal rate change, we're pleased that the exceptional granular execution by our field organization reflects and appropriately balances the current return profile and environmental trends for each line.

Greg: In terms of sequential rate movement from the first quarter, CMP, Auto, Umbrella, and Workers' Comp all increased.

Gregory Cheshire Toczydlowski: Umbrella and Auto led the way with double-digit rate increases. Renewal rate changes in our property line moderated, driven by the national property business, reflecting strong returns after several years of substantial compounding rates and improvements in terms and conditions. Even with these strong pricing levels, retention was improved or flat in every line other than property, where some large accounts in our national property business, in particular, traded away to the subscription market this quarter on terms we weren't willing to accept.

Greg: Umbrella and Auto led the way with double-digit rate increases.

Greg: Renewal rate change in our property line moderated, driven by the national property business, reflecting strong returns after several years of substantial compounding rate and improvements in terms and conditions.

Greg: Even with these strong pricing levels, retention was improved or flat in every line other than property where some large accounts in our national property business in particular traded away to the subscription market this quarter on terms we weren't willing to accept.

Greg Toczydlowski: As for the individual businesses, in select renewal premium change was exceptionally high at 12.3%, with the renewal rate change of 5.3%, up a point and a half from the first quarter and more than two points from the second quarter of last year. Retention remained healthy, but ticked down a bit from recent periods to 83% as we begin to purposely optimize our risk-return profile in a couple of targeted geographies and classes. New business remains strong and increased 8% from the prior year quarter. We're pleased with the impact that our production product and platform initiatives are having in the marketplace and building a high-quality mix of business and driving profitable growth in this market.

Gregory Cheshire Toczydlowski: As for the individual businesses, in select, renewal premium change was exceptionally high at 12.3 percent, with renewal rate change of 5.3 percent, up a point and a half from the first quarter and more than two points from the second quarter of last year. Retention remained healthy, but ticked down a bit from recent periods to 83% as we begin to purposely optimize our risk-return profile in a couple of targeted geographies and classes. New business remains strong and increased 8% from the prior year quarter.

Speaker Change: As for the individual businesses, in select, renewal premium change was exceptionally high at 12.3%, with renewal rate change of 5.3%, up a point and a half from the first quarter and more than two points from the second quarter of last year.

Speaker Change: Retention remained healthy, but ticked down a bit from recent periods to 83% as we begin to purposely optimize our risk-return profile in a couple of targeted geographies and classes.

Speaker Change: New business remained strong and increased 8% from the prior year quarter.

Gregory Cheshire Toczydlowski: We're pleased with the impact that our production, product, and platform initiatives are having in the marketplace and building a high-quality mix of business and driving profitable growth in this market. In the middle market, renewal premium change remains strong, inconsistent with recent levels at almost 10%. Renewal rate change of 7% was up more than a point from the second quarter of last year and has now been at or around the 7% mark for the fourth consecutive quarter; retention also remains strong at 89%. New business of $383 million was the highest ever second quarter result.

Speaker Change: We're pleased with the impact that our production, product, and platform initiatives are having in the marketplace and building a high-quality mix of business and driving profitable growth in this market.

Greg Toczydlowski: In middle market, renewal premium change remains strong and consistent with recent levels at almost 10%. Renewal Rechange of 7% was up more than a point from the second quarter of last year, and that has now been at or around the 7% mark for the fourth consecutive quarter. Retention also remained strong at 89%. A new business of $383 million was the highest ever second quarter result.

Speaker Change: In middle market, renewal premium change remains strong, inconsistent with recent levels at almost 10%.

Speaker Change: We know a rate change of 7% was up more than a point from the second quarter of last year and that it's now been at or around the 7% mark for the fourth consecutive quarter.

Speaker Change: Retention also remained strong at 89%. A new business of $383 million was the highest ever second quarter result.

Greg Toczydlowski: Lastly, press off my most recent round of field visits. I couldn't be more pleased with our team's execution, ideation, energy, and enthusiastic adoption of the tools and capabilities that have come from the strategic investments we've been making. And our distribution partners were once again crystal clear about our team's value and shared many examples of how our local teams, best in the business, distinguish themselves. These trips continue to highlight for me the value of our high performing talent and training curriculums, as well as the dividends we are receiving from our investments to be the undeniable choice for the customer and an indispensable partner for our agents and brokers.

Gregory Cheshire Toczydlowski: Lastly, fresh off my most recent round of field visits, I couldn't be more pleased with our team's execution, ideation, energy, and enthusiastic adoption of the tools and capabilities that have come from the strategic investments we've been making. And our distribution partners were once again crystal clear about our team's value and shared many examples of how our local teams, the best in the business, distinguish themselves. These trips continue to highlight for me the value of our high-performing talent in training as well as the dividends we are receiving from our investments to be the undeniable choice for the customer and an indispensable partner for our agents and brokers. With that, I'll turn the call over to Jeff.

Speaker Change: Lastly, fresh off my most recent round of field visits, I couldn't be more pleased with our team's execution, ideation, energy, and enthusiastic adoption of the tools and capabilities that have come from the strategic investments we've been making.

Speaker Change: And our distribution partners were once again crystal clear about our team's value and shared many examples of how our local teams, the best in the business, distinguish themselves.

Speaker Change: These trips continue to highlight for me the value of our high-performing talent in training curriculums as well as the dividends we are receiving from our investments to be the undeniable choice for the customer and an indispensable partner for our agents and brokers.

Jeff Klein: With that, I'll turn the call over to Jeff. Thanks, Greg. Bond and Specialty posted another strong quarter on both the top and bottom lines. We generated segment income of $170 million and a strong combined ratio of 87.7%. The underlying combined ratio improved 1.7 points to a very strong 86.1%. The underlying loss ratio improved 4.1 points to an excellent 46.4%, reflecting the comparison to an elevated level of losses in the prior year quarter from a small number of surety accounts. As we discussed last quarter, the expense ratio is modestly elevated, primarily due to the Corvus acquisition.

Jeffrey Peter Klenk: Thanks, Greg. Spondin Specialty posted another strong quarter on both the top and bottom lines. We generated segment income of $170 million and a strong combined ratio of 87.7%. The underlying combined ratio improved 1.7 points to a very strong 86.1%. The underlying loss ratio improved 4.1 points to an excellent 46.4%, reflecting the comparison to an elevated level of losses in the prior year quarter from a small number of sureties. As we discussed last quarter, the expense ratio is modestly elevated, primarily due to the Corvus acquisition.

Speaker Change: With that, I'll turn the call over to Jeff.

Jeff: Thanks, Greg.

Jeff: Fondant Specialty posted another strong quarter on both the top and bottom lines.

Jeff: We generated segment income of $170 million in a strong combined ratio of 87.7%.

Jeff: The underlying combined ratio improved 1.7 points to a very strong 86.1%.

Jeff: The underlying loss ratio improved 4.1 points to an excellent 46.4%, reflecting the comparison to an elevated level of losses in the prior year quarter from a small number of surety accounts.

Jeff: As we discussed last quarter, the expense ratio is modestly elevated primarily due to the Corvus acquisition.

Jeff Klein: We expect that to continue to be the case for a few more quarters as we integrate the operation and as premiums from Corvus' attractive book of business ramp up and earn in. Turning to the top line, we grew net-written premiums by 8% in the quarter to a record high. In our high quality domestic management liability business, we again delivered excellent retention of 90% with positive renewal premium change that is generally consistent with recent quarters. We're pleased that we grew new business by nearly 60% from the prior year quarter to a record $111 million, driven by Corvus.

Jeffrey Peter Klenk: We expect that to continue to be the case for a few more quarters as we integrate the operation and as premiums from Corvus' attractive book of business ramp up and earn. Turning to the top line, we grew net written premiums by 8% in the quarter to a record high, and in our high quality domestic management liability business, we again delivered excellent retention of 90%, with positive renewal premium change that is generally consistent with recent quarters. We're pleased that we grew new business by nearly 60% from the prior year quarter to a record $111 million, driven by Corvid.

Jeff: We expect that to continue to be the case for a few more quarters as we integrate the operation and as premiums from Corvus' attractive book of business ramp up and earn in.

Jeff: Turning to the top line, we grew net written premiums by 8% in the quarter to a record high.

Jeff: and our high quality domestic management liability business, we again delivered excellent retention of 90% with positive renewal premium change that is generally consistent with recent quarters.

Jeff: We're pleased that we grew new business by nearly 60% from the prior year quarter to a record $111 million, driven by Corvus.

Jeff Klein: As a reminder, all of Corvus' production will continue to be reflected in new business through next quarter. We grew net-written premiums in our market leading surety business by a terrific 11% in the quarter, reflecting a robust construction environment and continued strong demand for our surety products and services.

Jeffrey Peter Klenk: As a reminder, all of Corva's production will continue to be reflected in new business through next quarter. We grew net written premiums in our market-leading surety business by a terrific 11% in the quarter, reflecting a robust construction environment and continued strong demand for our surety products and services. So we're pleased to have, once again, delivered strong top and bottom line results this quarter. And now I'll turn the call over to Mike. Thanks, Jeff. Good morning, everyone.

Jeff: As a reminder, all of Corva's production will continue to be reflected in new business through next quarter.

Jeff: We grew net written premiums in our market-leading surety business by a terrific 11% in the quarter, reflecting a robust construction environment and continued strong demand for our surety products and services.

Michael Klein: So we're pleased to have once again delivered strong top and bottom line results this quarter, and now I'll turn the call over to Michael.

Jeff: So, we're pleased to have once again delivered strong top and bottom line results this quarter, and now I'll turn the call over to Michael.

Michael Klein: Thanks, Jeff.

Michael Klein: Good morning, everyone. In personal insurance and excellent underlying underwriting result and strong net favorable prior reserve development from a significantly improved bottom line result relative to the prior year quarter, despite another period of elevated industry-wide catastrophe loss. The underlying combined ratio of 86.3% reflects nearly an eight point improvement compared to the prior year quarter, primarily driven by higher earned pricing in both automobile and homeowners and other. Continued strong price increases in both auto and home drove 9% growth in net written premiums. In auto, we're pleased with another quarter of improved profitability and with the underwriting fundamentals of underlying fundamentals of the business.

Michael Frederick Klein: In personal insurance, an excellent underlying underwriting result and strong net favorable prior year reserve development drove a significantly improved bottom line result relative to the prior year quarter despite another period of elevated industry-wide catastrophe losses. The underlying combined ratio of 86.3% reflects nearly an 8 point improvement compared to the prior year quarter. Primarily driven by higher-earned pricing in both automobile and homeowners, and other. Continued strong price increases in both auto and home drove 9% growth in net written premiums.

Michael: Thanks, Jeff. Good morning, everyone.

Michael: In personal insurance, an excellent underlying underwriting result and strong net favorable prior year reserve development drove a significantly improved bottom line result relative to the prior year quarter, despite another period of elevated industry-wide catastrophe losses.

Michael: The underlying combined ratio of 86.3% reflects nearly an 8-point improvement compared to the prior year quarter, primarily driven by higher earned pricing in both automobiles and homeowners and other.

Michael: Continued strong price increases in both auto and home drove 9% growth in net written premiums.

Michael Frederick Klein: In Auto, we're pleased with another quarter of improved profitability and with the underlying fundamentals of the business. The second quarter combined ratio of 97.9% improved more than 10 points compared to the prior year quarter due to a lower underlying combined ratio as well as favorable prior year development. The underlying combined ratio improved more than 8 points, driven by the benefit of higher earned pricing and, to a lesser extent, lower losses from physical damage coverage. For modeling purposes, we view roughly two and a half points of the improvement in the quarter as non-recurring.

Otto: In auto, we're pleased with another quarter of improved profitability and with the underlying fundamentals of the business.

Michael Klein: The second quarter combined ratio of 97.9% improved more than 10 points compared to the prior year quarter due to a lower underlying combined ratio as well as favorable prior year development. The underlying combined ratio improved more than eight points, driven by the benefit of higher earned pricing and, to a lesser extent, lower losses from physical damage coverages.

Otto: The second quarter combined ratio of 97.9% improved more than 10 points compared to the prior year quarter due to a lower underlying combined ratio as well as favorable prior year development.

Otto: The underlying combined ratio improved more than 8 points, driven by the benefit of higher earned pricing, and to a lesser extent, lower losses from physical damage coverages.

Michael Klein: For modeling purposes, we view roughly two and a half points of the improvement in the quarter as non-recurring. In homeowners and other, the second quarter combined ratio improved over 16 points compared to the prior year quarter, reflecting a lower underlying combined ratio as well as higher favorable prior year development. What catastrophe lost dollars were similar to the prior year quarter. They had a smaller combined ratio impact as price increases continued to benefit earned premiums. Catastrophe losses this quarter, primarily resulting from severe convective storms, again significantly exceeded long-term industry averages. The 28 PCS designated CAD events were the most ever for a second quarter, and 150% of the historical 10-year average.

