Q4 2024 Travelers Companies Inc Earnings Call

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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 investors section on our website and now I'd like to turn the call over to Alan Schnitzer.

Alan Schnitzer: Thank you Abby good morning, everyone and thank you for joining us today.

Alan Schnitzer: Before we begin I want to take a moment to acknowledge the tragic wildfires that have devastated communities across Los Angeles.

Alan Schnitzer: Our Hearts go out to everyone affected those who've lost their homes businesses and was tragically their loved ones.

Alan Schnitzer: At times like these words alone are of course not enough.

Alan Schnitzer: As a company rooted in the communities. We serve we will be there for our customers and neighbors to support them as they recover and rebuild.

Alan Schnitzer: We've assessed impacted areas to aerial imagery and they'd like contact with the substantial majority of our customers with claims.

Alan Schnitzer: Enabling us to expedite claim payments.

Alan Schnitzer: In addition, our expert claim teams on the ground, we're grateful for their efforts.

Alan Schnitzer: We also have mobile claim office is positioned in the area where customers can file a claim in person or receive an advanced claimed claimed payment.

Alan Schnitzer: And we look forward to working with policymakers in California. It make sure. The state has a resilient insurance market going forward.

Alan Schnitzer: Now, let me turn to our fourth quarter and full year 2024 results were.

Alan Schnitzer: We're very pleased to report that for the full year core income was up 64% to more than $5 billion or $21.58 per diluted share generating core return on equity of 17, 2%.

Alan Schnitzer: These results were driven by strong fundamentals growth in earned premiums excellent underwriting profitability and a higher level of net investment income.

Alan Schnitzer: That combination makes for a powerful earnings engine and that momentum is at our backs as we enter 2025.

Alan Schnitzer: Turning to our fourth quarter results. We are very pleased to have generated exceptional top and bottom line results.

Alan Schnitzer: Income for the quarter, a $2 $1 billion was a record.

Alan Schnitzer: Net earned premiums increased 9% to $10 $9 billion and the combined ratio improved two six points to 83, 2%.

Alan Schnitzer: The improvement in the combined ratio was driven by very strong underlying profitability and higher net favorable prior year Reserve development.

Alan Schnitzer: The underwriting margins were strong in all three segments.

Combined ratio in business insurance improved by more than a point to an excellent 85, 2%.

Alan Schnitzer: The combined ratio in a bond and specialty business was a very strong 82, 7%.

Alan Schnitzer: And the combined ratio in personal insurance improved more than six points to an exceptional 87%.

Alan Schnitzer: These terrific segment results led to a reported consolidated combined ratio improved two six points to 83, 2%.

Alan Schnitzer: Okay.

Alan Schnitzer: Turning to investments after tax net investment income for the full year was up 21% to $3 billion.

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Alan Schnitzer: Driven by strong and reliable returns from our growing fixed income portfolio and higher returns from our non fixed income portfolio.

Alan Schnitzer: These results together with our strong balance sheet enabled us to grow adjusted book value per share by 13% during the year to $139.04.

Alan Schnitzer: After making important investments in our business and returning more than $2 billion of excess capital to shareholders.

Alan Schnitzer: Turning to the topline to continued terrific marketplace execution across all three segments.

Alan Schnitzer: Grew net written premiums during the year by 8% more than $43 billion.

Alan Schnitzer: And in the quarter by 7% to $10 $7 billion.

Alan Schnitzer: The strong value proposition that we offer to our customers and distribution partners along with outstanding execution by our colleagues in the field contributed to our top line success.

Alan Schnitzer: In business insurance, we grew net written premiums in the quarter by 8% to $5 4 billion.

Alan Schnitzer: Renewal premium change in this segment remained very strong at nine 6%, including renewal rate change of six 9%.

Alan Schnitzer: Retention also remained strong at 85%.

Alan Schnitzer: The combination of strong pricing and excellent retention reflects our deliberate and granular execution and then generally disciplined marketplace.

Alan Schnitzer: In bond and specialty insurance net written premiums by 7% to $1 $1 billion.

Alan Schnitzer: Excellent retention of 88% and our high quality management liability business.

Alan Schnitzer: And our market, leading surety business, we grew net written premiums by 19%.

Alan Schnitzer: We are very pleased to have generated terrific production results across our commercial segments, where margins continue to be attractive.

Alan Schnitzer: That includes our E&S offerings, where we grew net written premiums by 13% in 2024.

Alan Schnitzer: In personal insurance, we grew net written premiums in the quarter by 7% to $4 $3 billion driven.

Alan Schnitzer: Driven by continued strong renewal premium change, particularly in our homeowners business.

Alan Schnitzer: As we wrap up the year I'd like to take a few minutes to reflect on our 2024 results and put them into an overtime context.

Alan Schnitzer: As we've shared we are and have been focusing our investments on three strategic innovation priorities.

First extending our advantage in risk expertise.

Alan Schnitzer: Second providing great experiences for our customers distribution partners and employees.

Alan Schnitzer: Third optimizing productivity and efficiency.

Alan Schnitzer: These investments are designed in large part to position us to grow over time at leading returns.

Alan Schnitzer: The successful execution of that strategy has been an important contributor to our strong results.

Alan Schnitzer: Finding us with the financial resources that enable us to continue investing at scale.

Alan Schnitzer: Which we believe will increasingly be a different differentiator in this industry.

It's a virtuous cycle.

Alan Schnitzer: The data on slide 19 of the webcast presentation illustrates the significant acceleration of our performance since we launched the strategy.

Alan Schnitzer: We've grown our net written premiums over the past eight years by more than 70% to over $43 billion at.

Alan Schnitzer: At the same time, we've improved our underlying combined ratio by nearly seven points.

Alan Schnitzer: High quality growth with strong underwriting profitability is a noteworthy achievement in this industry.

Alan Schnitzer: In lines of business with returns that meet our objectives growth over time is generally come from a combination of price increases and growth in customers.

Alan Schnitzer: In lines, where the emphasis has been on improving returns premium growth has been driven by higher pricing.

Alan Schnitzer: In addition, our growth has largely been organic from products in which we have deep deep expertise.

Alan Schnitzer: Distribution partners, with whom we have long standing relationships.

Alan Schnitzer: In geographies, where we have a thorough understanding of the regulatory environment and other market dynamics.

Alan Schnitzer: In other words, a relatively low risk growth strategy.

Through our focus on productivity and efficiency. We've also meaningfully improved our operating leverage over this time.

Alan Schnitzer: We've allocated some of that benefit to investments and strategic priorities.

As you can see on slide 21, since 2017, we've more than doubled our investments in strategic technology initiatives.

Alan Schnitzer: Over that same period, we've carefully managed growth in routine, but necessary technology expenditures.

Alan Schnitzer: In other words over an eight year period, we simultaneously and meaningfully increased our technology spend and improve the strategic mix of that spend.

Alan Schnitzer: In 2017, our strategic investments represented about a third of our tech spend.

Alan Schnitzer: In 2024, our strategic Tech investments approached nearly half of our overall tech spend of more than $1 billion $5.

Alan Schnitzer: At the same time, our efforts to improve operating leverage also enabled us to lower our expense ratio by more than three points or about 10%.

Alan Schnitzer: The flexibility that operating leverage gives us to allocate the benefit between investment opportunities and the bottom line, it's a valuable competitive advantage.

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Alan Schnitzer: Turning to underwriting the tremendous strength in relative predictability of our underlying underwriting income is increasingly contributing to our bottom line.

Alan Schnitzer: Our underlying underwriting income has more than tripled over the last eight years, reaching $4 $5 billion after tax in 2024.

Alan Schnitzer: This level of underlying underwriting income positions us to deliver strong income and returns even with the level of outsized natural catastrophes, we and the industry experienced in 2024.

Alan Schnitzer: Our growth in underwriting income also contributed to the increase in our cash flow from operations.

Alan Schnitzer: Which was $9 $1 billion in 2024, our highest level ever and nearly $4 billion more than it was just five years ago.

Alan Schnitzer: Our strong operating cash flow is important it gives us the ability to make strategic investments in our business.

Alan Schnitzer: <unk> excess capital to shareholders and grow our investment portfolio.

Alan Schnitzer: Our investment portfolio, which we grew to almost $100 billion at year end positions us to continue generating a higher level of predictable and reliable net investment income.

Alan Schnitzer: In summary, we're capitalizing on the successful execution of an effective strategy.

Alan Schnitzer: Our strong results and financial position enabled us to be there when our customers need us most is our friends and neighbors in Los Angeles do right now.

Alan Schnitzer: The significant momentum we have built gives us great confidence in our ability to continue serving our customers and distribution partners, while delivering for our shareholders.

Alan Schnitzer: In other words, we remain very confident in the outlook for travelers and with that I'm pleased to turn the call over to Dan.

Speaker Change: Thank you Alan core.

Dan: Core income for the fourth quarter was $2 $1 billion and core return on equity was 27, 7%.

Dan: Bringing the full year core income to $5 billion in full year core ROA to 17, 2%.

Dan: We once again generated record levels of earned premium this quarter and we're very pleased with both the total combined ratio of 83, 2% and the underlying combined ratio of 84%.

Dan: The value of premium growth at strong underlying margins as evidenced by the quarter's underlying underwriting income of $1 $4 billion after tax bringing.

Dan: Bringing the year to date figure to $4 5 billion.

Dan: That's our first time ever above $4 billion and an increase of nearly 40% from last year's then record level.

Dan: The reported and underlying combined ratios for both the quarter and the full year were very strong in all three segments.

Dan: The expense ratio for the fourth quarter came in at 28, 2%.

Dan: Once again, reflecting the benefits of our focus on productivity and efficiency, coupled with strong topline growth.

Dan: Full year expense ratio of 28, 5% was in line with our expectations and our guidance throughout the year.

Dan: Even as the excellent loss ratio resulted in higher supplemental Commission expense.

Dan: Looking ahead to 2025, we're comfortable with the annual expense ratio at this level for now.

Dan: Is the strength of the underlying loss ratio provides continued opportunity to make meaningful investments in both people and technology that we believe will broaden and deepen our competitive advantages well into the future.