Otto: For modeling purposes, we view roughly two and a half points of the improvement in the quarter as non-recurring.

Michael Frederick Klein: In homeowners and other, the second quarter combined ratio improved by over 16 points compared to the prior year quarter, reflecting a lower underlying combined ratio as well as higher favorable prior year development. While catastrophe-loss dollars were similar to the prior year quarter, they had a smaller combined ratio impact as price increases continue to benefit earned premiums. Catastrophe losses this quarter, primarily resulting from severe convective storms, again significantly exceeded long-term industry averages. The 28 PCS-designated CAD events were the most ever for a second quarter and 150% of the historical 10-year average.

Otto: In homeowners and other, the second quarter combined ratio improved over 16 points compared to the prior year quarter, reflecting a lower underlying combined ratio as well as higher favorable prior year development.

Otto: While catastrophe-loss dollars were similar to the prior year quarter, they had a smaller combined ratio impact as price increases continued to benefit earned premiums.

Speaker Change: Catastrophe losses this quarter, primarily resulting from severe convective storms, again significantly exceeded long-term industry averages. The 28 PCS-designated CAD events were the most ever for a second quarter, and 150% of the historical 10-year average.

Michael Frederick Klein: Our catastrophe losses in the quarter were consistent with our market share. And for context, our average annual cat losses over the last 5 and 10 years remain below our market share. This most recent experience will, of course, be reflected in our models going forward, and we will continue to weigh our recent experience more heavily in our ongoing process of optimizing our exposure, underwriting, and pricing. The underlying combined ratio of 77.6% improved 7.6 points, due in large part to lower-than-expected fire and non-weather water losses, as well as the benefit of earned prices.

Michael Klein: Architects' fee losses in the quarter were consistent with our market share, and for context, our average annual CAD losses over the last five and ten years remain below our market share. This most recent experience will, of course, be reflected in our models going forward, and we will continue to weigh our recent experience more heavily in our ongoing process of optimizing our exposure, underwriting, and pricing. The underlying combined ratio of 77.6% improved 7.6 points, due in large part to lower than expected fire and non-weather water losses, as well as the benefit of earned pricing.

Speaker Change: Our catastrophe losses in the quarter were consistent with our market share. And for context, our average annual cat losses over the last 5 and 10 years remain below our market share.

Speaker Change: This most recent experience will, of course, be reflected in our models going forward and we will continue to weigh our recent experience more heavily in our ongoing process of optimizing our exposure, underwriting, and pricing.

Speaker Change: The underlying combined ratio of 77.6% improved 7.6 points.

Speaker Change: Due in large part to lower-than-expected fire and non-weather water losses, as well as the benefit of earned pricing.

Michael Klein: From modeling purposes, we expect approximately five points of the improvement in the homeowners and other underlying combined ratio to be non-recuring.

Michael Frederick Klein: For modeling purposes, we expect approximately five points of the improvement in the homeowners and other underlying combined ratio to be non-recurring. Turning to production, our results reflect the ongoing execution of a granular state-by-state strategy as we balance profitability and growth across the portfolio. In the domestic automobile business, retention of 82% remains strong.

Speaker Change: For modeling purposes, we expect approximately five points of the improvement in the homeowners and other underlying combined ratio to be non-recurring.

Michael Klein: Turning to production, our results reflect the ongoing execution of a granular state-by-state strategy as we balance profitability and growth across the portfolio. In domestic automobile, retention of 82% remains strong. Renewal premium change of 15.8% continued to moderate, as anticipated. Auto renewal premium change will continue to gradually decline, reflecting the improved profitability on the line. While new business premiums were higher than the prior year quarter in many states, new business premium in aggregate was down slightly relative to the second quarter of last year. This is the result of our continued efforts to manage auto profitability and a few remaining challenge states, as well as the cross-line impact resulting from some of our property actions, particularly in high-risk cat areas.

Speaker Change: Turning to production, our results reflect the ongoing execution of a granular state-by-state strategy as we balance profitability and growth across the portfolio.

Speaker Change: In domestic automobile, retention of 82% remains strong.

Michael Frederick Klein: Renewal premium change of 15.8% will continue to moderate as anticipated, and auto renewal premium change will continue to gradually decline reflecting the improved profitability on the line. While new business premiums were higher than the prior year quarter in many states, new business premium in aggregate was down slightly relative to the second quarter of last year. This is the result of our continued efforts to manage auto profitability in a few remaining challenge states, as well as the cross-line impact resulting from some of our property actions, particularly in high-risk cat areas.

Speaker Change: Renewal premium change of 15.8%, continue to moderate as anticipated.

Speaker Change: Auto renewal premium change will continue to gradually decline, reflecting the improved profitability on the line.

Speaker Change: While new business premiums were higher than the prior year quarter in many states, new business premium in aggregate was down slightly relative to the second quarter of last year.

Speaker Change: This is the result of our continued efforts to manage auto profitability in a few remaining challenge states.

Speaker Change: as well as the cross-line impact resulting from some of our property actions, particularly in high-risk cat areas.

Michael Klein: Production results in homeowners and other reflect our focus to manage growth while improving profitability. Renewal premium change increased sequentially to 15.1%, reflecting higher rate change, while retention remains strong at 85%. We expect renewal premium change to remain at this level through a year end. As we intended, new business and policies enforced declined, reflecting our efforts to thoughtfully deploy capacity.

Michael Frederick Klein: Production results in Homeowners and Other reflect our focus to manage growth while improving profitability. Renewal premium change increased sequentially to 15.1%, reflecting higher rate changes, while retention remained strong at 85%. We expect renewal premium change to remain at this level through year-end.

Speaker Change: Production results in Homeowners and Other reflect our focus to manage growth while improving profitability.

Speaker Change: Renewal premium change increased sequentially to 15.1%, reflecting higher rate change, while retention remained strong at 85%.

Speaker Change: We expect renewal premium change to remain at this level through year-end.

Michael Frederick Klein: As we intended, new business and policies in force declined, reflecting our efforts to thoughtfully deploy capacity. To sum up, for the personal insurance segment overall, we're pleased with our progress as we continue to deliver improved profitability. We're confident that the actions we've taken and continue to take will result in a profitable, growing portfolio of personalized business over time. Now, I'll turn the call back over to Abbe.

Speaker Change: As we intended, new business and policies in force declined, reflecting our efforts to thoughtfully deploy capacity.

Michael Klein: To sum up for the personal insurance segment overall, we're pleased with our progress as we continue to deliver improved profitability. We're confident that the actions we've taken and continue to take will result in a profitable, growing portfolio of personal lines of business over time.

Speaker Change: To sum up for the personal insurance segment overall, we're pleased with our progress as we continue to deliver improved profitability.

Speaker Change: We're confident that the actions we've taken, and continue to take, will result in a profitable, growing portfolio of personal lines business over time.

Abbe Goldstein: Now I'll turn the call back over to Abbe. Thank you.

Abbe F. Goldstein: Thank you. And Operator, we're ready to open up for Q&A. Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue.

Unknown Executive: Operator, we're ready to open up for Q&A. Thank you. We will now begin the question in answer section. If you would like to ask a question, please press star one on your telephone. Keep at to raise your hand and join the Q. If you would like to withdraw that question, again, press star one. And please limit yourself to one question and a single follow-up. For any additional questions, please req.

Speaker Change: Now, I'll turn the call back over to Abbe.

Operator: If you would like to withdraw that question, again press star 1. And please limit yourself to one question and a single follow-up. For any additional questions, please re-call. Your first question comes from David Motemaden with Evercore ISI. Please go ahead. Thanks. Good morning.

Abbe: Thank you. And operator, we're ready to open up for Q&A.

Abbe: Thank you. We will now begin the question and answer session.

Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw that question, again press star 1. And please limit yourself to one question and a single follow-up. For any additional questions, please re-queue.

David Motemaden: Your first question comes from David Motimatum with Evercore ISI. Please go ahead. Thanks. Good morning. I just had a question on the moving pieces around reserves in business insurance. So just the 250 million of recent accident year umbrella charges. That comes after 100 million last quarter.

Speaker Change: Your first question comes from David Motemaden with Evercore ISI. Please go ahead.

David Kenneth Motemaden: I just had a question about business insurance. So, just the $250 million... Umbrella Charges.

David Kenneth Motemaden: Thanks, good morning. I just had a question on the moving pieces around reserves in business insurance. So just the $250 million of recent accident year umbrella charges, that comes after $100 million last quarter.

David Kenneth Motemaden: That comes after... 100 million. So I guess I'm. Some of them are puts. Hey, David, it's Dan.

David Motemaden: So I guess I'm wondering if you could just elaborate on some of the more puts and takes, and maybe give some confidence that you put this behind you after the changes you made this quarter.

David Kenneth Motemaden: So I guess I'm wondering if you could just elaborate on some of the more puts and takes and maybe give some confidence that you've put this behind you after the changes you made this quarter.

Dan Fry: David, it's Dan.

Daniel Stephen Frey: So you're right, we've seen, you know, we've seen the umbrella and the general liability lines require some strengthening in the last few quarters. As we said in prepared remarks, we think that we're being proactive in reacting early and being decisive, meaning that we're being reasonably comprehensive by reacting in a meaningful way to what we're seeing. I think the confidence we have is two pieces.

Dan Fry: So you're right. We've seen umbrella in the general liability lines require some strengthening in the last few quarters.

David Kenneth Motemaden: Hey David, it's Dan. So you're right, we've seen Umbrella and the general liability lines require some

Dan Fry: As we said in prepare remarks, we think that we're being proactive in reacting early and being decisive in meaning that we're being reasonably comprehensive by reacting in a meaningful way to what we're seeing. I think the confidence we have is two pieces. One is we are reacting both to the changes in actual versus expected and allowing for longer development factors going forward on the very recent accident years. So, for the most part, we haven't even seen these claims come in yet, but we are allowing for the fact that when claims come in, they're likely going to cost more and take longer to settle.

David Kenneth Motemaden: Some strengthening in the last few quarters.

David Kenneth Motemaden: As we said in prepared remarks, we think that we're being proactive in reacting early and being decisive in meaning that we're being reasonably comprehensive by reacting in a meaningful way to what we're seeing.

Daniel Stephen Frey: One is that we are reacting both to the changes in actual versus expected and allowing for longer development factors going forward on the very recent accident years. So, for the most part, we haven't even seen these claims come in yet, but we are allowing for the fact that when claims come in, they're likely going to cost more and take longer to settle. And then, I think importantly, the 2015 through 2020 period has held up pretty well given the actions that we have taken through the end of 2023.

David Kenneth Motemaden: I think the confidence we have is two pieces. One is we are reacting both to the changes in actual versus expected and allowing for longer development factors going forward.

David Kenneth Motemaden: on the very recent accident years. So for the most part, we haven't even seen these claims come in yet, but we are allowing for the fact that when claims come in, they're likely gonna cost more and take longer to settle.

David Motemaden: And then I think importantly, the 2015 through 2020 period has held up pretty well given the actions that we had taken through the end of 2023. Got it. Okay.

David Kenneth Motemaden: And then I think importantly the 2015 through 2020 period has held up pretty well given the actions that we had taken through the end of 2023.

David Kenneth Motemaden: Okay. And, you know, maybe also underlying loss. If I sort of adjust out the light non-capital weather this quarter and then in 2G23, there still was around, year over year, talk about, I guess, what was driving Specially given all, Lost Trends, Big, Yeah, David, it's Dan again. So I'll take that.

Dan Fry: And maybe also within business insurance, the underlying loss ratio. If I sort of adjust out the light noncat weather, this quarter, and then in 2023, there still was around 50 basis points of improvement year over year on a clean basis. Could you talk about, I guess, what was driving that improvement and, you know, especially given all these changes? Was there? and many change to lost-trend baked in there.

Speaker Change: Got it. Okay.

Speaker Change: You know, maybe also within business insurance, the underlying loss ratio, if I sort of adjust out the light non-count weather this quarter and then in 2G23,

Speaker Change: There still was around 50 basis points of improvement year over year on a clean basis.

Speaker Change: Could you talk about, I guess, what was driving that improvement? And, you know, especially given all these changes, was there any change to lost trend baked in there?

Daniel Stephen Frey: So I'll start with the second part first. So every time we have an impact on PYD, you know, we re-evaluate: is that going to have an impact on the current loss year, jump-off point, or loss trend? Now we'd said last quarter that we had added, beginning last quarter, some IBNR to the current accident year. So we'd already taken some action.

Dan Fry: It's Dan again, so I'll take that.

Dan Fry: So I'll start with the second part first. So every time we have an impact on PID, we reevaluate is not going to have an impact on current loss year, jump off point or lost-trend. We've said last quarter that we had added, beginning last quarter, some IB&R to the current accident year. So we had already taken some action. The changes that we made in PID have some carry forward impact on the umbrella line. But there's puts in takes across a variety of lines, and when you blend them all together inside of business insurance, it did not result in a big movement.

Speaker Change: It's Dan again, so I'll take that. So I'll start with the second part first. So every time we have an impact on PYD, you know, we re-evaluate, is that going to have an impact on current loss year, jump off point, or loss trend?

Speaker Change: We'd said last quarter that we had added, beginning last quarter, some IBNR to the current accident year. So we'd already taken some action.

Daniel Stephen Frey: The changes that we made in PYD have some carry forward impact on the umbrella line, but there are puts and takes across a variety of lines, and when you blend them all together inside of business insurance, it did not result in a big movement. In terms of, you know, that the overall movement in BI's underlying loss ratio, you've got the big parts; there's still some benefit from earned pricing.

Speaker Change: The changes that we made in PYD had some carry forward impact on the umbrella line.

Speaker Change: But there's puts and takes across a variety of lines, and when you blend them all together inside of business insurance, it did not result in a big movement.

Dan Fry: In terms of the overall movement in BI's underlying loss ratio, you've got the big parts. There's still some benefit from earn pricing. Greg called out the fact that property losses other than catware about a point favorable than our expectations. Other than that, in any quarter, you're going to have a half a dozen things that move favorably or unfavorably from mix to base year to the impact of re-insurance, and you're seeing the net of those things. Nothing significant in there in terms of those individual movements.

Speaker Change: In terms of the overall movement in BI's underlying loss ratio, you've got the big parts. There's still some benefit from earned pricing. Greg called out the fact that property losses, other than CAT, were about a point favorable than our expectations.

Daniel Stephen Frey: You know, Greg called out the fact that property losses other than catastrophes were about a point favorable to our expectations. Other than that, in any quarter, you're going to have a half a dozen things that move favorably or unfavorably from mix to base year to the impact of reinsurance. You're seeing the net of those things.

Speaker Change: Other than that, in any quarter, you're going to have a half a dozen things that move favorably or unfavorably from mix to base year to the impact to reinsurance, and you're seeing the net of those things. Nothing significant in there in terms of those individual movements.

David Motemaden: Thank you.

Elyse Greenspan: Here next question comes from Elise Greenspin with Wells Fargo. Please go ahead. I think so.

David Kenneth Motemaden: Nothing significant in terms of those individual movements. Thank you. Your next question comes from Elyse, with Wells Fargo; please go ahead. I think so. Good morning. My first question is on the BI pricing trend. The RRC decelerated by 40 basis points.

Speaker Change: Thank you.

Speaker Change: Your next question comes from Elyse Greenspan with Wells Fargo. Please go ahead.

Greg Toczydlowski: I'm good morning. My first question. I'm looking at the BI pricing trends, which the RRC decelerated by 40 basis points. Is that due to property given that select and middle markets did improve in the quarter?

Elyse Beth Greenspan: I think so. Good morning. My first question, I'm looking at the BI pricing trends, which

Elyse Beth Greenspan: Is that just due to property, given that select and middle markets did improve? Keep improving. At least this is Greg.

Speaker Change: The RRC decelerated by 40 basis points. Is that just due to property, given that select and middle markets did improve in the quarter?

Gregory Cheshire Toczydlowski: Good morning. Yeah, you can see in the webcast, the individual pieces of select and middle market, and select is up, and middle market is flat. And I did call out that national property is the primary driver of that slight deceleration. Okay, great. And then, you know, just going back to the umbrella.

Greg Toczydlowski: Elise, this is Greg. Good morning. Yeah, you can see in the webcast the individual pieces of select and middle market, and selected up the middle market is flat. I did call out that national property is the primary driver of that that's like deceleration. Okay, great.

Speaker Change: Hey, Elyse, this is Greg. Good morning. Yeah, you can see in the webcast the individual pieces of select and middle market, and select is up and middle market is flat, and I did call out that national property is the primary driver of that slight deceleration.

Dan Fry: And then just going back to the umbrella increase as well. You know, can you give us a sense, maybe for some more color? You know, by accident here and then, you know, maybe just a little bit more follow up on David's question, like what emerged, I guess, in the Q2 more than what you saw in the Q1 to think that you, you know, put this issue to bed that we're not going to be dealing with, you know, additional charges as we go through the balance of this year.

Speaker Change: Okay, great.

Speaker Change: And then, you know, just going back to the umbrella increase as well.

Elyse Beth Greenspan: Well, um, can you give us a sense of more color, by accident here, and then, you know, maybe just a little bit more following up on David's What emerged that, more than what you saw in the Q1, said that we're not going to be dealing with, you know, additional charges, go through the balance. Yeah, Elyse, it's Dan.

Speaker Change: Um, you know, can you give us a sense, maybe, for some more color?

Speaker Change: You know, by accident here. And then, you know, maybe just a little bit more following up on David's question, like, what emerged, I guess, in the Q2, more than what you saw in the Q1, to think that you've, you know, put this issue to bed, that we're not going to be dealing with, you know, additional charges as we go through the balance of this year?

Dan Fry: Yeah, Elise, it's, it's, it's Dan. So I think it's a pretty narrow range. We're giving you that it's three actions of ears, 21, 22, and 23. It'll really feel the need to break it apart between the three. And it's a little bit more of the same, right? Things have continued to come in a little, a little higher, whether it's attorney rep rate or severity. You know, jury awards, all of those things, lengthening of the tail. What we're, what we're doing this quarter is, again, both reacting to what did we see that came in differently than what we would have expected.

Daniel Stephen Frey: So I think it's a pretty narrow range. We're giving you that it's three accident years, 21, 22, and 23. I don't really feel the need to break it apart between those three.

Speaker Change: Yeah, Elyse, it's Dan. So I think it's a pretty narrow range we're giving you that it's...

Speaker Change: 3 accident years, 21, 22, and 23. I don't really feel the need to break it apart between the three. And it's a little bit more of the same, right? Things have continued to come in a little higher, whether it's attorney rep rate or severity.

Daniel Stephen Frey: And it's a little bit more of the same, right? Things have continued to come in a little higher, whether it's attorney's rates or severity. You know, jury awards, all of those things, lengthening of the tail.

Daniel Stephen Frey: What we're doing this quarter is again reacting to what we see that came in differently than what we would have expected and adjusting the development factors that we're going to use going forward. And that's what we mean when we say we think we're being proactive and decisive in this quarter's action. Your next question comes from the line of Rob Cox with Goldman Sachs. Please go ahead.

Speaker Change: You know, jury awards, all of those things, lengthening of the tail, what we're doing this quarter is, again, both reacting to...

Dan Fry: And adjusting the development factors that we're going to use going forward, and that that's what we mean when we say we think we're being proactive and decisive in this quarter's action. Okay.

Speaker Change: What did we see that came in differently than what we would have expected, and adjusting the development factors that we're going to use going forward, and that's what we mean when we say we think we're being proactive and decisive in this quarter's action.

Elyse Greenspan: Thank you.

Rob Cox: Your next question comes from the line of Rob Cox with Goldman Sachs. Please go ahead. Hey, thanks for taking my question. Yeah, I just wanted to ask, I'm the data surrounding the court backlogs. I thought that was interesting. The court backlogs are now resolved from the COVID shutdown. Could you give us a little more color on that? Are you referencing data for Travelers, or is that external industry data?

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Rob Cox with Goldman Sachs. Please go ahead.

Rob Cox: Hey, thanks for taking my question. Yeah, I just wanted to ask about the data surrounding the court backlogs. I thought that was interesting. The court backlogs are now resolved from the COVID shutdown.

Rob Cox: Hey, thanks for taking my question. Yeah, I just wanted to ask on the data surrounding the court backlogs, I thought that was interesting. The court backlogs are now resolved from the COVID shutdown. Could you give us a little more color on that? Are you referencing data for travelers or is that external industry data?

Alan Schnitzer: Yeah, good morning, it's Alan. That is really an evaluation of our own data. We probably have the market relevance to understand what's going on more broadly, but that's based on our view of our data. Okay, got it.

Alan David Schnitzer: Could you give us a little more color on that? Are you referencing data for travelers? Or is that external industry data? Yeah, Rob. Good morning. It's Alan.

Rob Cox: Yeah, Rob, good morning. It's Alan. That is really an evaluation of our own data. But, you know, we think we've, you know, we're probably have the market relevance to understand what's going on more broadly, but that's based on our view of our data.

Alan David Schnitzer: Yeah, that is really an evaluation of our own data. But you know, we think we've, you know, probably have the market relevance to understand what's going on more broadly, but that's based on our view of our data. Okay.

Dan Fry: The changes to reinsurance, do you expect any impacts to the combined ratio at all or the underlying combined ratio for many of the movements there?

Daniel Stephen Frey: The changes to reinsurance, do you expect any impacts to, you know, the combined ratio at all or the underlying combined ratio for many of the movements there? Robert, Stan, so not really, you know, pricing was about in line with what we would have expected and, You know, I'll just remind you that... Although costs of reinsurance might have gone up a little bit, we're getting price increases on the direct side. So the margin impact is, and will be, significant, probably, if any. Okay, great.

Speaker Change: Okay, got it.

Speaker Change: The changes to reinsurance, do you expect any impacts to the combined ratio at all or the underlying combined ratio from any of the movements there?

Dan Fry: Robert Stan, so not really pricing was about in line with what we would have expected, and I'll just remind you that although cost of reinsurance might have gone up a little bit, we're getting pricing increases on the direct side, so the margin impact is insignificant probably, if any. Okay, great, thank you.

Speaker Change: Robert, Stan, so not really, you know, pricing was about in line with what we what we would have expected and

Speaker Change: You know I'll just remind you that

Speaker Change: Although cost of reinsurance might have gone up a little bit we're getting price increases on the direct side so the margin impact is insignificant probably if any.

Greg Toczydlowski: Your next question comes from Gregory question, focus on slide eight of your PowerPoint presentation and what I'm focused on is your competitive positioning. If I look at the year-to-date top lines, adults kind of seem movements that I'm surprised by, I guess, seeing national accounts, gross messages did 100-to-date, it seems like it's counterintuitive. You expect the larger account business to be more competitive and then select the middle market. Kind of anticipate maybe that to be higher growth areas for you from a net premium-written perspective, so maybe you can provide some colors on that topic.

Rob Cox: Thank you. Your next question comes from Gregory Peters with Raymond James. Please go ahead. Good morning, everyone.

Speaker Change: Okay, great. Thank you.

Speaker Change: Your next question comes from Gregory Peters with Raymond James. Please go ahead.

Gregory Cheshire Toczydlowski: I'd like, for my first question, focus on slide eight of your PowerPoint presentation. And what I'm focused on is your competitive positioning. If I look at the year-to-date top line results, I'm kind of seeing some movements. So Greg, it's Dan. I'll start, and maybe Greg will chime in.

Gregory Cheshire Toczydlowski: Good morning, everyone.

Gregory Cheshire Toczydlowski: I'd like to, for my first question, focus on slide 8 of your PowerPoint presentation. And what I'm focused on is your competitive positioning. If I look at the year-to-date top line results,

Speaker Change: Kind of seeing some movements that I'm surprised by, I guess, seeing national accounts grow as much as they did on a day-to-day basis, kind of.

Speaker Change: It seems like it's counterintuitive. You expect the larger account business to be more competitive. And then on the select and middle market,

Speaker Change: I kind of anticipate maybe that to be higher growth areas for you from a net premium written perspective.

Dan Fry: So Greg, it's Dan. I'll start, and maybe Greg will chime in. So national accounts on a relative basis in terms of its contribution to business insurance in total, not the biggest piece, in its large accounts. So how many you retain, you could lose one account in a quarter, and that has a big impact on retention. You could write one new, big new piece of business that's going to change the premium base. So I'd say two things about national accounts. One, we're really happy with the profitability of that book. Two, I'm not surprised to see the variability given one that's a relatively small base and that two of the accounts themselves tend to be big.

Speaker Change: So maybe you can provide some colors on that topic.