Dan: Catastrophe losses in the fourth quarter were a modest $175 million pretax, including a net increase of a little more than $100 million related to re estimation of prior quarter cats.

Dan: Turning to prior year Reserve development.

Dan: Total net favorable development of $262 million pretax with all three segments contributing.

Dan: In business insurance net favorable <unk> of $147 million was driven by favorability in workers' comp that was partially offset by adverse development in abuse and molestation exposure in our run off book.

Dan: In bond and specialty net favorable <unk> of $45 million was driven by better than expected results in fidelity and surety.

Dan: Personal insurance had $70 million of net favorable <unk> with favorability in both auto and homes.

Dan: After tax net investment income of $785 million was up 22% from the prior year quarter.

Dan: Fixed maturity NII was again higher than the prior year quarter, reflecting both the benefit of higher yields and the significant growth in our portfolio of invested assets.

Speaker Change: Which as Alan mentioned is approaching the $100 billion marks.

Speaker Change: Returns in the non fixed income portfolio were also higher than in the prior year quarter.

Speaker Change: In terms of our outlook for fixed income NII for 2025, including earnings from short term Securities. We expect approximately $3 billion after tax beginning with $710 million in the first quarter and growing to $790 million in the fourth quarter.

Speaker Change: Page 22 of the webcast presentation provides information about our January one catastrophe reinsurance renewal.

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Speaker Change: Our long standing cat ex ol Treaty continues to provide coverage for both single cat events and the aggregation of losses from multiple cat events and we have increased the amount of total coverage for 2025.

Speaker Change: The per occurrence loss deductible was unchanged at $100 million.

Speaker Change: And we've placed coverage for $3 $7 billion of the $4 billion layer above the $4 billion attachment point.

Speaker Change: We're pleased to have added $150 million of coverage, while reducing the total amount of ceded premium for this treaty.

Speaker Change: Also as part of our January 1st renewals, we enhanced our casualty reinsurance program for 2025.

Speaker Change: Thanks to the reinsurance market receptivity to our casualty book, we were able to purchase more coverage at a lower attachment point on a roughly margin neutral basis.

Speaker Change: I point this out to make you aware that the incremental seeded premium related to the additional coverage will impact the growth rate of consolidated net written premium for full year 2025 by a little less than half a point.

Speaker Change: Because the written ceded premium impact all hits business insurance in the first quarter.

Speaker Change: The impact on net written premium growth in Q1 for the <unk> segment will be about four points or about two points on a consolidated basis.

Speaker Change: And while we're talking about the 2025 year on our financial modeling note as you can see on slide 23 of the webcast presentation are pre tax catastrophe plan for 2020 569 combined ratio points.

Speaker Change: Slide 23 also provides a summary of the seasonality of our cat losses over the prior decade.

Speaker Change: As shown in the data second quarter is regularly and noticeably than our largest cat quarter. We've.

Okay.

Speaker Change: Good morning, ladies and gentlemen, welcome to the fourth quarter results teleconference for travelers, we ask that you hold all questions until the completion of formal remarks at which time, you'll be given instructions for the question and answer session.

Speaker Change: We've provided this view of historical data in our year end packages for a few years now, but we thought it might also be helpful to share our plan view for the coming year by quarter. So you will find that here as well.

Speaker Change: Obviously, the 2025 planned figures were put together without knowledge of the January wildfires in California.

Speaker Change: As a reminder, this conference is being recorded on January 22 2025.

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.

Speaker Change: As you know the California wildfires that began earlier this month.

Speaker Change: Going to be a material event for the industry and we will have a material impact on our first quarter earnings.

Speaker Change: Thank you good morning, and welcome to travelers discussion of our fourth 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 dot com under the investors section.

Speaker Change: Because of the event is so recent and to some degree still ongoing we'd like to take more time to refine our analysis before providing an estimate.

Speaker Change: Also of interest for 2025, we continue to value our relationship with Fidelis.

Speaker Change: Pleased to have renewed the 20% quota share with them.

Speaker Change: <unk> today will be Alan Schnitzer, Chairman and CEO, Dan Fry, Chief Financial Officer, and our three segment Presidents Lasky of business insurance, Jeff Plank in bond and specialty insurance and Michael Klein of personal insurance.

Speaker Change: The renewal includes the same loss ratio cap, we had in place for both 2023 and 2024.

Speaker Change: Turning to capital management.

Speaker Change: Operating cash flows for the quarter of $2 $1 billion were again very strong and we ended the quarter with holding company liquidity of approximately $1 $8 billion.

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.

For the full year, we generated our best ever level of operating cash flow at $9 1 billion.

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. Our presentation. Today includes forward looking statements. The company cautions investors that any forward looking statements involve risks and uncertainties and is not a guarantee of future performance actual results may do.

Speaker Change: Interest rates increased during the quarter and as a result, our net unrealized investment loss increased from $2 $1 billion. After tax at September 30th $3 $6 billion after tax at year end.

Speaker Change: Adjusted book value per share, which excludes net unrealized investment gains and losses was $139.04 at year end up 13% from a year ago.

Speaker Change: 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: We returned $494 million of capital to our shareholders this quarter.

Speaker Change: Rising share repurchases of $252 million and dividends of $242 million.

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 investors section on our website and now I'd like to turn the call over to Alan Schnitzer.

Speaker Change: We have approximately $5 billion of capacity remaining under the share repurchase authorization from our board of directors.

Speaker Change: Recapping our results for 2024 core income was just over $5 billion and core ROE was 17, 2%.

Speaker Change: We delivered our highest ever levels of written premium underwriting income net investment income core income and cash flow from operations. In addition, we ended the year with our all time high and adjusted book value per share and with our largest investment portfolio ever.

Alan Schnitzer: Thank you Abby good morning, everyone and thank you for joining us today.

Alan Schnitzer: Before we begin I want to take a moment to acknowledge the tragic wildfires that have devastated communities across Los Angeles.

Alan Schnitzer: Our Hearts go out to everyone affected those who lost their homes businesses and most tragically their loved one.

Speaker Change: Short, we're extremely well positioned for 2025 and beyond.

At times like these words alone are of course not enough.

Speaker Change: And with that I'll turn the call over to Greg for a discussion of business insurance.

Alan Schnitzer: As a company rooted in the communities. We serve we will be there for our customers and neighbors to support them as they recover and rebuild.

Greg: Thanks, Dan business insurance had another strong quarter rounding out a terrific year in terms of financial results execution in the marketplace and progress on our strategic initiatives said.

Alan Schnitzer: We've assessed impacted areas to aerial imagery and made life contact with the substantial majority of our customers with claims.

Greg: Segment income for the quarter was nearly $1 2 billion, our highest quarter ever and up about 25% from the prior year quarter, which was our previous quarterly high.

Alan Schnitzer: Enabling us to expedite claim payments.

Alan Schnitzer: In addition, our expert quaint teams on the ground, we're grateful for their efforts.

Alan Schnitzer: We also have mobile claim office is positioned in the area where customers can file a claim in person or receive an advanced claimed claimed payment.

Greg: The improvement from the prior year was broad based driven by higher net investment income higher underlying underwriting income and higher favorable prior year Reserve development.

Alan Schnitzer: And we look forward to working with policymakers in California. It make sure. The state has a resilient insurance market going forward.

Greg: The all in combined ratio of 85, 2% was a great result, and we're once again, particularly pleased with our exceptional underlying combined ratio of 86, 2%, an all time quarterly bes.

Alan Schnitzer: Now, let me turn to our fourth quarter and full year 2024 results were.

Alan Schnitzer: We're very pleased to report that for the full year core income was up 64% to more than $5 billion or $21.58 per diluted share generating core return on equity of 17, 2%.

Greg: The underlying loss ratio improved by more than half a point from the prior year driven by the benefit of earned pricing the.

Alan Schnitzer: These results were driven by strong fundamentals growth in earned premiums excellent underwriting profitability and a higher level of net investment income.

Greg: The expense ratio remained excellent at 28, 8%.

Greg: Turning to the topline we grew net written premiums by 8% to an all time fourth quarter high of more than $5 4 billion.

Alan Schnitzer: That combination makes for a powerful earnings engine and that momentum is at our backs as we enter 2025.

Greg: Pricing remains strong with renewal premium change of nine 6% driven by renewal rate change of six 9%.

Alan Schnitzer: Turning to our fourth quarter results. We are very pleased to have generated exceptional top and bottom line results.

Alan Schnitzer: Core income for the quarter of $2 $1 billion was a record.

Greg: Retention remained excellent at 85% and.

Alan Schnitzer: Net earned premiums increased 9% to $10 $9 billion and the combined ratio improved two six points to 83, 2%.

Greg: And new business of $641 million was the second highest fourth quarter result ever.

Greg: <unk> only to last year's record fourth quarter.

Alan Schnitzer: The improvement in the combined ratio was driven by very strong underlying profitability and higher net favorable prior year Reserve development.

Greg: We're pleased with these production results and our ability to sustained strong levels of pricing, reflecting the relative return profiles and environmental trends for each line.

Alan Schnitzer: The underwriting margins were strong in all three segments. The combined ratio in business insurance improved by more than a point to an excellent 85, 2%.

Greg: Renewal rate increases in umbrella and auto were both well into double digits in both up sequentially from the third quarter.

Alan Schnitzer: The combined ratio in a bond and specialty business was a very strong 82, 7%.

Greg: Rate increases in CMP NGL remained strong and generally in line with third quarter levels, while the rate increases in property were less in Q3.

Alan Schnitzer: And the combined ratio in personal insurance improved more than six points to an exceptional <unk> 7%.

Alan Schnitzer: These terrific segment results led to a reported consolidated combined ratio that improved two six points to 83, 2%.

Greg: More specifically on property right. The moderation continues to be driven by our national property book.

Greg: Where returns are very strong after several years of compounding rate and improvements in terms and conditions.

Alan Schnitzer: Turning to investments after tax net investment income for the full year was up 21% to $3 billion to.

Greg: Across the book, even with the sustained strong pricing levels retention remained excellent as I mentioned earlier, reflecting our strong value proposition and the marketplaces acknowledgment of environmental trends and uncertainty.