Speaker Change: So, Greg, it's Dan. I'll start and maybe Greg will chime in. So, national accounts, you know, on a relative basis, in terms of its

Daniel Stephen Frey: So, national accounts, you know, on a relative basis, in terms of its contribution to business insurance and total not the biggest piece, and it's large accounts. So how many you retain, you know, you could lose one account in a quarter, and that has a big impact on retention. You could write one new, big new piece of business that's gonna change the premium base. So I'd say two things about national accounts. One, we're really happy with the profitability of that book.

Greg: contribution to business insurance and total

Greg: Not the biggest piece.

Greg: and it's large accounts, so how many you retain.

Greg: You could lose one account in a quarter and that has a big impact on retention. You could write one new...

Greg: Big new piece of business that's going to change the premium base. So, I'd say two things about national accounts. One, we're really happy with the profitability of that book.

Daniel Stephen Frey: Two, I'm not surprised to see the variability given one, that it's a relatively small base and that, two, the accounts themselves tend to be big. In terms of select and middle, look, we love the performance of both of those businesses. Greg did make comments in his script about some refinement of the way we're thinking about underwriting in small commercial. Middle market, you know, margins are really good, 8% growth. We're very happy with how we focused on the balance of retention and price where we need it. But I don't know, Greg, anything to add to that?

Greg: Two, I'm not surprised to see the variability given, one, that it's a relatively small base and that two, the accounts themselves tend to be big.

Greg Toczydlowski: In terms of selecting middle, we love the performance of both of those businesses. Greg did make comments in his script about some refinement of the way we're thinking about underwriting in small commercial. Middle market, margins are really good, 8% growth. We're very happy on how we focused on the balance of retention and price where we needed. But I don't know, Greg; anything to add to that?

Greg: In terms of select and middle, look, we love the performance of both of those businesses. Greg did make comments in his script about some refinement of the way we're thinking about underwriting.

Greg: Small commercial middle market, you know margins are really good eight percent growth. We're very happy on

Greg: How we focused on the balance of retention and price where we need it, but

Gregory Cheshire Toczydlowski: Yeah, Greg, maybe just start with the bigger picture, the total business. 7% is a really good result given the attractive margins in this business right now. And you pointed out some of the individual business units. When you look at them from quarter to quarter, a number of items can have some level of variation, including booking lags, reinsurance processing, and things that Dan just referenced. But in terms of the aggregate results, I'd point you to the closest as they are, the quarter to year to date. I'd point you to the year to date number as that's a better indicator of how we're feeling about the top line of the business right now.

Greg Toczydlowski: Yeah, Greg, maybe just start with the bigger picture of the total business. Seven percent is a really good result given the attractive margins in this business right now. And you pointed out some of the individual business units. When you look at them from quarter to quarter, a number of items can have some level of variation, including booking lags, reinsurance processing, things that Dan just referenced. But in terms of the aggregate results, I'd point you as close as they are the quarter to year to date. I'd point you to the year-to-date number. Is that the better indicator of how we're feeling about the top line of the business right now?

Greg: I don't know, Greg, anything to add to that? Yeah, Greg, maybe just start with the bigger picture, the total business. Seven percent, so a really good result given the attractive margins in this business right now. And you pointed out some of the individual business units. When you look at them from quarter to quarter, a number of items can have some level of variation, including booking lags.

Greg: Reinsurance Processing, things that Dan just referenced, but you know in terms of the aggregate results I'd point you as close as they are, the quarter to year to date, I'd point you to the year to date number as that's a better indicator of how we're feeling about the top line of the business right now.

Michael Klein: Fair enough. I guess for my follow-up question, I'm going to pivot to the personal insurance segment. Michael, I appreciate your comments about the challenge to the states and trying to get positioned the right positioning and pricing for your auto product. One of the largest and most visible peers seems to be really gaining share at this moment in time in the personal auto space.

Greg: Fair enough. I guess for my follow-up question, I'm going to pivot to the personal insurance segment. And, you know, Michael, I appreciate your comments about

Michael: challenged states and trying to get the right positioning and pricing for your auto product. You know, one of the largest and most visible peers seems to be really.

Michael Klein: And I guess when I look at your policy for the first count going down, both in the first and second quarter, I'm just curious if you think your competitive positioning in personal auto is consistent with what's going on in the marketplace. Greg, I think it's a great question. I would say to your point about, is it consistent with what's going on in the marketplace? It's interesting; the one peer you're talking about is the one peer with those results, not everybody else, inclusive of us. So I would take a step back, first of all, and say certainly kudos to them and the results they're generating and the success that they're having.

Speaker Change: We're gaining share at this moment in time in the personal auto space, and I guess when I look at your policy for enforced count going down, you know, both in the first and second quarter, I'm just curious if you think

Speaker Change: Your competitive positioning in personal auto is...

Speaker Change: is consistent with what's going on in the marketplace.

Gregory Cheshire Toczydlowski: Yeah, Greg, I think it's a great question. I would say, you know, to your point about is it consistent with what's going on in the marketplace? It's interesting, the one peer you're talking about is the one peer with those results, not everybody else, including us.

Speaker Change: Yeah, Greg, I think it's a great question. I would say, you know, to your point about is it consistent with what's going on in the marketplace,

Speaker Change: It's interesting, the one peer you're talking about is the one peer with those results.

Michael Frederick Klein: So I would take a step back, first of all, and say, certainly, you know, kudos to them and the results they're generating and the success that they're having. But it's really not us who are the outliers. And then underneath that, I think, again, I tried to detail it for you, we are having success in the geographies that I'll say are the ones that aren't noisy. Um, and generating new business growth in those places where we like the auto margins and we're not impacted by some of the property actions, number one. That growth is, if you just look at the auto line by itself, being hampered by those challenged geographies.

Speaker Change: not everybody else inclusive of us. So I would take a step back, first of all, and say certainly, you know, kudos to them and the results they're generating and the success that they're having. But it's really not us who's the outlier.

Michael Klein: But it's really not us who are the outlier. And then underneath that, I think again, I tried to detail it for you. We are having success in the geographies that I'll say are the ones that aren't noisy. And generating new business growth in those places where we like the auto margins and we're not impacted by some of the property actions. Number one, that growth is, if you just look at the auto line by itself, being hampered by those challenged geographies. And then I also think that it's important to think about the differences in our strategy and our book of business when you look at our auto growth numbers.

Speaker Change: and generating new business growth in those places where we like the auto margins and we're not impacted by some of the property actions, number one.

Speaker Change: That growth is, if you just look at the auto line by itself, being hampered by those challenged geographies.

Michael Frederick Klein: And then I also think that it's important to think about the differences in our strategy and our book of business. When you look at our auto growth numbers, right, we are predominantly a package writer of personal lines of business. The competitor that's growing auto is not predominantly a package writer of personal lines business. And when you look at the challenge geographies from a property standpoint and you look at the independent agent channel... What you find in the marketplace is that in many of those geographies, in order to write the property, the carrier is insisting on also writing the auto.

Speaker Change: And then I also think that it's important to think about the differences in our strategy and our book of business.

Michael Klein: We are predominantly a package writer of personal lines business. The competitor that's growing auto is not predominantly a package writer of personal lines business. And when you look at the challenge geographies from a property standpoint and you look at the independent agent channel, what you find in the marketplace is that, in many of those geographies, in order to write the property, the carrier is insisting on also writing the auto. And so if you are a competitor that's less dependent on auto business that brings property with it, you're not as challenged by those marketplace dynamics in those high-risk property geographies.

Speaker Change: When you look at our auto growth numbers, right, we are predominantly a package writer of personal lines of business.

Speaker Change: The competitor that's growing auto is not predominantly a package writer or a personal lines business.

Speaker Change: And when you look at the challenge geographies from a property standpoint, and you look at the independent agent channel, what you find in the marketplace is that in many of those geographies, in order to write the property,

Michael Frederick Klein: And so, if you are a competitor that's less dependent on the auto business that brings property with it, you're not as challenged by those marketplace dynamics in those high-risk property geographies. So I think those are some of the things that explain the differences.

Speaker Change: The carrier is insisting on also writing the auto and so if you are a competitor that's less dependent on auto business that brings property with it

Speaker Change: You're not as challenged by those marketplace dynamics in those high-risk property geographies. So those are I think those are some of the things that that explain the differences. But again I would come back and say we're very pleased with our ability to generate auto new business growth.

Michael Klein: So those are some of the things that explain the differences. But again, I would come back and say we're very pleased with our ability to generate auto new business growth in the places where we're not challenged by those factors. The other thing is if you were to look underneath the new business growth numbers, first of all, you can see in aggregate auto new business growth is much better than property new business growth. And particularly in those challenges geographies from a property standpoint. Our auto-new business is down, but it's not down nearly as much as the property new business in those geographies.

Alan David Schnitzer: But again, I would come back and say we're very pleased with our ability to generate auto new business growth in the places where we're not challenged by those factors. The other thing is, if you were to look underneath the new business growth numbers, first of all, you can see in aggregate, auto new business growth is much better than property new business growth, and particularly in those challenged geographies from a property standpoint.

Speaker Change: in the places where we're not challenged by those factors.

Speaker Change: The other thing is, if you were to look underneath the new business growth numbers, first of all, you can see, in aggregate, auto new business growth is much better than property new business growth, and particularly in those challenged geographies from a property standpoint.

Alan David Schnitzer: Our auto new business is down, but it's not down nearly as much as the property new business in those geographies. And Greg, I would just point out at a very high level that Michael points out some distinguishing characteristics of our personal insurance business. There are some significant benefits from that business model.

Greg: Our auto new business is down, but it's not down nearly as much as the property new business in those geographies. And Greg, I would just point out at a very high level, Michael points out some distinguishing characteristics of our personal insurance business. There are some significant benefits from that business model. I mean, obviously...

Alan Schnitzer: And Greg, I would just point out, at a very high level, Michael points out some distinguishing characteristics of our personal insurance business. There are some significant benefits from that business model. I mean, obviously, it's having the impact it's having on growth, but there's some significant offsetting benefits to that business model. And we're well on the way to sorting this out.

Greg: It's having the impact it's having on growth, but there are some significant offsetting benefits to that business model, and we're well on the way to sorting this out.

Jimmy Bueller: Thank you very much for the detailed answers. Here next question comes from the line of Jimmy Bueller with J.P. Morgan. Please go ahead. Hey, good morning. So first just had a question on just your cat losses given changes we've seen in the insurance market the last year and a half. Should we assume that you're going to be absorbing higher levels of cats going forward, or is the high number that you posted this quarter, same quarter last year as well, more of a function of the type of events?

Greg: Got it. Thank you very much for the detailed answers.

Alan David Schnitzer: I mean, obviously, it's having the impact it's having on growth, but there are some significant offsetting benefits to that business model, and we're well on the way to sorting this out. Your next question comes from Jimmy Bhullar, with J.P. Morgan. Please go ahead. Hey, good morning. So first, just had a question on your cat losses. Given the changes we've seen in the reinsurance market over the last year, should we assume that you're gonna be absorbing higher levels of gas going forward, or is the number that you posted this quarter, same quarter last year as well, more of a function of the type of events? Yeah, Jimmy, it's Dan.

Greg: Your next question comes from the line of Jimmy Buhler with JP Morgan. Please go ahead.

Jimmy Buehler: Hey, good morning. So first, just had a question on

Jimmy Buehler: Just your cat losses, given changes we've seen in the reinsurance market the last year and a half, should we assume that you're gonna be absorbing higher levels of cats going forward, or is the high number that you posted this quarter, same quarter last year as well, more of a function of the type of events we've seen?

Dan Fry: Yeah, Jimmy, it's Dan. So if you look at the reinsurance detail, we gave at the January 1 renewals and now again at July 1 renewals, we're not really holding on to more. We tend to buy more tail coverage on big cat events. The attachment points have gone up, but the attachment points have gone up naturally as a result of the growth in the premium base and the growth of the insured values. So what's coming through our net result is not really any impact from less use of reinsurance.

Jamminder Singh Bhullar: So, you know, if you look at the reinsurance detail we gave at the January one renewals and now again, it's July one renewals, we're not really holding on to more. You know, we tend to buy more tail coverage on big cat events. The attachment points have gone up, but the attachment points have gone up naturally as a result of the growth in the premium base and the growth of the insured values. What's coming through our net result is not really any impact from Bless Use of Ranger. Okay, and then, just for Michael, can you talk about this person?

Jimmy Buehler: Yeah, Jimmy, it's Dan. So, you know, if you look at the reinsurance detail we gave at the January 1 renewals and now again at July 1 renewals, we're not really holding on to more.

Jimmy Buehler: We tend to buy more tail coverage on big cat events. The attachment points have gone up, but the attachment points have gone up naturally as a result of the growth in the premium base and the growth of the insured values.

Jimmy Buehler: What's coming through our net result is not really any impact from...