Alan Schnitzer: We run by strong and reliable returns from our growing fixed income portfolio and higher returns from our non fixed income portfolio.

Alan Schnitzer: These results together with our strong balance sheet enabled us to grow adjusted book value per share by 13% during the year to $139.04.

As for the individual businesses in select renewal premium change remained strong at 12% up about one point from the fourth quarter of last year.

Alan Schnitzer: After making important investments in our business and returning more than $2 billion of excess capital to shareholders.

Alan Schnitzer: Turning to the topline to continued terrific marketplace execution across all three segments.

Greg: Renewal rate change of five 6% ticked up from the third quarter and was up more than a point and a half from the prior year quarter.

Grew net written premiums during the year by 8% more than $43 billion.

As we expected retention moderated as we continue to intensely optimize our CMP risk return profile and a couple of targeted geographies.

Alan Schnitzer: And in the quarter by 7% to $10 $7 billion.

Alan Schnitzer: The strong value proposition that we offer to our customers and distribution partners along with outstanding execution by our colleagues in the field contributed to our top line success.

Greg: New business was healthy and near historical highs.

Greg: Overall, we remain pleased with the granular pricing and underwriting execution driving profitable growth in select.

Alan Schnitzer: In business insurance, we grew net written premiums in the quarter by 8% to $5 4 billion.

Alan Schnitzer: Renewal premium change in this segment remained very strong at nine 6%.

Greg: The mix, we are achieving through these actions position us for long term success.

Alan Schnitzer: Renewal rate change of six 9%.

Greg: In middle market renewal premium change was close to 10% with renewal rate change of seven 8% about flat with the third quarter and up about a point from the prior year quarter.

Alan Schnitzer: Retention also remained strong at 85%.

Alan Schnitzer: The combination of strong pricing and excellent retention reflects our deliberate and granular execution generally disciplined marketplace.

Greg: The rate increases remained broad based as we achieved positive rate change and almost 80% of our middle market accounts.

Alan Schnitzer: In bond and specialty insurance, we grew net written premiums by 7% to $1 1 billion with.

Greg: And the execution was once again excellent with meaningful spread from our best performing accounts, who are lower performing accounts.

Alan Schnitzer: With excellent retention of 88% and our high quality management liability business.

Alan Schnitzer: And our market, leading surety business, we grew net written premiums by 19%.

Greg: Lastly, new business of $357 million was our highest ever fourth quarter and we're pleased with the risk selection and strength of pricing on the accounts, we added to the portfolio.

Alan Schnitzer: We are very pleased to have generated terrific production results across our commercial segments, where margins continue to be attractive.

Alan Schnitzer: That includes our E&S offerings, where we grew net written premiums by 13% in 2024.

Greg: As we close out 2024, let me provide a little color on full year results before turning the call over to Jeff.

Alan Schnitzer: In personal insurance, we grew net written premiums in the quarter by 7% to $4 3 billion.

Greg: Segment income of more than $3 $3 billion. The underlying combined ratio of 88, 1% and top line of more than $22 billion were all record results.

Alan Schnitzer: Driven by continued strong renewal premium change, particularly in our homeowners business.

Alan Schnitzer: Okay.

Alan Schnitzer: As we wrap up the year I'd like to take a few minutes to reflect on our 2024 results.

Greg: As for production renewal premium change in retention both remained historically high while new business premiums reached an all time best.

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Alan Schnitzer: As we've shared we are and have been focusing our investments on three strategic innovation priorities.

Greg: These results are a direct reflection of our strong value proposition as well as the successful execution of our thoughtful and deliberate strategies.

Alan Schnitzer: First extending our advantage in risk expertise.

Alan Schnitzer: Second providing great experiences for our customers distribution partners and employees.

Greg: And while delivering these exceptional financial and production results.

Third optimizing productivity and efficiency.

Alan Schnitzer: These investments are designed in large part to position us to grow over time at leading returns.

Greg: We're also extremely pleased with our field execution and our broader team's dedication to delivering new tools insights and product enhancements.

Alan Schnitzer: The successful execution of that strategy has been an important contributor to our strong results, providing us with the financial resources that enable us to continue investing at scale.

Greg: We have strengthened our competitive advantages in several key areas.

Greg: Among other achievements, we have developed a more granular in predictive price to risk models.

Alan Schnitzer: Which we believe will increasingly be a different differentiator in this industry.

Alan Schnitzer: It's a virtuous cycle.

Greg: Enhanced submission insights based on quality and appetite.

Alan Schnitzer: The data on slide 19 of the webcast presentation illustrates the significant acceleration of our performance since we launched the strategy.

Greg: Leveraged more segmented and responsive loss analytics methodologies.

Greg: And integrated a customer relationship platform with our cutting edge underwriting workstation.

We've grown our net written premiums over the past eight years by more than 70% to over $43 billion.

Greg: Our financial and operational performance. This year was terrific and our continued focus and investment in strategic capabilities positions us extremely well for long term profitable growth.

Alan Schnitzer: At the same time, we've improved our underlying combined ratio by nearly seven points.

Alan Schnitzer: High quality growth with strong underwriting profitability is a noteworthy achievement in this industry.

Jeff: Proud of these results and the best in class team that produce left with that I'll turn the call over to Jeff.

Alan Schnitzer: In lines of business with returns that meet our objectives growth over time is generally come from a combination of price increases and growth in customers.

Jeff: Thanks, Greg.

Jeff: Bonded specialty ended the year with another strong quarter on both the top and bottom lines.

Alan Schnitzer: In lines, where the emphasis has been on improving returns premium growth has been driven by higher pricing.

Jeff: We generated segment income of $228 million, an excellent combined ratio of 82, 7% and.

In addition, our growth has largely been organic from products in which we have deep deep expertise.

Jeff: In a strong 86, 8% underlying combined ratio in the quarter.

Alan Schnitzer: Our 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.

Jeff: Turning to the top line. We're pleased that we grew net written premiums by 7% in the quarter.

Jeff: And our high quality domestic management liability business, we delivered very strong retention of 88%.

Alan Schnitzer: In other words, a relatively low risk growth strategy.

Alan Schnitzer: It's a real focus on productivity and efficiency. We've also meaningfully improved our operating leverage over this time.

Jeff: We're pleased the corvus transition from an MGA to writing on our high quality paper drove higher retention relative to cordis historical experience.

Alan Schnitzer: We've allocated some of that benefit to investments and strategic priorities.

Alan Schnitzer: As you can see on slide 21, since 2017, we've more than doubled our investments in strategic technology initiatives.

Jeff: Management liability renewal premium change was positive and improved a point from the third quarter.

Jeff: And new business was consistent with the very strong fourth quarter of 2023.

Alan Schnitzer: Over that same period, we've carefully manage growth in routine, but necessary technology expenditures.

Jeff: Turning to our market, leading surety business. We grew net written premiums by an outstanding 19% from prior year quarter.

Alan Schnitzer: In other words over an eight year period, we simultaneously and meaningfully increased our technology spend and improve the strategic mix of that spend.

Jeff: This growth reflects a robust construction environment.

Alan Schnitzer: In 2017, our strategic investments represented about a third of our tech spend.

Jeff: Continued strong demand for our surety products and services.

Jeff: And outstanding execution by our team in growing our high credit quality portfolio.

Alan Schnitzer: In 2024, our strategic Tech investments approached nearly half of our overall tech spend of more than $1 billion $5.

Jeff: So we're pleased to have once again delivered strong top and bottom line results this quarter in bond and specialty insurance.

Alan Schnitzer: At the same time, our efforts to improve operating leverage also enable us to lower our expense ratio by more than three points or about 10%.

Jeff: Capped off a year during which we delivered record levels of net written premiums in both our surety and management liability businesses.

Alan Schnitzer: The flexibility of that operating leverage gives us to allocate the benefit between investment opportunities and the bottom line, it's a valuable competitive advantage.

Jeff: We're also pleased to have delivered excellent returns, while making significant strategic investments in our business.

Jeff: Including enhancing our cyber capabilities upgrading our management liability technology platform.

Alan Schnitzer: Turning to underwriting the tremendous strength in relative predictability of our underlying underwriting income is increasingly contributing to our bottom line.

Jeff: And optimizing segmentation and productivity through advanced analytics and AI.

Alan Schnitzer: Our underlying underwriting income has more than tripled over the last eight years, reaching $4 $5 billion after tax in 2024.

Michael: And now I'll turn the call over to Michael.

Michael: Thanks, Jeff and good morning, everyone.

Michael: I am very pleased to share that personal insurance delivered segment income of $798 million and a combined ratio of 87% for the fourth quarter of 2024.

Alan Schnitzer: This level of underlying underwriting income positions us to deliver strong income and returns even with the level of outsized natural catastrophes, we and the industry experienced in 2024.

Michael: Both results outpaced last year's strong fourth quarter result.

Alan Schnitzer: Our growth in underwriting income also contributes to the increase in our cash flow from operations.

Michael: For the full year <unk> delivered record segment income, a one and a quarter billion dollars.

Alan Schnitzer: Which was $9 $1 billion in 2024, our highest level ever and nearly $4 billion more than it was just five years ago.

Michael: And a combined ratio of 94, 4%, reflecting substantial improvement in the fundamentals of our business.

Alan Schnitzer: Our strong operating cash flow is important it gives us the ability to make strategic investments in our business.

Michael: Net written premiums grew 7% in the quarter and 8% for the year, bringing full year net written premium to a record of nearly $17 2 billion.

Alan Schnitzer: <unk> capital to shareholders and grow our investment portfolio.

Alan Schnitzer: Our investment portfolio, which we grew to almost $100 billion at year end positions us to continue generating a higher level of predictable and reliable net investment income.

Michael: And automobile the fourth quarter combined ratio was 94, 2%.

Michael: The underlying combined ratio of 96, 3% improved six four points compared to the prior year.

Alan Schnitzer: In summary, we're capitalizing on the successful execution and effective strategy.

Michael: This improvement was primarily driven by the benefit of higher earned pricing.

Alan Schnitzer: Our strong results and financial position enabled us to be there when our customers need us most is our friends and neighbors in Los Angeles do right now.