Michael Klein: And then just for Michael, can you talk about just personal competitor behavior in the personal auto line, both in terms of pricing and then advertising spending by some of the larger peers. I would say, in terms of pricing, we continue to see renewal premium changes and price changes working their way into books of business across the industry, similar to what we're seeing. I do think it's important when you look at our renewal premium change number, though, to distinguish between what's coming through renewal premium change and the rate that's being filed for go forward business. Like what you're looking at when you look at our renewal premium change number and many renewal premium change numbers across the industry is the lag, the fact of the rate that's already been taken.

Speaker Change: Bless Use of Reinsurance

Speaker Change: And then just for Michael, can you talk about competitor behavior in the personal auto line, both in terms of pricing and then advertising spending by some of the larger peers?

Daniel Stephen Frey: personal auto line, both in terms of pricing and then advertising spending by some of the larger, Sure, Jimmy. I would say in terms of pricing, we continue to see, you know, renewal premium changes and price changes working their way into books of business across the industry, similar to what we're seeing. I do think it's important when you look at our renewal premium change number, though, to distinguish between what's coming through the renewal premium change and the rate that's being filed for go-forward business, right?

Jimmy Buehler: Sure, Jimmy.

Jimmy Buehler: I would say in terms of pricing...

Jimmy Buehler: You know, we continue to see...

Jimmy Buehler: You know, renewal premium changes and price changes working their way into books of business across the industry, similar to what we're seeing. I do think it's important when you look at our renewal premium change number, though, to distinguish between what's coming through renewal premium change.

Daniel Stephen Frey: What you're looking at when you look at our renewal premium change number and many renewal premium change numbers across the industry is the lagged effect of the rate that's already been taken. When we look at filing activity for ourselves and for others, we see a much less significant amount of rate filing this time this year than you would have seen this time last year.

Jimmy Buehler: and the rate that's being filed for go-forward business, right? What you're looking at when you look at our renewal premium change number and many renewal premium change numbers across the industry is the lagged effect of the rate that's already been taken.

Michael Klein: When we look at filing activity for ourselves and for others, you see a much less significant amount of rate filing this time this year than you would have seen this time last year. And so again, what you're seeing in renewal premium change in auto is the lagged impact of that.

Jimmy Buehler: When we look at filing activity for ourselves and for others, you see a much less significant amount of rate filing this time this year than you would have seen this time last year. And so again, what you're seeing in renewal premium change in auto is the lagged impact of that.

Michael Frederick Klein: And so again, what you're seeing in the renewal premium change in auto is the lagged impact of that. In terms of your question about advertising, certainly, we see increased advertising amongst some of our competitors who are big advertisers across the industry. In marketplaces where we bid for demand, where we bid for leads, we see the prices of those leads going up.

Michael Klein: In terms of your question about advertising, certainly we see increased advertising among some of our competitors who are big advertisers across the industry. In marketplaces where we bid for demand or we bid for leads, we see the prices of those leads going up. That's reflective of that increased advertising spend and that increased appetite for leads, but I think that both of those things, I think, demonstrate that what you're seeing is improved profitability in auto across the industry and pivot towards profitable growth very consistent with the conversation and the messaging that we're sharing.

Jimmy Buehler: In terms of your question about advertising, certainly we see increased advertising.

Jimmy Buehler: Amongst some of our competitors who are big advertisers across the industry.

Jimmy Buehler: In marketplaces where we bid for demand, where we bid for leads, we see the prices of those leads going up. That's reflective of that increased advertising spend and that increased...

Michael Frederick Klein: That's reflective of that increased advertising spend and that increased appetite for leads. But I think that both of those things demonstrate that what you're seeing is improved profitability in the auto industry across the industry and a pivot towards profitable growth very consistent with the conversation and the messaging that we're sharing. Your next question comes from the line of Joshua Shanker with Bank of America. Please go ahead. Yeah, thank you very much.

Jimmy Buehler: Appetite for Leads but I think that those both of those things I think demonstrate that what you're seeing is improved profitability in auto across the industry and a pivot towards profitable growth very consistent with the conversation and the messaging that we're sharing.

Michael Klein: Thank you.

Joshua Shanker: Your next question comes from the line of Joshua Shanker with Bank of America. Please go ahead. Yeah, thank you very much. I guess for Michael, you know, you're right to point out that the property declines are greater than the auto declines.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Joshua Shanker with Bank of America. Please go ahead.

Joshua David Shanker: I guess for Michael, you know, you're right to point out that the property declines are greater than the auto. I'm wondering if you can talk about whether there are non-renewals of customers who you no longer want given their geography, or whether it's pricing actions that are driving those customers away. When we look at the policy count changes in homeowners, uh, what's driving, Sure, Josh. The biggest driver of the policy count decline in homeowners is the reduction in new business.

Joshua David Shanker: Yeah, thank you very much. I guess for Michael, you know, you're right to point out that the property

Michael Klein: I'm wondering if you can talk about whether there's non-renewals of customers who you no longer want given their geographies or whether it's pricing that action that are driving those customers away. When we look at the policy count changes in homeowners, what's driving them? Sure, Josh. The biggest driver of the policy count decline in homeowners is the reduction in new business. You see where the retention holding relatively steady. And so, for the most part, new business production being down is what's driving the PIS decline. I'll also say that it's sort of consistent with my comments earlier.

Joshua David Shanker: declines are greater than the auto declines. I'm wondering if you can talk about whether

Joshua David Shanker: There's non-renewals of customers who you no longer want given their geographies or whether it's pricing actions that are driving those customers away. When we look at the policy count changes in homeowners, what's driving them?

Joshua David Shanker: Sure, Josh. The biggest driver of the policy count decline in homeowners is the reduction in new business.

Michael Frederick Klein: You see the retention holding relatively steady, and so for the most part, new business production being down is what's driving the PIF decline. I'll also say that, sort of consistent with my comments earlier, the new business reduction in the CAT challenge states is down more significantly than the new business reduction you see in the production highlights as we work to manage the distribution of our property exposure. There is some limited non-renewal activity that I would say is really twofold.

Josh: You see with the retention holding relatively steady And so for the most part New business production being down is what's driving the PIF decline

Michael Klein: The new business reduction in the cat challenge states is down more significantly than the new business reduction you see in the production highlights. As we work to manage the distribution of our property exposure, there is some limited non-renewal activity that I would say is really twofold. One is normal course, good hygiene, evaluating the worst performing risks in the portfolio and taking action on them. The other is some targeted non-renewal as again as we manage the geographic distribution of our exposures and manage growth in some higher concentration, higher cat geographies. But again, those actions are all intentional, and the new business reductions, as I said in my prepared remarks, really are as intended as part of our efforts to improve profitability.

Speaker Change: I'll also say that, sort of consistent with my comments earlier,

Speaker Change: The new business reduction in the CAT challenge states is down more significantly than the new business reduction you see in the production highlights.

Speaker Change: As we work to manage the distribution of our property exposure...

Speaker Change: There is some limited non-renewal activity that I would say is

Michael Frederick Klein: One is, of course, good hygiene, evaluating the worst performing risks in the portfolio and taking action on them. The other is some targeted non-renewals, again, as we manage the geographic distribution of our exposures and manage growth in some higher-concentration, higher-cat geographies. But again, those actions are all intentional.

Speaker Change: Really twofold. One is normal course, good hygiene, evaluating the worst performing risks in the portfolio and taking action on them.

Speaker Change: The other is some targeted non-renewals, again, as we manage the geographic distribution of our exposures and manage growth in some higher concentration, higher-cat geographies.

Michael Frederick Klein: And the new business reductions, as I said in my prepared remarks, really are as intended as part of our efforts to improve profitability. And then a quick question on catastrophe, quite a decade in terms of cadastral losses. While you've made changes over time, you were. Transcribed by https://otter.ai. A broken clock is right twice a day.

Speaker Change: But again, those actions are all intentional and the new business reductions, as I said in my prepared remarks, really are as intended as part of our efforts to improve profitability.

Josh Shanker: And then a quick question on catastrophe has been a quite a decade in terms of catastrophe losses. While you've made changes over time, you were cat management friends from pretty consistent. You liked the risk, and you only have protection really at the top of very extreme events. A broken clock is right today in the high end of 2020, but looking at the last 10 years, has the cat program at Travelers been the most efficient use of your capital. And when you revisit that, this is exactly what we need to do for the next 10 years.

Speaker Change: And then a quick question on catastrophe. It's been a quite a decade in terms of catastrophe losses.

Speaker Change: While you've made changes over time, your cap management program has been pretty consistent. You like the risk and you only have protection really at the top for very extreme events.

Joshua David Shanker: Looking at the last 10 years, has the CAP program asked Travelers been the most efficient use of your capital, and when you revisit that, is this exactly what we need to do for the next 10 years? Josh, I think we're very comfortable with being a net underwriter. We think that we've got the data, the analytics, and the culture to manage this the right way. And you can't expect a reinsurer to take on losses without conveying a margin to them.

Speaker Change: A broken clock is right twice a day and hindsight is 20-20, but looking at the last 10 years, has the CAP program at Travelers been the most efficient use of your capital? And when you revisit, say that this is exactly what we need to do for the next 10 years?

Alan Schnitzer: Josh, I think we're very comfortable with being a net underwriter. We think that we've got the data, the analytics, the culture to manage this the right way. And you can't expect to reinsure to take on losses without conveying a margin to them. And so when we look at the strength of our underwriting, we think that there's a real advantage for us in being largely a net underwriter. Thank you very much.

Speaker Change: Josh, I think we're very comfortable with being a net underwriter. We, you know, we think that we've got the data, the analytics, the culture to manage this the right way.

Speaker Change: And you can't expect a reinsurer to take on losses without conveying a margin to them. And so when we look at the strength of our underwriting, we think that there's a real advantage for us in being largely a net underwriter.

Joshua David Shanker: And so when we look at the strength of our underwriting, we think that there's a real advantage for us in being largely a net underwriter. Thank you very much. Thank you. Your next question comes from the line of Ryan Tunis with Autonomous Research.

Ryan Tunis: Thank you. Your next question comes from the line of Ryan Tunis with Autonomous Research. Please go ahead. Hey, thanks. Good morning. First question, a couple of parts.

Speaker Change: Thank you very much. Thank you.

Speaker Change: Your next question comes from the line of Ryan Tunis with Autonomous Research. Please go ahead.

Ryan James Tunis: Please go ahead. Thanks. Good morning.

Ryan James Tunis: First question, a couple of parts. First of all... I guess with what you're seeing an umbrella, is it safe to assume that the underlying cause of a lot of those losses you're seeing is mostly. The second part. I remember what, years ago, in 2019.

Ryan James Tunis: Hey, thanks. Good morning. First question, a couple parts on casualty.

Ryan Tunis: I guess what you're seeing in umbrella is it is it's safe to assume that the underlying cause of a lot of those losses you're seeing is mostly auto related. That's the first part, and then the second part I remember like six years ago in 2019 you guys experienced some of this earlier than others. It's just something about you know your small middle market you're writing lower limit that there's a little bit less of a tail, so just a nature your business kind of experiences some of the inflationary impacts you've seen from 2021 to 2023 faster.

Speaker Change: First of all,

Ryan James Tunis: I guess with what you're seeing in Umbrella, is it safe to assume that the underlying cause of a lot of those losses you're seeing is mostly auto-related? That's the first part.

Daniel Stephen Frey: You guys experienced some of this earlier than others. Is there something about your small middle market, your writing lower limit, that there's a little bit less of a tail, the nature of your business, kind of experiences some of the inflationary impacts we've seen from 2020. Hey, Ryan, let me start there.

Speaker Change: The second part, I remember like six years ago in 2019, you guys experienced some of this earlier than others. Is there something about...

Speaker Change: your small middle market, you're writing lower limits, that there's a little bit less of a tail.

Speaker Change: Just the nature of your business.

Speaker Change: Kind of experiences some of the inflationary impacts we've seen from 2021 to 2023 faster.

Ryan Tunis: Hey Brian, let me start there. So, in terms of what we're saying, no, it's not actually a predominantly auto issue. This is a combination of economic inflation and social inflation driving claim activity into the umbrella line. In short, economic inflation sort of speaks for itself. Social inflation: it's an aggressive plaintiffs' bar, it's third-party litigation funding, it's, you know, sympathetic jurors. It's the exact same constellation of factors we've been talking about, just a little bit more pronounced. In terms of our ability to see it sooner, I don't honestly don't think it's a function of our book of business or our limits or anything else.

Daniel Stephen Frey: So, in terms of what we're saying, no, it's not actually a predominantly auto issue. This is, this is a combination of economic inflation and social inflation driving claim activity into the umbrella line, in short, and economic inflation sort of speaks for itself. It's an aggressive plaintiffs bar, it's third-party litigation funding, it's, you know, a sympathetic jury, it's, it's the exact same constellation of factors we've been talking about, just a little bit more pronounced.

Speaker Change: Hey, Ryan, let me start there. So in terms of what we're seeing, no, it's actually not a predominantly auto issue.

Speaker Change: This is a combination of economic inflation and social inflation driving claim activity into the umbrella line, in short. Economic inflation sort of speaks for itself. Social inflation...

Speaker Change: It's an aggressive plaintiff's bar. It's third-party litigation funding. It's, you know, sympathetic juries. It's the exact same constellation of factors we've been talking about, just a little bit more pronounced.

Daniel Stephen Frey: In terms of our ability to see it sooner, I honestly don't think it's a function of our book of business or our limits or anything else. I think it's a function of our data, our analytics, and, really importantly, our culture. We've got a culture that looks for this, that sees it.

Speaker Change: In terms of our ability to see it sooner, I honestly don't think it's a function of our book of business or our limits or anything else.

Dan Fry: I think it's a function of our data or analytics and really importantly our culture. We've got a culture that looked for this, that sees it. We've got a very, very important and very valuable feedback among our claims professionals, our pricing actuaries, our reserving actuaries, and our underwriters that can put together a story very, very quickly. And it's actually competitive advantages. As you know, Dan highlighted in his prepared remarks the ability to sharpen a view of loss costs very, very early in the life of immature long tail lines is a huge advantage. It's the difference on whether you're subject to adverse adverse selection or inflicting adverse selection.

Speaker Change: I think it's a function of our data, our analytics, and really importantly, our culture. We've got a culture that looks for this, that sees it.

Daniel Stephen Frey: We've got a very, very important and very valuable feedback loop among our claims professionals, our pricing actuaries, our reserving actuaries, and our underwriters who can put together a story very, very quickly. And it's actually a competitive advantage, as Dan highlighted in his prepared remarks. The ability to sharpen a view of lost costs very, very early in the life of immature, long-tail lines is a It's the difference between whether you're subject to adverse selection or inflicting adverse selection. And we think, you know, this positions us very well. Again, it's very, very early. These years are predominantly IBNR.

Speaker Change: We've got a very, very important and very valuable feedback loop among our claims professionals, our pricing actuaries, our reserving actuaries, and our underwriters that can put together a story very, very quickly.

Speaker Change: And it's actually a competitive advantage.

Speaker Change: Highlighted in his prepared remarks, the ability to sharpen a view of lost costs very, very early in the life of immature, long-tail lines is a huge advantage. It's the difference on whether you're subject to adverse selection or inflicting adverse selection.

Dan Fry: And we think you know this positions is very well against very very early. These years are predominantly IBNR and, and our you know the returns that we're looking at in those years actually continues to be very attractive. So like I get the interest in it believe me we're interested in it too, but our ability to see this and react to it really is a competitive advantage for travelers.

Speaker Change: And we think, you know, this positions us very well. Again, it's very, very early. These years are predominantly IBNR.

Daniel Stephen Frey: And our, you know, the returns that we're looking at in those years actually continue to be very attractive. So I get the interest in it. Believe me, we're interested in it, too. But our ability to see this and react to it really is a competitive advantage for travel.

Speaker Change: And our, you know, the returns that we're looking at in those years actually continues to be very attractive. So, like, I get the interest in it. Believe me, we're interested in it, too. But our ability to see this and react to it really is a competitive advantage for travelers.

Dan Fry: Got it then I guess just to follow up I think Greg mentioned lower attention select the counseling heard the word geography is I mean the extent that you are seeing elevated canton commercial lines I'd be curious if you guys think you are. Is that more of a small commercial issue, or if not, is it kind of more middle market or national count? Yeah, we're not seeing cats disproportionately across any of the business units in business insurance, and it's just our normal good housekeeping and selected that we're going through and looking at the book of business and understanding parts of it where we need to get a better risk return profile. And you know, certainly aren't going to share the individual geographies as that's market sensitive, but that's what's going on underneath that statement.

Ryan James Tunis: Then I guess just to follow up. I think Greg mentioned lower retention. I've heard the word "G-I-N-G-I-N-G-I-N-G," which is, I mean, to the extent that you are seeing elevated cats in commercial lines, I'd be curious if you guys think... Um, is that more of a small commercial issue? Or if not, more of a middle market. Hey Ryan,

Speaker Change: Got it. Then I guess just a follow-up.

Speaker Change: I think Greg mentioned lower retention and select accounts. I heard the word geography.

Speaker Change: is

Speaker Change: To the extent that you are seeing elevated counts in commercial lines, I'd be curious if you guys think you are. Is that more of a small commercial issue or if not, is it more middle market or national account?

Gregory Cheshire Toczydlowski: Yeah, we're not seeing cuts disproportionately across any of the business units in business insurance. And it's just our normal good housekeeping and selective selection that we're going through and looking at the book of business and understanding parts of it where we need to get a better risk return profile. And folks certainly aren't going to share the individual geographies as that's market sensitive, but that's what's going on underneath that statement. It's the kind of optimizing we do in every business every day. I understand. Thank you. Thank you. Your next question comes from Brian Meredith with UBS. Please go ahead.

Speaker Change: Hey Ryan, this is Greg. Yeah, we're not seeing cuts disproportionately across any of the business units in business insurance.

Ryan James Tunis: And it's just our normal good housekeeping and selected that we're going through and looking at the book of business.

Ryan James Tunis: understanding parts of it where we need to get a better risk return profile and you know folks certainly aren't going to share the individual geographies as that's market sensitive but that's what's going on underneath that statement. It's it's it's the kind of optimizing we do in every business every day.

Dan Fry: It's it's it's it's a kind of optimizing we do in every business every day.

Ryan Tunis: Understood. Thank you, thank you.

Brian Meredith: Your next question comes from Brian Meredith with UBS. Please go ahead. Hey, thanks. Now, a couple of questions here. First one, there was some legislation in Florida. I guess it passed in June that talked about Medicare reimbursement rates to doctors. It'll affect workers comp. I'm just curious if you could maybe talk a little bit about how that would have come up, you know, pricing and, you know, lost cost severity trends. And is that something you seek? Are we continuing throughout the US?

Speaker Change: Understood, thank you.

Speaker Change: Thank you.

Speaker Change: Your next question comes from Brian Meredith with UBS. Please go ahead.

Brian Robert Meredith: Hey, thanks. A couple of quick questions here. First one, there was some legislation in Florida, I guess, that passed that talked about Medicare reimbursement rates to doctors.

Brian Robert Meredith: Hey, thanks Alan. A couple quick questions here. First one, there was some legislation in Florida, I guess it passed in June , that talked about Medicare reimbursement rates to doctors. It'll affect workers comp. I'm just curious if you could maybe talk a little bit about how that...

Daniel Stephen Frey: It'll affect workers comp. I'm just curious if you could maybe talk a little bit about how that, you know, pricing and lost cost severity trends and is that something you see continuing throughout the U.S.? Brian, what I would say about the workers comp loss trend is that, you know, we continue to book it based on a long-term basis, and frequency and severity both continue to emerge favorable to our expectations.

Speaker Change: would have, you know, pricing and, and, you know, lost cost severity trends. And is that something you see continuing throughout the U.S.?

Dan Fry: Brian, what I would say about workers comp, lost trend, is that, you know, we continue to look at based on long-term basis and frequency and severity, both continue to emerge favorable to our expectations. So there's nothing we're seeing out there that's, you know, necessarily adversely impacting that perspective, but, you know, we've got a lot of things going on here. It's a long-tailed line, and we're going to have a lot of respect for the duration of the liability. And Brian, in terms of any specific state change that you mentioned, you know, our product managers are looking at that at the state level.

Speaker Change: Brian , what I would say about workers' comp loss trend is that, you know, we continue to book it based on long-term basis and frequency and severity both continue to emerge favorable to our expectations. So, there's...

Daniel Stephen Frey: So there's nothing we're seeing out there that's necessarily adversely impacting that perspective, but, you know, it's a long tail line, and we're going to have a lot of respect for the duration of the liability. And Brian, in terms of any specific state change that you mentioned, our product managers are looking at that at the state level. They're estimating what some of the bills and changes are, and you know, we factor that in the pricing over time as we see those trends come in. So if there's a new regulation out there and we think it's meaningful, we certainly are going to take an estimate on that and how it plays out in the marketplace. Thanks.

Brian Robert Meredith: There's nothing we're seeing out there that's, you know, necessarily...

Brian Robert Meredith: Adversely impacting that perspective, but, you know, it's a long tail line and we're going to have a lot of respect for the duration of the liability. And Brian , in terms of any specific state change that you mentioned, you know, our product managers are looking at that at the state level, they're estimating what some of the bills

Dan Fry: They're estimating what some of the bills and changes are. And, you know, we factor that in the pricing over time as we see those trends come in. So if there's a new reg out there and we think it's meaningful, we certainly are going to take an estimate at that, and I'll place out in the marketplace.

Brian Robert Meredith: and changes are and you know we factor that in the pricing over time as we see those trends come in so if there's a new reg out there and we think it's meaningful we certainly are going to take an estimate at that and how it plays out in the marketplace.

Dan Fry: A terrific thanks. And Alice, second question is, you all have seen some great growth in your, you know, E&S capabilities, and clearly seems like you're building those out. I'm just curious; you know, you've typically been known as kind of the largest standard commercial line to admit a market player, you know, in the US. You know, why kind of use the sudden change, we're not sudden change, but the kind of gradual change and strategy here tour more focus on the E&S markets. And do you think this continues here for the travelers that E&S will become a larger and larger percentage of your overall call a commercial business mix?

Daniel Stephen Frey: And Alice, the second question is, you all have seen some great growth in your ENS capabilities, and clearly, it seems like you're building those out. I'm just curious, you know, you've typically been known as kind of the larger company in the US, you know, why kind of the sudden change, or not sudden change, but that kind of gradual more focus on the E&S markets, and do you think this will continue here for the travelers, that E&S will become, or I'll call it, commercial? So, Brian, we are predominantly a standard lines writer, and we will continue to be that for the foreseeable future.

Alan: Terrific. Thanks. And Alan, second question is, you all have seen some great growth in your E&S capabilities, and clearly it seems like you're building those out. I'm just curious, you know, you've typically been known as kind of the largest standard commercial lines admitted market player, you know, in the U.S. You know, why kind of the sudden change, or not sudden change, but the kind of gradual change in strategy here at Tor?

Speaker Change: more focus on the E&S markets and do you think this continues here for the travelers that E&S will become a larger and larger percentage of your overall called commercial business mix?

Dan Fry: I would, so Brian, we are predominantly a standard lines writer, and we will continue to be that for the foreseeable future. We're not changing any stripes here. And we've had substantial E&S capability for a very long time. So, you know, for a long time, a lot of our national property business has been written on E&S paper. We've got our North Field E&S business. We've got our Lloyd's business; some of what we do in our bond and specialty business is written on E&S paper. So, it's been a capability that we've had for a long time. And there have been, there have been eds and flows of business in and out of the E&S for a long time.

Brian Robert Meredith: So Brian , we are predominantly a standard lines writer and we will continue to be that for the foreseeable future. We're not changing any stripes here and we've had substantial ENS capability for a very long time.

Alan David Schnitzer: We're not changing any stripes here, and we've had substantial E&S capability for a very long time. So, you know, for a long time, a lot of our national property business has been written on E&S paper. We've got our Northfield E&S business. We've got our Lloyds business. Some of what we do in our bond and specialty business is written on E&S paper.

Speaker Change: You know, for a long time, a lot of our national property business has been written on ENS paper. We've got our Northfield.

Speaker Change: E&S Business

Speaker Change: We've got our Lloyd's business, some of what we do in our bond and specialty business is written on E&S papers, so it's been a capability that we've had for a long time.

Alan David Schnitzer: So it's been a capability that we've had for a long time, and there have been ebbs and flows of business in and out of E&S for a long time. And so, you know, part of this is what's been flowing into it and our ability to capture it. In addition, as we've seen an attractive ENS opportunity, we've leaned into it a little bit. So think what we did with Fidelis and our acquisition of Corvus, and those have been contributors too.

Speaker Change: There have been ebbs and flows of business in and out of E&S for a long time, and so part of this is what's been flowing into it and our ability to capture it.