Michael: Lower losses, resulting from favorable frequency across a number of coverages.

Michael: And sustained moderation in physical damage severity trends.

Alan Schnitzer: The significant momentum we have built gives us great confidence in our ability to continue serving our customers and distribution partners, while delivering for our shareholders.

Michael: This quarter's underlying results included a one five point benefit from the favorable re estimation of prior quarters in the current year.

Alan Schnitzer: In other words, we remain very confident in the outlook for travelers.

Michael: For the full year 2020 for the auto combined ratio of 95% with a considerable improvement compared to the prior year, reflecting the success of our disciplined approach to execution.

Dan Fry: With that I'm pleased to turn the call over to Dan.

Dan Fry: Thank you Alan core.

Dan Fry: Core income for the fourth quarter was $2 $1 billion and core return on equity was 27, 7% bringing.

Michael: With another quarter of sustained profitability, we remain focused on growing the auto book.

Dan Fry: Bringing the full year core income to $5 billion in full year core ROA to 17, 2%.

Michael: In homeowners and other the fourth quarter combined ratio of 67, 8% improved three points compared to the prior year.

Dan Fry: We once again generated record levels of earned premium this quarter and we're very pleased with both the total combined ratio of 83, 2% and the underlying combined ratio of 84%.

Michael: As an improved underlying combined ratio was partially offset by the impact from higher catastrophes.

Michael: The underlying combined ratio improved four three points, primarily driven by favorable non weather losses relative to the prior year and the continued benefit of earned pricing.

Dan Fry: The value of premium growth had strong underlying margins as evidenced by the quarter's underlying underwriting income of $1 $4 billion after tax bringing.

Michael: This quarter's underlying results included a two point benefit from the favorable re estimation of prior quarters in the current year.

Dan Fry: Bringing the year to date figure to $4 $5 billion.

Dan Fry: It's our first time ever above $4 billion.

Michael: Stepping back the 2020 for full year property combined ratio of 93, 9% was a strong calendar year result.

Dan Fry: And an increase of nearly 40% from last year's then record level.

Dan Fry: The reported and underlying combined ratios for both the quarter and the full year were very strong in all three segments.

Michael: That said, we have more work to do to improve accident year profitability and consistently deliver target returns overtime.

Dan Fry: The expense ratio for the fourth quarter came in at 28, 2%.

Michael: Our production results reflect our continued focus on generating growth in auto while improving profitability in property through the execution of our granular state by state strategy.

Dan Fry: Once again, reflecting the benefits of our focus on productivity and efficiency, coupled with strong topline growth.

Dan Fry: Full year expense ratio of 28, 5% was in line with our expectations and our guidance throughout the year.

Michael: In domestic automobile retention remained consistent while renewal premium change of 10, 2% continued to moderate as intended reflective of auto profitability.

Dan Fry: Even as the excellent loss ratio resulted in higher supplemental Commission expense.

Michael: We're pleased to note that auto new business premium increased relative to the prior year quarter, driven by growth in new policies and new business premiums in states that are not constrained by our property actions.

Dan Fry: Looking ahead to 2025, we're comfortable with the annual expense ratio at this level for now.

Dan Fry: As the strength of the underlying loss ratio provides continued opportunity to make meaningful investments in both people and technology that we believe will broaden and deepen our competitive advantages well into the future.

Michael: And domestic homeowners and other retention rose slightly to 86% and renewal premium change of 14, 1% remains strong and consistent with recent quarters.

Catastrophe losses in the fourth quarter were a modest $175 million pretax, including a net increase of a little more than $100 million related to re estimation of prior quarter cats.

Michael: In 2025, we expect renewal premium change to increase to the high teens as we continue to seek rate increases and further increase insured values to ensure they remain aligned with replacement costs.

Turning to prior year Reserve development.

Michael: The slight decline in homeowners policies in force continues to reflect our deliberate efforts to improve profitability and thoughtfully deploy our property capacity.

Dan Fry: We had total net favorable development of $262 million pretax with all three segments contributing.

Dan Fry: In business insurance net favorable <unk> idea of $147 million was driven by favorability in workers' comp that was partially offset by adverse development in abuse and molestation exposure in a runoff book.

Michael: To recap in 2024, we delivered record net written premiums in segment income.

The substantial year over year improvement reflects the success of the significant actions, we've taken to improve the fundamentals of the business as well as the moderation of underwrite underlying loss trends.

Dan Fry: In bond and specialty net favorable Pea idea of $45 million was driven by better than expected results in fidelity and surety.

Michael: At the same time, we continued to invest in and deliver capabilities that will support the profitable growth of our business.

Dan Fry: Personal insurance had $70 million of net favorable P y D with favorability in both auto and homes.

Examples include the re platforming of our specialty products <unk>.

Michael: <unk> advancement of our Intel or drive telematics offering.

Dan Fry: After tax net investment income of $785 million was up 22% from the prior year quarter.

Michael: Further evolution of our AI enabled aerial imagery capabilities.

Michael: And modernization of our infrastructure.

Alan Schnitzer: Fixed maturity NII was again higher than the prior year quarter, reflecting both the benefit of higher yields and the significant growth in our portfolio of invested assets, which as Alan mentioned is approaching the $100 billion more.

Michael: I couldnt be more proud of our team or more grateful to our distribution partners for their hard work and dedication in the face of an environment that continues to test and challenge us and our industry.

Michael: In particular I'd like to recognize our claim team who as we speak are on the ground in California, supporting our customers in their time of need.

Speaker Change: Returns in the non fixed income portfolio were also higher than in the prior year quarter.

Speaker Change: In terms of our outlook for fixed income NII for 2025, including earnings from short term Securities. We expect approximately $3 billion after tax beginning with $710 million in the first quarter growing to $790 million in the fourth quarter.

Abbe: With that I'll turn the call back over to Abbe.

Abbe: Thanks, Michael.

Abbe: We're ready to open up for questions now.

Thank you we will now begin the question and answer session. If you have dialed in I would like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.

Speaker Change: Yeah.

Speaker Change: Page 22 of the webcast presentation provides information about our January one catastrophe reinsurance renewal.

Abbe: If you would like to withdraw your question simply press Star one again.

Abbe: We ask that you limit yourself to one question and one follow up to allow everyone an opportunity to ask a question.

Speaker Change: Our longstanding cat ex ol Treaty continues to provide coverage for both single cat events and the aggregation of losses from multiple cat events and we have increased the amount of total coverage for 2025.

Abbe: We will go first to Robert Cox at Goldman Sachs.

Hi, Thanks for taking my question.

Speaker Change: The per occurrence loss deductible was unchanged at $100 million.

Abbe: Maybe just first on pricing I was hoping you could kind of unpack the renewal rate change a little bit and what you saw over the quarter that might have been indicative of a trend into 2025.

Speaker Change: And we've placed coverage for $3 $7 billion of the $4 billion layer above the $4 billion attachment point.

Abbe: Whether it's by account size our product just curious what changed in the context of our overall stable figure for business insurance.

Speaker Change: We're pleased to have added $150 million of coverage, while reducing the total amount of ceded premium for this treaty.

Also as part of our January 1st renewals, we enhanced our casualty reinsurance program for 2025.

Abbe: Hey, Robert This is Greg given the headline numbers you can see there isn't meaningful change between the pricing and so again, our very granular local execution. We continue to look at them account by account basis, and we haven't seen any meaningful shift.

Speaker Change: Thanks to the reinsurance markets receptivity to our casualty book, we were able to purchase more coverage at a lower attachment point on a roughly margin neutral basis.

Speaker Change: I point this out to make you aware that the incremental seeded premium related to the additional coverage.

Abbe: Other than the color that I gave you in the prepared comments so very stable.

Robert Cox: Okay got it thank you.

Speaker Change: Will impact the growth rate of consolidated net written premium for full year 2025 by a little less than half a point.

Abbe: And then maybe just as a follow up on <unk> on.

Abbe: On cats.

Robert Cox: Obviously.

Speaker Change: Because the rate in ceded premium impact all hits business insurance in the first quarter.

Robert Cox: A number of large events here I was hoping you could just walk us through what you booked for mill and if that $100 million increase in current year cats was all related to Hawaii and then.

Speaker Change: The impact on net written premium growth in Q1 for the <unk> segment will be about four points or about two points on a consolidated basis.

Robert Cox: Not necessarily a quantitative question, but ultimately the impacts that you expect might come out of the California fires.

Speaker Change: And while we're talking about the 2025 year on our financial modeling note.

Speaker Change: As you can see on slide 23 of the webcast presentation, our pretax catastrophe plan for 2020 569 combined ratio points.

Robert Cox: Hey, Rob it's Dan So I'll start with BYD.

Speaker Change: So no no.

Speaker Change: No big events in the quarter as you can see by no new events, you'll be able to see when the K comes out in the table Milton was around 60 million Bucks for us a little less than that.

Speaker Change: Slide 23 also provides a summary of the seasonality of our cat losses over the prior decade.

Speaker Change: As shown in the data second quarter is regularly and noticeably been our largest cat quarter.

Speaker Change: The preliminary range, we had provided on the third quarter earnings call.

Speaker Change: We've provided this view of historical data in our year end packages for a few years now, but we thought it might also be helpful to share our plan view for the coming year by quarter, So youll find that here as well.

Speaker Change: A number of prior quarter cats had adjustments to them. That's typical that change that you referenced from my prepared remarks was driven by Helene <unk>.

Speaker Change: Obviously, the 2025 planned figures were put together without knowledge of the January wildfires in California.

Speaker Change: Not surprising not concerning our that was a big event in the last five days of the quarter and with sort of an unusual pattern as it did more damage in Georgia and the Carolinas than it did in Florida. So when you get a big event at the end of the quarter Youre trying to say I have other similar historical events that I can model out.

Speaker Change: As you know the California wildfires that began earlier this month.

Speaker Change: We're going to be a material event for the industry and we will have a material impact on our first quarter earnings.

Speaker Change: Because of the event is so recent and to some degree still ongoing we'd like to take more time to refine our analysis before providing an estimate.

How claims are going to come in and then with the severity of different types of claims is going to be you. Just didn't have a lot of comparables in terms of Helene. So I don't really surprising to see a move there.

Speaker Change: Also of interest for 2025, we continue to value our relationship with Fidelis. We're pleased to have renewed the 20% quota share with them.

Speaker Change: In terms of California look as we've centered our in our remarks, it's going to be a big event for the industry. We think it will have an impact on our first quarter earnings for sure.

Speaker Change: The renewal includes the same loss ratio cap, we had in place for both 2023 and 2024.

Speaker Change: Turning to capital management operating cash flows for the quarter of $2 $1 billion were again very strong and we ended the quarter with holding company liquidity of approximately $1 $8 billion.

Speaker Change: But to the degree that it's still very early and it's still really on ongoing in some cases, it's just too soon for us to.

Speaker Change: To provide a number at this point.

Speaker Change: For the full year, we generated our best ever level of operating cash flow at $9 1 billion.

We'll move next to Gregory Peters at Raymond James.

Gregory Peters: Good morning, everyone.

Speaker Change: Interest rates increased during the quarter and as a result, our net unrealized investment loss increased from $2 $1 billion. After tax at September 30th $3 $6 billion after tax at year end.

Speaker Change: I guess to the first question kind of building on the last answer.

Gregory Peters: In your.

Speaker Change: Our prepared remarks by Greg you talked about so why retention dropping down a little bit due in part to some changes in your CMP profile.

Speaker Change: Adjusted book value per share, which excludes net unrealized investment gains and losses was $139.04 at year end up 13% from a year ago.

Speaker Change: If you could give us some more color on that and.

Speaker Change: Maybe as we look at business insurance give us some perspective on.

Speaker Change: We returned $494 million of capital to our shareholders this quarter comprising share repurchases of $252 million and dividends of $242 million.

Speaker Change: On the retention ratios as rights to loss business.

Speaker Change: <unk> on price versus.

Speaker Change: Pension re underwriting.

Speaker Change: Yeah, Greg let me take those two pieces for.

Speaker Change: We have approximately $5 billion of capacity remaining under the share repurchase authorization from our board of directors.

Greg: The select one start there you get into a little bit of competitive sensitive information. If I give you the exact specifics of what geographies and industry classes that we're non renewing but let me give you a little color over the top we would only do non renewals when we can't get the right price to risk through the regulatory process.

Speaker Change: Recapping our results for 2024 core income was just over $5 billion.

Speaker Change: Clorox ROE was 17, 2%.

Speaker Change: We delivered our highest ever levels of written premium underwriting income net investment income core income and cash flow from operations. In addition, we ended the year with our all time high and adjusted book value per share and with our largest investment portfolio ever.

So you can think about severe convective storm. That's a recent payroll that continues to be more severe.

Greg: We've isolated a couple of spots, where we've needed to non renewal components of the small commercial book, but that gives you a little bit of a flavor of what's driving that we think we bottomed out on those non renewals of select so at that 80% retention that's kind of the expectation that we have given that we are through the for us to those.

Speaker Change: In short, we're extremely well positioned for 2025 and beyond.

Speaker Change: And with that I'll turn the call over to Greg for a discussion of business insurance.

Greg: Thanks, Dan business insurance had another strong quarter rounding out a terrific year in terms of financial results execution in the marketplace and progress on our strategic initiatives.

Greg: Renewals in the back half of 2025, we would see some improvement there.

Greg: Segment income for the quarter was nearly $1 $2 billion, our highest quarter ever and up about 25% from the prior year quarter, which was our previous quarterly high.

Greg: So that's the that's really the driver of what's driving the slight deterioration in retention across business insurance.

Greg: The improvement from the prior year was broad based driven by higher net investment income higher underlying underwriting income and higher favorable prior year Reserve development.

Greg: Great and then I guess.

Greg: As a follow up.

Greg: And I've asked this question of you before Alan.

Greg: But looking at slide 21, which is your technology investments.

Greg: The all in combined ratio of 85, 2% was a great result, where once again, particularly pleased with our exceptional underlying combined ratio of 86, 2%, an all time quarterly Beth.

Speaker Change: Not really if you've provided this chart don't really put some numbers in there and we hear you and various comments.

Speaker Change: Dribble out commentary about where you are making investments in technology, but I thought maybe you could spend a minute and give us some more.

Greg: The underlying loss ratio improved by more than half a point from the prior year driven by the benefit of earned pricing.

Speaker Change: Granular details on what's going on there because it seems like it's pretty important initiatives for the company.

Greg: Expense ratio remained excellent at 28, 8%.

Speaker Change: Yes, Thanks, Greg and good morning in terms of numbers, we don't put numbers on that scale, but we have shared that the overall tech spend over $1 billion $5 last year I think we shared that in the prior year.

Greg: Turning to the topline we grew net written premiums by 8% to an all time fourth quarter high of more than $5 $4 billion.

Greg: Pricing remains strong with renewal premium change of nine 6% driven by renewal rate change of six 9%.

Speaker Change: And if I had to give you a broad brush response to where is it I would say broadly speaking, but not exclusively but broadly broadly speaking, we're digitizing the value chain and so thats digitizing the customer journey, it's modernizing the foundation its advanced analytics, it's automation, it's faster speed to market getting the right price on the.

Greg: Retention remained excellent at 85%.

Greg: And new business of $641 million was the second highest fourth quarter result ever.

Greg: Only to last year's record fourth quarter.

Greg: We're pleased with these production results and our ability to sustain strong levels of pricing, reflecting the relative return profiles and environmental trends for each line.

Speaker Change: Risk.

Speaker Change: And those sorts of things, but you know at the enterprise level. We're also investing in talent and AI and third party data product development.

Speaker Change: Business units and segments are busy at work investing in new products partner integration better front end for customers things like that.

Greg: Renewal rate increases in umbrella and auto were both well into double digits in both up sequentially from the third quarter.

Greg: Rate increases in CMP NGL remained strong and generally in line with third quarter levels, while the rate increases in property were less in Q3.

Speaker Change: We will go next to Mike Zaremski at BMO capital markets.

Mike Zaremski: Alright. Thanks.

Greg: More specifically on property right. The moderation continues to be driven by our national property book.

Mike Zaremski: First question on the reserve releases in commercial.

Greg: Where returns are very strong after several years of compounding rate and improvements in terms and conditions.

Mike Zaremski: Yes.

Mike Zaremski: Most releases I've seen in a couple of years good to see.

Mike Zaremski: Any.

Greg: Across the book, even with the sustained strong pricing levels retention remained excellent as I mentioned earlier.

Mike Zaremski: We heard the prepared remarks, the high level remarks, but anything you'd want to call out as kind of a.

Mike Zaremski: Notable true up or.

Greg: <unk>, our strong value proposition in the market places acknowledgment of environmental trends and uncertainty.

Mike Zaremski: This level of releases would kind of imply that knee ibrd.

Mike Zaremski: Added in recent years more so than your peers kind of is.

Greg: As for the individual businesses in select renewal premium change remained strong at 12%.

Mike Zaremski: It is helping.

Mike Zaremski: Sure Mike It's Dan So just to come back to the remarks specific to business insurance.

Greg: Up about a point from the fourth quarter of last year.

Greg: Renewal rate change of five 6% ticked up from the third quarter and was up more than a point and a half from the prior year quarter.

Mike Zaremski: The main driver of the favorability was workers comp workers' comp has been as you all well know a very favorable story for a long time now is sort of just a question of how much is it from quarter to quarter, depending on the way data developments and changes in frequency and severity.

Greg: As we.

Greg: Specced at retention moderated as we continue to intentionally optimize our CMT risk return profile and a couple of targeted geographies.

Mike Zaremski: We've said it before and I'll just say it again, we don't really think of <unk> as a run rate of any sort. So I expect that number to be different from quarter to quarter that was the big that was the big piece of good news in the quarter. The only noteworthy piece of unfavorable development in the quarter as I mentioned on.

Greg: New business was healthy and near historical highs.

Greg: Overall, we remain pleased with the granular pricing and underwriting execution driving profitable growth in select.

The mix, we are achieving through these actions position us for long term success.

Mike Zaremski: On the call was strengthening in the runoff book for abuse and molestation.

Greg: In middle market renewal premium change was close to 10% with renewal rate change of seven 8% about flat with the third quarter and up about a point from the prior year quarter.

Mike Zaremski: There are always other puts and takes in the quarter, but nothing of any significance are worth calling out.

Greg: The rate increases remained broad based as we achieved positive rate change and almost 80% of our middle market accounts.

Mike Zaremski: Okay, Great and I guess my follow up I'll stick to.

Speaker Change: Workers comp.

Mike Zaremski: You may have answered this in.

Greg: The execution was once again excellent with meaningful spread from our best performing accounts, who are lower performing accounts.

And Rob's question, but in the prepared remarks, I don't think you mentioned kind of any pricing changes.

Mike Zaremski: Quarter over quarter or trends in workers' comp. So is it just fair to assume given the.

Greg: Lastly, new business of $357 million was our highest ever fourth quarter and we're pleased with the risk selection and strength of pricing on the accounts, we added to the portfolio.

Speaker Change: Workers' comp pricing is still a bit.

Mike Zaremski: Negative on and real pricing.

Mike Zaremski: I would say, Mike I would describe it as largely stable you know the pure renewal rate change is a little bit negative and with exposure you get to something a little bit positive and yes. There is always some fluctuations quarter to quarter, but I think stable sort of the way I'd describe it.

Greg: As we close out 2024, let me provide a little color on full year results before turning the call over to Jeff.

Greg: Segment income of more than $3 $3 billion, the underlying combined ratio of 88, 1%.

Jeff Plank: Top line of more than $22 billion were all record results.

Speaker Change: We will go next to David Mono Madden at Evercore ISI.

Jeff Plank: As for production renewal premium change in retention both remained historically high while new business premiums reached an all time best.

Mike Zaremski: Okay.

Speaker Change: Hey, Thanks, good morning.

Speaker Change: I had a question just on the business insurance underlying loss ratio I, Greg I heard you call out just earned rate earned rate coming in I guess I'm wondering is there anything else in that.