Dan Fry: And so, you know, part of this is what's been, you know, flowing into it and our ability to capture it. In addition, as we've seen an attractive E&S opportunity, we've leaned into it a little bit. So, think, think what we've done with Fidelis and our acquisition of Corvus. And those have been contributors too. So, you know, this isn't a changing of stripes by any stretch of the imagination, but there's an opportunity out there, and we're participating in it at very attractive margins.

Speaker Change: In addition, as we've seen an attractive ENS opportunity, we've leaned into it a little bit. So think what we've done with Fidelis and our acquisition of Corvus.

Alan David Schnitzer: So, you know, this isn't a changing of strides by any stretch of the imagination, but there's an opportunity out there, and we're participating in it at very attractive margins. Great, helpful, thank you. Thank you. Your next question comes from Meyer Shields with KBW. Please go ahead. Great, thanks, and good morning.

Speaker Change: and those have been contributors too so you know this this isn't a changing of strides by any stretch of the imagination but but there's an opportunity out there and we're participating in it at at very attractive margins.

Brian Meredith: Great, helpful.

Meyer Shields: Thank you. Your next question comes from Mayor Shields with KBW. Please go ahead. Great, thanks. And good morning. I guess first question.

Speaker Change: Great. Helpful. Thank you. Thank you.

Speaker Change: Your next question comes from Meyer Shields with KBW. Please go ahead.

Meyer Shields: I guess the first question, I'm not sure who this is best sent to. Does the Supreme Court overturning the Chevron doctrine impact exposure? I don't really know how to answer that, to be honest, Mayor, and we'll see over time whether there's any significant impact at all from Chevron. I mean, I hesitate to speculate on that at all, and maybe it depends on, you know, who the regulators are in place and how that changes from one administration to the next.

Alan Schnitzer: and I'm not sure who this is best sent to, but does the Supreme Court overturning the Chevron doctrine have that impact exposure for various casualty lines? I don't really know how to answer that, to be honest, mayor, and we'll see over time whether there's any significant impact at all from Chevron. I mean, I hesitate to speculate on that at all, and maybe it depends on who the regulators are in place and how that changes from one administration to the next. But I'm trying to decide whether I want to answer this off top of my head or not because it's not something that we've really run our hands over.

Meyer Shields: Great, thanks, and good morning. I guess first question, I'm not sure who this is best sent to, but does the Supreme Court's overturning the Chevron doctrine, how does that impact exposure for various casualty lines?

Meyer Shields: I don't really know how to answer that, to be honest, Mayor, and we'll see over time whether there's any significant impact at all from Chevron.

Speaker Change #100: I mean, I hesitate to speculate on that at all, and maybe it depends on, you know, who the regulators are in place and how that changes from one administration to the next, but...

Meyer Shields: I'm trying to decide whether I want to answer this off the top of my head or not, because it's not something that we've really wrung our hands over, but... If you imagine that regulatory activity is a contributor to loss activity, the impact of that decision on the Chevron document, you'd expect, might be a good guy, frankly. But I think it's too early for us to make that call.

Speaker Change #101: I'm trying to decide whether I want to answer this off the top of my head or not, because it's not something that we've really wrung our hands over.

Alan Schnitzer: But if you imagine that regulatory activity is a contributor to loss activity, the impact of that decision on the Chevron document you'd expect might be a good guy, frankly, but I think it's too early for us to make that call.

Speaker Change #101: If you imagine that regulatory activity is a contributor to loss activity, the...

Speaker Change #102: The impact of that decision on the Chevron document, you'd expect, might be a good guy, frankly. But I think it's too early for us to make that call.

Michael Klein: Okay, sure enough, the second question, I guess this is from Michael.

Michael Klein: When you look at the sort of potential outcomes for non-catastrophe weather and catastrophe losses, do you think of those as being inversely related or unrelated? Mayor, I think it depends on the quarter. The non-CAT weather in personal insurance, sometimes we'll see a benefit because much of the weather gets classified as a cat. That actually was the case in the second quarter of last year. That was less so the case this year. When we talked about the underlying result this quarter, I talked about the fact that it was really fire and non-weather water losses just to put a point on it and really didn't talk about non-CAT weather because in this quarter we had both elevated catastrophes and we had about what we expected from a non-CAT weather standpoint.

Speaker Change #102: Okay, fair enough. The second question, I guess this is for Michael, when you look at the sort of

Michael: Potential outcomes for non-catastrophe weather and catastrophe losses, do you think of those as being inversely related or unrelated?

Alan David Schnitzer: Mayor, I think it depends on the quarter, you know, the non-cat weather in personal insurance. Sometimes we'll see a benefit because much of the weather gets classified as a cat. That actually was the case in the second quarter of last year. But that was less so the case this year.

Michael: Mayor, I think it depends on the quarter. You know, the non-CAT weather...

Speaker Change #103: in personal insurance.

Speaker Change #104: Sometimes we'll see a benefit because much of the weather gets classified as a cat. That actually was the case in the second quarter of last year.

Michael Frederick Klein: When we talked about the underlying result this quarter, I talked about the fact that it was really fire and non-weather water losses, just to put a point on it, and really didn't talk about non-capital weather, because in this quarter, we really had both elevated catastrophes. And we had about what we expected from a non-CAT weather standpoint. So, in some cases, you'll see a little bit of an inverse relationship, depending upon the sort of the footprint of the weather and how significant the events are. But they're not always inversely related or directly related, for that matter.

Speaker Change #105: That was less so the case this year. When we talked about...

Speaker Change #106: You know, the underlying result this quarter, I talked about the fact that it was really fire and non-weather water losses, just to put a point on it, and really didn't talk about non-cat weather, because in this quarter...

Speaker Change #106: It really, we had both elevated non-catastrophes.

Speaker Change #106: And we had about what we expected from a non-cat weather standpoint. So in some cases you'll see a little bit of an inverse relationship depending upon...

Michael Klein: In some cases, you'll see a little bit of an inverse relationship depending upon the footprint of the weather and how significant the events are, but they're not always inversely related or directly related, for that matter. It was a little bit of a factor for us in business insurance, not huge, but it did have that impact this quarter. So when we do think about our weather, obviously we're managing it as one, but there's a lot of what we would report favorably or unfavorably in small weather that you would see in the catastrophe line as some of our peers.

Speaker Change #106: Sort of the footprint of the weather and how significant the events are, but they're not always inversely related

Michael Frederick Klein: Yeah, I mean, it was a little bit of a factor for us this quarter in business insurance. Not huge, but it, you know, it did have that impact this quarter. And, you know, so when we do think about our weather, obviously, we're, you know, managing it as one, but, you know, there's a lot of what we would report favorably or unfavorably in small weather that you would see in the catastrophe line of some of our peers. Okay. Your next question comes from Mike Zaremski with BMO. Please go ahead. Hey, thanks. Good morning.

Speaker Change #106: [inaudible]

Speaker Change #106: You know, so when we do think about our weather, obviously we're, you know, we're managing it as one, but, you know, there's a lot of what we would report favorably or unfavorably in small weather that you would see in the catastrophe line as some of our peers.

Michael Klein: Okay, that's perfect.

Michael Klein: Thank you so much.

Mike Zermanski: Your next question comes from Mike Zermanski with BMO. Please go ahead. Thanks, good morning. Just stepping back and thinking about the competitive environment in commercial lines, maybe a little more focused on business insurance, but maybe not. You know, would you expect? Current pricing power trends and maybe for the industry to kind of be stable, or would you expect to have an upward sloping trend if indeed, Travelers is kind of ahead of the others in terms of being proactive on lost trends, especially on the casualty side. I think we're going to try very hard not to give outlook on pricing, but I will say that from here we would expect renewal price change continued to be positive and strong, and in particular driven by casualty.

Speaker Change #107: Okay, that's perfect. Thank you so much.

Speaker Change #108: Your next question comes from Mike Zaremski with BMO. Please go ahead.

Michael David Zaremski: I'm just, you know, stepping back and thinking about the competitive environment in commercial lines, maybe a little more focused on business insurance, but maybe not. Would, you know, would you expect, Pricing Power, https://www.youtube.com? Indeed, Travelers is kind of ahead of others. Proactive. Lost Trends Especially.

Michael David Zaremski: Hey, thanks. Good morning. Just, you know, stepping back and thinking about the

Michael David Zaremski: The competitive environment in commercial lines, maybe a little more focused on business insurance, but maybe not, you know, would, you know, would you expect current

Speaker Change #110: Pricing power trends and maybe for the industry to kind of be stable.

Speaker Change #110: or would you expect kind of an upward sloping trend?

Speaker Change #111: If indeed, you know, Travelers is kind of ahead of the, of others.

Speaker Change #112: in terms of.

Speaker Change #112: of, you know, being proactive on

Speaker Change #112: on lost trends, especially on the casualty side.

Daniel Stephen Frey: You know, Mike, I think we're going to try very hard not to give an outlook on pricing, but I will say that, from here, we would expect renewal price change to continue to be positive and strong, and in particular driven by casualty. Now, whether that means up a little bit or down a little bit, you know, in one line or another, I don't really know. But I would say we expect it to remain relatively strong. You know, there's a lot of uncertainty out there, and, you know, you've heard from others about their experience on the casualty lines.

Speaker Change #112: You know, Mike, I think we're going to try very hard not to give outlook on pricing, but I...

Speaker Change #113: I will say that, you know, from here, we would expect renewal price change to continue to be positive and strong, and in particular, driven by...

Dan Fry: Now whether that means up a little bit or down a little bit in one line or another, I don't really know, but I would say we expected to remain relatively strong. There's a lot of uncertainty out there, and you've heard from others about their experience in the casualty lines. As we look at the schedule P's, honestly, we expect there to be more of that coming from the industry. When we look at our position relative to the industry position, we would expect there to be more coming from the industry. So I would say positive and strong, particularly driven by casualty.

Michael David Zaremski: Casualty, now whether that means up a little bit or down a little bit, you know, in one line or another, I don't really know, but I would say we...

Michael David Zaremski: Expected to remain relatively strong, you know, there's there's a lot of uncertainty out there and

Speaker Change #114: You know, you've heard from others about their experience in the casualty lines. As we look at the Schedule P's, honestly, we expect there to be more of that coming from the industry. You know, when we look at our position relative to the industry position, we would expect there to be more coming from the industry. So I would...

Michael David Zaremski: As we look at the Schedule P's, honestly, we expect there to be more of that coming from the industry. You know, when we look at our position relative to the industry position, we would expect there to be more coming from the industry. So I would say positive and strong, particularly driven by casualty. Quick follow-up, and I wish there was a live transcript.

Speaker Change #114: I would I would say positive and strong particularly driven by casualty.

Mike Zermanski: Got it, and quick follow-up. I wish there was a live transcript.

Daniel Stephen Frey: There's not because of this, this global, http://www.globalonenessproject.org, had remarks that were. I'm going to talk about kind of underlying profitability, is there, can you, you know, can you unpack what, what was the, what was the... investors, are you trying to tell us to focus kind of more on the underlying loss ratio and, what, what that, No, Mike. So thanks for listening. I think that the main gist was sort of, there was a period of time where underlying underwriting income was at a pretty steady level. And It was a long period of time.

Dan Fry: There's not because of this global IT issue, but I feel Dan, you made some prepared remarks that were a bit longer and talked about kind of underlying profitability and consistency. Can you unpack what was the message you were trying to convey to us and investors? Are you trying to tell us to focus kind of more on the underlying loss ratio and less on the kind of PYD levels, or am I just misunderstanding what you meant by that? No, Mike, so thanks for listening. I think the main just was sort of, there was a period of time where underlying underwriting income was a pretty steady level.

Speaker Change #115: Got it.

Speaker Change #115: Quick follow-up, and I wish there was a live transcript. There's not because of this this global IT issue, but um, I feel Dan you made some prepared remarks that were were a bit longer and you talked about kind of underlying

Speaker Change #116: Profitability and consistency, is there, can you, you know, can you unpack what was the, what was the message you were trying to convey to us and investors? Are you trying to tell us to focus kind of more on

Speaker Change #117: The underlying loss ratio and less on kind of PYD levels or am I just misunderstanding what you meant by that?

Speaker Change #117: You know, Mike, so thanks for listening. I think that the main gist was sort of...

Speaker Change #118: There was a period of time where underlying, underwriting income was a pretty steady level. And it was a long period of time, and that was a period of time when written premium growth was sort of ticking around low single digits for a fair amount of time.

Dan Fry: It was a long period of time, and that was a period of time when written premium growth was sort of ticking around low single digits for a fair amount of time. And then when we started to accelerate the rate of top line growth, again around 2016, and did it at consistent margins, the point was that’s just translated into a much bigger base of pretty reliable underlying underwriting income. We can't quite go so far as to say it's just going to come in like the tide. But you look at the last five years where, before 2020, we'd never reached $2 billion in after-tax underlying underwriting income.