Jeff Plank: These results are a direct reflection of our strong value proposition as well as the successful execution of our thoughtful and deliberate strategies.

Speaker Change: 57.3, that's not sustainable or favorable mix or anything like that.

Jeff Plank: And while delivering these exceptional financial and production results.

Jeff Plank: Also extremely pleased with our field execution and our broader team's dedication to delivering new tools insights and product enhancements.

Speaker Change: That's flattering the result.

Dan: Hey, David It's Dan I'll take that so I guess the answer is not really.

Jeff Plank: We have strengthened our competitive advantages in several key areas.

Dan: When we have something that we think you need to sort of call out as as nonrecurring we try to do it in prepared remarks, you heard Michael reference current year prior quarter adjustments benefiting the fourth quarter in auto and home.

Jeff Plank: Among other achievements, we have developed a more granular in predictive price to risk models.

Jeff Plank: Enhanced submission insights based on quality and appetite.

Dan: We didn't call anything out NPI, because we didn't really think there was anything unusual to call out so the benefit in the quarter is earned price.

Jeff Plank: Leverage more segmented and responsive loss analytics methodologies.

Jeff Plank: <unk> integrated our customer relationship platform with our cutting edge underwriting workstation.

Dan: A really terrific underlying at 57, 4% and even within that we did choose to add a little bit of IBM <unk> to the casualty line again, reflecting uncertainty in that line not a big move.

Jeff Plank: Our financial and operational performance. This year was terrific and our continued focus and investment in strategic capabilities positions us extremely well for long term profitable growth.

Dan: So a pretty clean jump off point, and really driven by benefit of earned pricing.

Jeff Plank: Proud of these results and the best in class team that produce left with that I'll turn the call over to Jeff.

Speaker Change: Got it thank you.

Speaker Change: And then maybe just on that point, just adding more IV and are to some of those casualty lines and then maybe just looping and the decision to increase.

Jeff Plank: Thanks, Greg.

Jeff Plank: Bonded specialty ended the year with another strong quarter on both the top and bottom lines.

We generated segment income of $228 million, an excellent combined ratio of 82, 7%.

Speaker Change: The reinsurance protection on the casualty book could you could you just walk through.

Speaker Change: Sort of the thought process of of getting the reinsurance and is it just sort of I mean, you guys are it's seems like you guys are reacting sooner than many in the industry and is that just sort of added protection as you lean into growth or I'd be interested in sort of the thought process there.

Jeff Plank: In a strong 86, 8% underlying combined ratio in the quarter.

Jeff Plank: Turning to the top line. We're pleased that we grew net written premiums by 7% in the quarter.

Jeff Plank: And our high quality domestic management liability business, we delivered very strong retention of 88%.

Jeff Plank: We're pleased the corvus transition from an MGA to writing on our high quality paper drove higher retention relative to corvus historical experience.

Speaker Change: Let me start and then I'll turn it over to Dan if I leave anything out or I would say the changes we made we made because we could and every every renewal of every reinsurance treaty. We take a look at our business, we take a look at the reinsurance marketplace.

Jeff Plank: Management liability renewal premium change was positive and improved a point from the third quarter.

Speaker Change: And make the best risk reward decisions, we can make and so what what we were able to achieve for the price we were able to achieve it we thought made a lot of sense, but I would describe ordinary.

Jeff Plank: And new business was consistent with the very strong fourth quarter of 2023.

Jeff Plank: Turning to our market, leading surety business. We grew net written premiums by an outstanding 19% from prior year quarter.

Speaker Change: Ordinary course process and a terrific result.

Jeff Plank: This growth reflects a robust construction environment continue.

Brian Meredith: We will go next to Brian Meredith UBS financial.

Jeff Plank: Continued strong demand for our surety products and services.

Brian Meredith: Yes. Thank you.

Jeff Plank: And outstanding execution by our team in growing our high credit quality portfolio.

Brian Meredith: I'm just curious looking at the <unk> results. The underlying combined ratio is as good as it's been in 20 years I'm. Just curious in your thoughts are we kind of sitting here at peak margins is there more room for improvement how should we kind of think about the margin to return to joining other business, which a record.

Jeff Plank: So we're pleased to have once again delivered strong top and bottom line results this quarter in bond and specialty insurance captive.

Jeff Plank: Capping off a year during which we delivered record levels of net written premiums in both our surety and management liability businesses.

Alan Schnitzer: Well, thanks for that Brian They are terrific margins and we're very pleased with these margins I'm not I'm not going to forecast the margins for you, but what I will tell you is we love the business that we're putting on the books and we loved the pricing we love the stability in the marketplace. We loved the retention that we're seeing.

Jeff Plank: We're also pleased to have delivered excellent returns, while making significant strategic investments in our business.

Jeff Plank: Including enhancing our cyber capabilities upgrading our management liability technology platform.

Jeff Plank: And optimizing segmentation and productivity through advanced analytics and AI.

Alan Schnitzer: And these you take a look at this RPC, which is near double digits. That's.

Michael Klein: And now I'll turn the call over to Michael.

Michael Klein: Thanks, Jeff and good morning, everyone.

Alan Schnitzer: It's about the highest its ever been over a long period of time, so market feels stable for us and we feel good about the outlook, but I'm going to stop short of telling you what the direction is going to be.

Michael Klein: I'm very pleased to share that personal insurance delivered segment income of $798 million and a combined ratio of 87% for the fourth quarter of 2024.

I appreciate that and then maybe a little bit of a follow up that I am curious your comments and thoughts on the tort environment right now I'm always appreciate your comments on it anything that youre seeing are happening that maybe point system improvement potentially going forward or or vice versa.

Michael Klein: Both results outpaced last year's strong fourth quarter result.

Michael Klein: For the full year <unk> delivered record segment income, a one and a quarter billion.

Michael Klein: The combined ratio of 94, 4%.

Michael Klein: Collecting substantial improvement in the fundamentals of our business.

Speaker Change: Yes, the torch environment is it's.

Michael Klein: Net written premiums grew 7% in the quarter and 8% for the year, bringing full year net written premium to a record of nearly $17 2 billion.

It's definitely continues to be front and center in front of mind for us.

Speaker Change: It's an environmental issue that we're all facing.

Speaker Change: From a from a public policy perspective, the insurance industry might be the tip of the spear, but this is really an industry for businesses and consumers and I think there's a growing recognition of that it also has contributed to some very difficult insurance markets in a few states and we've seen a couple of states.

Michael Klein: And automobile the fourth quarter combined ratio was 94, 2%.

Michael Klein: The underlying combined ratio of 96, 3% improved six four points compared to the prior year.

Michael Klein: This improvement was primarily driven by the benefit of higher earned pricing.

Lower losses, resulting from favorable frequency across a number of coverages.

Speaker Change: Action to respond to that and in a couple of other states. We've had some favorable development in terms of of some.

Michael Klein: Sustained moderation in physical damage severity trends.

Speaker Change: Legislation around third party litigation financing disclosure, which we think is positive and hope as a trend so.

Michael Klein: This quarter's underlying results included a one five point benefit from the favorable re estimation of prior quarters in the current year.

Speaker Change: <unk> continues to be front and center for Us and we continue to.

Michael Klein: For the full year 2020 for the auto combined ratio of 95% with a considerable improvement compared to the prior year, reflecting the success of our disciplined approach to execution.

Speaker Change: Trying to get at it.

Speaker Change: Yeah.

Speaker Change: Great. Thank you.

West Carmichael: Well move next to West market excuse me Carmichael with autonomous research.

Michael Klein: With another quarter of sustained profitability, we remain focused on growing the auto book.

Speaker Change: Hey, good morning, and thanks for taking my question. My first one is on catastrophes in the 2025 plan I think you mentioned there is nothing in there related to California wildfires, but your full year assumption at six nine points I think that's a little bit maybe below the last couple of years. So could you maybe just help us with what's going into that planning assumption.

Michael Klein: In homeowners and other the fourth quarter combined ratio of 67, 8% improved three points compared to the prior year.

Michael Klein: As an improved underlying combined ratio was partially offset by the impact from higher catastrophes.

Michael Klein: The underlying combined ratio improved four three points, primarily driven by favorable non weather losses relative to the prior year and the continued benefit of earned pricing.

West Carmichael: Sure well you know, there's a lot of methodology and thought.

Speaker Change: And frankly judgment that goes into that number.

West Carmichael: <unk>.

West Carmichael: I think it would be premature to assume that what we've seen in the last couple of years that that high watermark as the new normal going forward, but certainly we take a look at that and incorporated into our thinking.

Michael Klein: This quarter's underlying results included a two point benefit from the favorable re estimation of prior quarters in the current year.

Michael Klein: Stepping back the 2020 for full year property combined ratio of 93, 9% was a strong calendar year result.

West Carmichael: We've waived the more recent years more heavily as we've come up with a cat plan. So I think I think that six nine points on a point basis would cover the cat losses in seven out of the last 10 years or something like that so.

Michael Klein: That said, we have more work to do to improve accident year profitability and consistently deliver target returns overtime.

Michael Klein: Our production results reflect our continued focus on generating growth in auto while improving profitability on property through the execution of our granular state by state strategy.

West Carmichael: We've got a bias toward the high end of recent experience, but again, we think it would be a little premature to assume that this high watermark as a new normal.

Michael Klein: In domestic automobile retention remained consistent while renewal premium change of 10, 2% continued to moderate as intended reflective of auto profitability.

Speaker Change: Got it. Thank you and my follow up on reserve development and <unk> I know you've talked about favorability in workers' comp are you able to size the gross amount of favorable development for us.

West Carmichael: Quarter.

Michael Klein: We're pleased to note that auto new business premium increased relative to the prior year quarter.

West Carmichael: Okay.

West Carmichael: <unk>, it's Dan. So we were you can think about that as comp in the fourth quarter being in the ballpark of around $250 million of good news.

Michael Klein: Driven by growth in new policies, and new business premiums in states that are not constrained by our property actions.

West Carmichael: Okay. Thank you.

Michael Klein: And domestic homeowners and other retention rose slightly to 86% and renewal premium change of 14, 1% remains strong and consistent with recent quarters.

Speaker Change: We'll take our next question from Alex Scott at Barclays.

Alex Scott: Hey, good morning. Thanks.

Alex Scott: First one I have is on the personal lines business.

Michael Klein: In 2025, we expect renewal premium change to increase to the high teens.

Speaker Change: Appreciate that there's a big event going on in homeowners right now, but just the underlying results this quarter kind of coming along faster than I would've guessed I'm wondering if it changes your approach to the market.

Michael Klein: As we continue to seek rate increases and further increase insured values to ensure they remain aligned with replacement costs.

Michael Klein: The slight decline in homeowners policies in force continues to reflect our deliberate efforts to improve profitability and thoughtfully deploy our property capacity.

Alex Scott: You know how competitive you want to be on price and.

Alex Scott: Is there to grow et cetera.

Michael: Sure Alex it's Michael.

Michael Klein: To recap in 2024, we delivered record net written premiums in segment income.

Alex Scott: I would say.

Not really.

Michael Klein: The substantial year over year improvement reflects the success of the significant actions, we've taken to improve the fundamentals of the business as well as the moderation of underwrite underlying loss trends.

Alex Scott: As I mentioned in my prepared remarks, if you look at the full year results at about a 94 and you take out <unk> you get to a 98 that is.

Alex Scott: Not delivering targeted returns in the property line of business.

Michael Klein: At the same time, we continued to invest in and deliver capabilities that will support the profitable growth of our business.

We also throughout the year have commented on favorable frequency and property.

Michael Klein: Examples include the re platforming of our specialty products.

Alex Scott: Offset by a bit of persistent severity.

Michael Klein: Continued advancement of our intelligence telematics offering.

Alex Scott: Hard to know how much of that favorable frequency is going to persist and so that's really why I said, we still have work to do in property and our focus on property really remains on improving profitability and generating consistent.

Michael Klein: Further evolution of our AI enabled aerial imagery capabilities.

Michael Klein: And modernization of our infrastructure.

Michael Klein: I couldn't be more proud of our team or more grateful to our distribution partners for their hard work and dedication in the face of an environment that continues to test and challenge us and our industry.

Alex Scott: <unk> returns.

Got it. Thank you as a follow up I wanted to see if I could ask one on.

Michael Klein: In particular I'd like to recognize our claim team who as we speak are on the ground in California, supporting our customers in their time of need.

Alex Scott: On the ongoing wildfires in California.

Alex Scott: Any any additional color you can help us with regarding your exposure maybe.

Michael Klein: With that I'll turn the call back over to Abbe.

Abbe: Thanks, Michael we are ready to open up for questions now.

Alex Scott: In Pacific Palisades in particular, the way you approach the more wildfire prone areas of that market.

Abbe: Thank you we will now begin the question and answer session. If you have dialed in I would like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.

Alex Scott: Anything on additional living expenses, they might just help as well I know youre not willing to quantify at this point that totally makes sense like anything that could kind of help us understand.

Abbe: If you would like to withdraw your question simply press Star one again.

Abbe: We ask that you limit yourself to one question and one follow up to allow everyone an opportunity to ask a question.

Alex Scott: Honestly I just don't think there's a lot we can share there we have and I think Michael shared this recently.

Speaker Change: We'll go first to Robert Cox at Goldman Sachs.

Alex Scott: We've taken.

Alex Scott: <unk> taken steps to thoughtfully manage our exposure in wildfire prone areas others have too. So we don't we don't know what that's done to our relative market share in some of these places.

Speaker Change: Hi, Thanks for taking my question maybe.

Speaker Change: Maybe just first on pricing I was hoping you could kind of unpack the renewal rate change a little bit and what you saw over the quarter that might have been indicative of a trend into 2025, whether it's by account size or our product just curious what changed in the context of our overall stable figure for our business.

Alex Scott: <unk>.

Alex Scott: So I don't I don't know that there's any any real color that we can give.

Alex Scott: Beyond what we've already shared.

Alex Scott: Okay.

Alex Scott: We'll go next to Elyse Greenspan at Wells Fargo.

Speaker Change: <unk>.

Alex Scott: Hi, Thanks, Good morning, My first question.

Speaker Change: Okay.

Speaker Change: Hey, Robert this is Greg.

Alex Scott: I just wanted to go back to the business insurance underlying loss ratio. So you guys saw in the third quarter right. There was a 180 basis points of year over year improvement and you said that there was.

Robert Cox: Even though the headline number as you can see there isn't meaningful change between the pricing and so again, our very granular local execution. We continue to look at them account by account basis, and we haven't seen any meaningful shifts.

Alex Scott: No real noise to call out so that was kind of a good run rate now it seems like 60 basis points. This quarter is a run rate I know you guys said that you.

Speaker Change: Other than the color that I gave you in the prepared comments so very stable.

Speaker Change: Okay got it thank you.

Speaker Change: And then maybe just as a follow up on on cats.

Speaker Change: There was some conservatism put into the casualty picks, but I believe that was the case in every quarter. This year. So what was the change from the 180 to the 60 that now seems like run rate in <unk> from Q3 to Q4 on the underlying loss ratio.

Speaker Change: Obviously.

Speaker Change: A number of large events here I was hoping you could just walk us through what you booked for mill and if that $100 million increase in current year cats was all related to <unk> and then.

Speaker Change: Not necessarily a quantitative question, but ultimately the impacts that you expect might come out of the California fires.

Speaker Change: Daily Stan so when we're talking about adjustments to jump off point of run rate.

Speaker Change: Again, we really think it's important to look at the business comparing the fourth quarter to the fourth quarter, the third quarter to the third quarter not either the sequential quarter or the sequential margin improvement. So we're trying to give you a jump off points of was there anything particularly unusual in a quarter that as you think about that as your modeled begins.

Dan Fry: Hey, Rob it's Dan So I'll start with BYD.

Speaker Change: No no no.

Speaker Change: No big events in the quarter as you can see by no new events, you'll be able to see when the K comes out in the table Milton was around 60 million Bucks for us a little less than.

Speaker Change: The preliminary range, we had provided on the third quarter earnings call.

Speaker Change: Point for the next year's quarter that you'd call out there.

Speaker Change: It's not to say that there's zero. Besides pricing there are as we've said in each of the quarters. This year, there's a number of puts and takes each year, but none of them were individually that significant and so we're down to a point where inside of a point of change and we're trying to say is there anything in there that really seems like it's <unk>.

Speaker Change: A number of prior quarter cats had adjustments to them that's typical.

Speaker Change: That change that you referenced from my prepared remarks was driven by Helene.

Speaker Change: Not surprising not concerning our that was a big event in the last five days of the quarter.

Speaker Change: And with sort of an unusual pattern as it had sort of did more damage in Georgia and the Carolinas than it did in Florida. So when you get a big event at the end of the quarter, you're trying to say I have other similar historical events that I can model out how claims are going to come in and then with the severity of different types of claims is going to be.

Speaker Change: Normal and should be adjusted or are we thinking about it is not.

Speaker Change: Our quote unquote clean jump off point and Thats. The color were trying to give you there not to the basis point of how much is <unk>.

Speaker Change: <unk> going to be in one quarter versus the next.

Speaker Change: Thanks, and then my follow up I, just wanted to go back to the California fires for a second.

Speaker Change: You just didn't have a lot of comparables in terms of Helene, so not really surprising to see them move there.

Speaker Change: We obviously can look at.

Speaker Change: In terms of California look as we've centered our in our remarks, it's going to be a big event for the industry.

<unk> sure.

Speaker Change: Market share is there any commentary I guess, you would give relative to statewide share.

Speaker Change: It'll have an impact on our first quarter earnings for sure.

Speaker Change: For travelers relative to potential share in the impacted areas and my second question, Dan on the reinsurance coverage right.

But to the degree that it's still very early and it's still really on ongoing in some cases, it's just too soon for us to.

Speaker Change: Go get cover right. So I know there is.

Speaker Change: To provide a number at this point.

Speaker Change: With like a $4 billion retention and then there was deductibles, but if.

Speaker Change: Okay.

Speaker Change: Well move next to Gregory Peters at Raymond James.

Speaker Change: The virus is a large event.

Speaker Change: <unk>.

Earmark your cats, I think to a certain degree right for the full year I just want to make sure I'm thinking about that correctly.

Gregory Peters: Good morning, everyone.

Speaker Change: I guess first question kind of building on the last answer.

Speaker Change: Please let me start on on your market share question, and then I'll turn it over to Dan for the reinsurance question. So you could take some estimate of market share and apply it to an estimate of industry loss and that would give you what I would describe as a point of reference so pretty blunt instrument, though for a few reasons first it's obviously pretty sensitive.

Speaker Change: In your prepared remarks, Greg you you talked about the select retention dropping down a little bit due in part to some changes in your CMP profile.

Speaker Change: If you could give us some more color on that and maybe as we look at business insurance give us some perspective on on the retention ratios as relates to lost business that youre, losing on price versus intense.

Speaker Change: Whatever estimate you have insured losses for the industry and that is going to develop over time.

Speaker Change: Second when it comes to market share the publicly available market share is dated information doesn't reflect actions, we or others have taken to manage exposure and it doesn't reflect any differences that might exist between local market share and statewide market share. So those are the those are the cautions I'd give you in in in applying that but yes.

Speaker Change: Intentional re underwriting.

Gregory Peters: Yeah, Greg let me take those two pieces for.

Speaker Change: The select one start there you get into a little bit of competitive sensitive information. If I give you the exact specifics of what geographies and industry classes that we're non renewing but let me give you a little color over the top we would only do non renewals when we can't get the right price to risk through the regulatory process.

Speaker Change: So it's a reference point I get it.

Speaker Change: And then at least with regard to the 2025.

Speaker Change: <unk>, you're right one of the one of the we think great features of our treaty is that it is in aggregate and it is an aggregate cover so while I wouldn't expect recoveries under the treaty from the California wildfires to the degree that they impact first quarter earnings and it's and it's a big number there is 100 million dollar per event deduct.