Daniel Stephen Frey: And that was a period of time when written premium growth was sort of ticking around low single digits for a fair amount of time. And then when we started to... Accelerate the rate of top-line growth again around 2016, and do it at consistent margins. The point was, that just translated into a much bigger base of pretty reliable underlying underwriting income. You can't quite go so far as to say it's just going to come in like the tide, but you look at the last five years where, before 2020, we'd never reached $2 billion in after-tax underlying underwriting income.

Speaker Change #118: And then when we started to

Speaker Change #118: accelerate the rate of top-line growth again around 2016.

Speaker Change #118: that and did it at consistent margins the point was that's just translated into a much bigger base

Speaker Change #118: of pretty reliable underlying underwriting income. You can't quite go so far as to say it's just going to come in like the tide, but you look at the last five years where we, before 2020, we'd never reached $2 billion in after-tax underlying underwriting income.

Daniel Stephen Frey: We crossed $2 billion in 2020 and stayed there. Then we crossed $3 billion in 2023, and in the first half of the year, we're up 30-something percent compared to that. I sometimes think that people don't think of us as having grown, but really, the underlying earnings power of the franchise is just in a completely different ballpark than it was five or six years ago. And that's the important point, Mike.

Dan Fry: We crossed $2 billion in 2020 and stayed there. Then we crossed $3 billion in 2023, and in the first half of the year we're up 30-something percent compared to that. I sometimes think that people don't think of us as having grown, but really the underlying earnings power, the franchise, is just in a completely different ballpark than it was five or six years ago. And that's the important point, Mike. When you look at the various things that impact the bottom line, underlying underwriting income has been a much bigger, much more reliable contributor to that.

Speaker Change #118: We crossed $2 billion in 2020 and stayed there, then we crossed $3 billion in 2023, and in the first half of the year, we're up 30-something percent compared to that. So...

Speaker Change #118: I sometimes think that people don't think of us as having grown, but really the underlying earnings power of the franchise is just in a completely different ballpark than it was five or six years ago. And that's the important point, Mike, when you look at the various things that impact the bottom line...

Daniel Stephen Frey: When you look at the various things that impact the bottom line, underlying underwriting income has been a much bigger, much more reliable contributor to that. And when you think about the earnings power of the travelers, that's an important contributor, and well, I'll leave it at that. And we have time for one more question, and that question comes from Bob Hwang with Morgan Stanley. Please go ahead.

Michael David Zaremski: Underlying, underwriting income has been a much bigger, much more reliable contributor to that. And when you think about the earnings power of the travelers, that's an important contributor and, well, I'll leave it at that.

Dan Fry: And when you think about the earnings power of the travelers, that's an important contributor, and I'll leave it at that.

Brian Meredith: Thank you. And we have time for one more question. And that question comes from Bob Wang with Morgan Stanley. Please go ahead. Great. Thank you. Just maybe on workers' comp a little bit. Obviously, California's benchmark rate decreased by 2%. As we think about more and more people go back to work, the cost of medical insulation going up.

Bob Hwang: Great. Thank you, workers comp a little bit, Obviously, California. As we think about more and more people going back to work, the cost of medical inflation is going up. Can you maybe talk about the dynamics between your pricing, your severity, as well as your frequency, and how we should think about the 300 million this quarter and then also just the overall book on work? It's a lot there, Bob, and I'm not, honestly, I'm not sure what the question is. The workers' comp book continues to be extraordinarily attractive.

Michael David Zaremski: Thank you.

Speaker Change #119: And we have time for one more question. And that question comes from Bob Huang with Morgan Stanley . Please go ahead.

Jian Huang: Great. Thank you. Just maybe on workers' comp a little bit.

Jian Huang: Obviously California's benchmark rate decreased by 2%. As we think about more and more people go back to work, cost of medical inflation going up, can you maybe talk about the dynamics between your...

Dan Fry: Can you maybe talk about the dynamics between your pricing, your severity as well as your frequency and how we should think about the 300 million relief this quarter, and then also just the overall reserving position for the book on workers comp. I'm not sure what the question is. The workers comp book continues to be extraordinarily attractive. We are the market leader and very good at it. We like the business. We like the returns. We feel great about the balance sheet position.

Speaker Change #121: your pricing, your severity, as well as your frequency, and how we should think about the $300 million release this quarter, and then also just the overall reserving position for the book on workers' comp.

Speaker Change #122: So a lot there, Bob, and I'm not, honestly, I'm not sure what the question is.

Jian Huang: The workers' comp book continues to be extraordinarily attractive. We are the market leader and very good at it. We like the business. We like the returns.

Daniel Stephen Frey: We are the market leader and very good at it. We like the business. We like the returns. We feel great about the balance sheet position. I mean, if there's a specific question there, let me know so we can be responsible. Yeah, yeah, sorry, maybe it got cut off.

Dan Fry: I mean, if there's a specific question there, let me know so we can be responsive. Yeah, sorry, maybe it got caught up. I'm just trying to get a better understanding of just given where the rates are given where medical cost installations are going, which is increased right and given that frequency or at least from the fact that more and more people are going back to the office, should we expect frequency to go up should we expect severity to go up from here. How do you think about after you take the 300 million dollars of workers comp reserve release this quarter, how should we think about just the ongoing reserve position of that book.

Speaker Change #123: We feel great about the balance sheet position. I mean, if there's a specific question there, let me know so we can be responsive.

Bob Hwang: I'm just trying to get a better deal given where the rates are, given where medical costs are going, which have increased, right? And given that frequency, or at least from the fact that more and more people are going back to the office. Should we expect frequency to go up? Should we expect severity to go up? And how do you think about after you take the $300 million in Workers' Comp Reserve? Quarter. How should we think about just the ongoing book?

Speaker Change #124: Yeah, yeah, sorry, maybe it got cut off. I'm just trying to get a better understanding of...

Speaker Change #124: [inaudible]

Speaker Change #125: Should we expect frequency to go up? Should we expect severity to go up from here? How do you think about after you take the $300 million of workers' comp reserve release this quarter, how should we think about just the ongoing reserve position of that book? That's where I'm trying to get to.

Daniel Stephen Frey: That's where we've had favorable developments in the workers comp line for many, many, many quarters now. And, and I don't know what it's going to be next quarter or the quarter after that, but I can tell you that we continue to feel positively about the balance sheet reserves sitting behind the workers comp book in terms of frequency and severity. Look, frequency has been on a long-term secular decline.

Dan Fry: That's where I'm trying to get to. Yeah, so I mean we've had favorable development in the workers comp line for many, many, many quarters now, and I don't know what it's going to be next quarter or the quarter after that, but I can tell you that we continue to feel positively about the balance sheet. It's going to be reserves sitting behind the workers' comp book in terms of frequency and severity. Look, frequency has been on a long-term secular decline, and again, we're not going to project where that's necessarily going, but it's been on a long-term secular decline that, you know, the pandemic and the work from home that's followed it is probably too early to make a call on it.

Speaker Change #126: Yeah, so I mean we've had favorable development in the workers comp line for many many many quarters now And and I don't know what it's going to be next quarter or the quarter after that But I can tell you that we continue to feel positively about the balance sheet

Speaker Change #126: reserves sitting behind the workers' comp book. In terms of frequency and severity, look...

Speaker Change #126: Frequency has been on a long-term secular decline.

Daniel Stephen Frey: And, again, we're not going to project where that's necessarily going, but it's been on a long-term secular decline that, you know, the pandemic and the work-from-home that's followed it. It's probably too early to make a call on it, but, you know, at the margins, that's probably been positive. And, you know, if people came back to work and it ticked up a little bit, that wouldn't be particularly troubling for us, because as we think about where frequency and severity go from here, as we've always done, given the duration of the liability, we are very respectful of those two things.

Speaker Change #126: And, again, we're not going to project where that's necessarily going, but it's been on a long-term secular decline that, you know, the

Speaker Change #126: The pandemic and the work from home that's followed it...

Dan Fry: But, you know, at the margins, that's been probably positive. And, you know, if people came back to work and it ticked up a little bit, that wouldn't be particularly troubling for us because, as we think about where frequency and severity go from here, as we've always done, given the duration of the liability, we are very respectful of those two things. And so we continue to book frequency and severity as if it's going to go back to long-term trends. And so we feel fine about the line and where lost trend is and where it could go.

Speaker Change #126: It's probably too early to make a call on it, but, you know, at the margins, that's been probably positive. And, you know, if people came back to work and it ticked up a little bit, that wouldn't be particularly troubling for us, because as we think about where frequency and severity go from here...

Speaker Change #126: As we've always done, given the duration of the liability, we are very respectful of those two things. And so we continue to book frequency and severity as if it's going to go back to long-term trends.

Daniel Stephen Frey: And so we continue to book frequency and severity as if it's going to go back to long-term trends. And so we feel fine about the line and where the lost trend is and where it could go. Okay, I got it.

Speaker Change #126: And so, we feel fine about the line and where lost trend is and where it could go.

Michael Klein: Okay, got it. If I can just sneak into the last one revolve around that New Jersey homeowner price, I know that pricing was up significantly. Just curious what's the rationale about the New Jersey's homeowner pricing increase. If there's any, you're asking about New Jersey homeowner pricing increases? Yes, sir. I mean pricing in homeowners broadly is up, driven by rates. New Jersey's actually been a challenging place from the homeowner's pricing standpoint, and it's one of the reasons we're actually dramatically shrinking the book of business in that state. And it's really driven by the loss environment. So, you know, New Jersey's been, again, a challenging environment from the loss standpoint, and the regulatory challenges there are really the driver of our need to shrink that book.

Bob Hwang: If I can, at the last one revolves around that New Jersey homeowner price. I know that pricing was up. Just curious, what's the rationale about that? Homeowner Pricing Increase, if there is any. Are you asking about New Jersey homeowner price increases? Yes, sir. Um, I mean, pricing for homeowners broadly is up driven by rates. New Jersey has actually been a challenging place from a homeowner's pricing standpoint. And it's one of the reasons we're actually dramatically shrinking the book of business in that state.

Speaker Change #127: Okay, got it. If I can just sneak in the last one, revolving around that New Jersey homeowner price. I know that pricing was up significantly. Just curious, what's the rationale about the New Jersey's homeowner pricing increase, if there is any?

Speaker Change #128: You're asking about New Jersey homeowner price increases?

Speaker Change #129: Yes, sir.

Speaker Change #130: I mean, pricing in homeowners broadly is up driven by rate.

Speaker Change #131: New Jersey has actually been a challenging place from a homeowner's pricing standpoint and it's one of the reasons we're actually dramatically shrinking the book of business in that state.

Bob Hwang: And it's really driven by the legal environment. So, you know, New Jersey has been, again, a challenging environment from a legal standpoint. And the regulatory challenges there are really the driver of our need to shrink that book. If we could get approval for the rate that we think we need, then we'd be happy to write business there. But right now, regulatory dysfunction is a significant challenge.

Speaker Change #131: Um, and it's really driven by the law environment. So, um, you know, New Jersey's been, again, a challenging environment from a law standpoint, and the regulatory challenges there are really the driver of our need to shrink that book.

Michael Klein: If we could get approval for the rate that we think we need, then we'd be happy to write business there, but right now the regulatory dysfunction is a significant challenge. Really appreciate that. Thank you very much.

Speaker Change #131: If we could get approval for the rate that we think we need, then we'd be happy to write business there. But right now, the regulatory dysfunction is a significant challenge.

Speaker Change #132: Really appreciate that. Thank you very much.

Unknown Executive: And that concludes our question-and-answer session.

Alan David Schnitzer: I really appreciate that. Thank you very much. Thank you. And that concludes our question and answer session. I will now turn the conference back over to Ms. Abbe Goldstein for closing. Thank you very much for joining us. And, as always, if there's any follow-up, please feel free to reach out to Investor Relations. Have a good day. This concludes today's conference call. Thank you for your participation, and you may now

Speaker Change #133: And that concludes our question and answer session. I will now turn the conference back over to Ms. Abbe Goldstein for closing comments.

Abbe Goldstein: I will now turn the conference back over to Ms. Ivy Goldstein for closing comments. Thank you very much for joining us. And, as always, if there's any follow-up, please feel free to reach out to a Master Relations. Have a good day.

Abbe F. Goldstein: Thank you very much for joining us and as always if there's any follow-up please feel free to reach out to Investor Relations. Have a good day.

Unknown Executive: This concludes today's conference call. Thank you for your participation, and you may now disconnect.

Abbe F. Goldstein: And this concludes today's conference call. Thank you for your participation and you may now disconnect.