Speaker Change: So you can think about severe convective storm. That's a recent peril that continues to be more severe.

Speaker Change: We've isolated a couple of spots, where we've needed to non renewal components of the small commercial book, but that gives you a little bit of a flavor of what's driving that.

Speaker Change: Think we bottomed out on those non renewals of select so at that 80% retention, that's kind of the expectation that we have given that we are through that for us to those renewals in the back half of 2025, we would see some improvement there.

Speaker Change: As I said in my prepared remarks, and as you can see on the chart, but yes. This will accumulate towards the $4 billion retention, which if theres a very active second quarter for cats are a very active third quarter for cats, it's possible that we'd be talking about recoveries under the treaty.

Speaker Change: So that's the that's really the driver of what's driving the slight deterioration in retention across business insurance.

Speaker Change: Yes.

Speaker Change: We'll move next to Iran Qunar at Jefferies.

Speaker Change: Thank you good morning.

Speaker Change: Hum.

Speaker Change: Just going back topic of the data at the California wildfires.

Speaker Change: Great and then I guess that's.

Speaker Change: As a follow up.

Speaker Change: I asked this question of you before Alan Hum.

Speaker Change: Can you maybe talk about how if at all.

Speaker Change: But looking at slide 21, which is your technology investments.

Speaker Change: So you would impact the company's appetite for home and property business in the state.

Speaker Change: Not really if you could provide us this chart don't really put some numbers in there and we hear you.

Speaker Change: Would you look to further prune exposure to wildfires or do you believe that the actions that you've taken.

Speaker Change: To date positioning well from that perspective.

Speaker Change: His comments.

Speaker Change: Dribble out commentary about where you're making investments in technology, but I thought maybe you could spend a minute and give us some more granular.

Speaker Change: Yeah.

Speaker Change: I'll start and then Michael I will turn it over.

Speaker Change: It's going to depend on on how the market reacts to it.

Speaker Change: Granular details on what's going on there because it seems like it's pretty important initiatives for the company.

Speaker Change: The.

Speaker Change: Insurance market was challenged going into this there were some recently adopted reforms and I think that was a good start it's possible that this is going to be a catalyst for further and meaningful reforms.

Speaker Change: Yes, Thanks, Greg and good morning.

Speaker Change: In terms of numbers, we don't put numbers on that scale, but we have shared that the overall tech spend over $1 billion $5 last year I think we shared that in the prior year.

Speaker Change: So I think we're just going to wait and need to see how that shakes out before we.

Speaker Change: And if I had to give you a broad brush response to where is it I would say broadly speaking, but not exclusively but broadly broadly speaking, we're digitizing the value chain.

Speaker Change: Make any decisions yet.

Speaker Change: Yeah, and the only thing I would add to that your own as we've been shrinking in California coming into the event.

Speaker Change: We have a rate increase for property on file with the department as we speak which clearly doesn't include the losses from the California wildfires. So all of that will certainly.

Speaker Change: So thats digitizing the customer journey, it's modernizing the foundation its advanced analytics, it's automation its fastest speed to market getting the right price on the risk.

Speaker Change: Feed into our assessment of actions, we need to we need to take going forward.

Speaker Change: Those sorts of things, but you know at the enterprise level. We're also investing in talent and AI and third party data product development.

Speaker Change: Okay.

Speaker Change: Makes sense.

Speaker Change: Then Michael maybe another question for you it sounds like your appetite for auto is personal auto is growing you're open for business and a growing number of states.

The business units and segments are busy at work investing in new products partner integration better front end for customers things like that.

Speaker Change: At the same time Im sure Youre seeing the same headlines we are on tariff and alike.

Speaker Change: Okay.

Mike Zaremski: We'll go next to Mike Zaremski.

Speaker Change: Amit.

Speaker Change: Are your is your appetite for auto.

Speaker Change: <unk> capital markets.

Speaker Change: Yeah.

Speaker Change: Taking into account the potential for tariffs or is that something that you will react to if and when we actually see those.

Speaker Change: Alright. Thanks.

Speaker Change: First question on the reserve.

There are releases in commercial.

Put in place.

Speaker Change: Sure. It's a great question and I would lean more towards the ladder in terms of your question I think certainly it's hypothetical it's hard to predict we don't know which countries, we don't know what amounts and where auto parts and autos coming from.

Speaker Change: Yes.

Speaker Change: Most releases I've seen in a couple of years so good to see.

Speaker Change: And he and I I heard that you heard the prepared remarks high level prepared remarks, but anything you'd want to call out as kind of a.

Speaker Change: Notable true up or you know that this level of releases, where they kind of imply that the IV iron or you guys have added in recent years more so than your peers, you know kind of as a.

Speaker Change: It depends a lot on which countries youre talking about and.

Speaker Change: What level of those tariffs are at and so.

Speaker Change: As opposed to trying to predict it we're looking at our prospective view of rate adequacy, we feel great about the margins in the business today, we're actively pursuing auto growth and.

Speaker Change: It is helping.

Dan Fry: Sure Mike It's Dan So just to come back to the remarks specific to business insurance.

We will continue to do so and then we will reflect that.

Dan Fry: The main driver of the favorability was workers' comp Workers' comp has been as you all well know a very favorable story for a long time now it's sort of just a question of.

Speaker Change: Any changes in our pricing.

Speaker Change: When and if we know what they are in and then factor that into their calculus at that point in time.

Dan Fry: How much is it from quarter to quarter, depending on the way data developments and changes in frequency and severity.

Speaker Change: Okay.

Speaker Change: We will take our next question from Josh Shanker at Bank of America.

Dan Fry: We've said it before and I'll just say it again, we don't really think of <unk> as a run rate of any sort. So I expect that number to be different from quarter to quarter that was the big that was the big piece of good news in the quarter. The only noteworthy piece of unfavorable development in the quarter as I mentioned on.

Josh Shanker: Thank you.

Josh Shanker: Okay, I hate asking more wildfire questions I understand you don't know, but education very valuable to us can you tell us the degree to which some.

Josh Shanker: Travelers policies might exclude fire.

Josh Shanker: Or is it a travelers policy one that has not been put anyone's the fair plan.

Dan Fry: On the call was strengthening in the runoff book for abuse and molestation.

Dan Fry: There are always other puts and takes in the quarter, but nothing of any significance are worth calling out.

Josh Shanker: It has comprehensive coverage.

Josh Shanker: Sure Josh its Michael So we write two types of property policies in California.

Dan Fry: Okay, Great and I guess my follow up I'll stick to workers.

Josh Shanker: We write a standard quantum home two property policy that does include coverage for a wildfire.

Dan Fry: Workers comp and you may have you may have answered this.

Josh Shanker: In areas, where we do not have an appetite to write policies that cover fire. We do right. What we call a dicey policy, which you can think of as a policy that excludes.

Dan Fry: And Rob's question, but in the prepared remarks, I don't think you mentioned kind of any pricing changes.

Dan Fry: Quarter over quarter or or trends in workers' comp. So is it just fair to assume given the workers.

Dan Fry: Workers' comp pricing.

Josh Shanker: Losses from fire and wildfires.

Dan Fry: A bit.

Dan Fry: Negative and real pricing.

Josh Shanker: Some customers pair that with a fair planning policy. Because then they have the travelers claim service they have the travelers coverage for non fire losses, and so we do have both types of policies in force in the state.

Speaker Change: I would say, Mike I would describe it as largely stable you know the pure renewal rate change is a little bit negative and with exposure you get to something a little bit positive and you know theres always some fluctuations quarter to quarter, but I think staples for the way I'd describe it.

Josh Shanker: And just one other question and I'm not trying to pin a number on your own if you I'm just trying to be smart.

Dan Fry: Yeah.

Speaker Change: We'll go next to David Motor Madman at Evercore ISI.

Speaker Change: What is travelers appetite for 5 million dollar homes in the state of California or whatnot.

Dan Fry: Okay.

Speaker Change: Hey, Thanks, good morning.

Speaker Change: I had a question just on the business insurance underlying loss ratio I, Greg I heard you call out just earned rate or earned rate coming in.

I don't really I don't think of travelers is targeting high net worth individuals, but California's an expensive real estate market can you just talk about appetite and what are the normal travelers target home in that state.

Speaker Change: I guess I'm wondering is there anything else in that 50.

Michael: Yes, sure sure Josh It's Michael again, I would say are our appetite for and our exposure to $5 million homes in California is very limited.

Speaker Change: <unk> 57.3, that's not sustainable or favorable mix or anything like that.

Michael: You know and we've talked about in the past our appetite really is middle market in mass affluent business I would say when you get to.

Speaker Change: That's flattering their result.

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

David: Yes, the answer is not really.

Michael: <unk> 5 million dollar homes, we would consider that really more high net worth business and were not a significant player in that market.

Speaker Change: When we have something that we think you need to sort of call out as as nonrecurring we try to do it in prepared remarks, you heard Michael reference you know current year prior quarter adjustments benefiting the fourth quarter in auto and home.

Speaker Change: Thank you very much for the answers.

Michael: Yeah.

Speaker Change: We have time for one more question and that question comes from the line of Michael Philips at Oppenheimer.

Speaker Change: We didn't call anything out NPI, because we didn't really think there was anything unusual to call out so the benefit in the quarter is earned price.

Thanks, Good morning, and thanks for fitting me in wondering if you could peel back the growth commercial auto mid teens right now how much of that is rate how much of that is.

Speaker Change: You know a really terrific underlying at 57, 4% and even within that we did choose to add a little bit of IV NR to the casualty line again, reflecting uncertainty in that line not a big move.

Speaker Change: And then maybe any comments on commercial auto that youre seeing in frequency and severity would be appreciated. Thank you.

Speaker Change: Hey, Michael I am not going to get into the details on loss trend on that but I'll give you a little bit of color on the top line Delta that you asked about the thrust of that is renewal premium change. So it really is rate and exposure that's driving that topline growth.

Speaker Change: So a pretty clean jump off point, and really driven by benefit of earned pricing.

Speaker Change: Got it thank you.

Speaker Change: And then maybe just on that point, just adding more IV and are to some of those casualty lines and then maybe just looping and the decision to increase.

Speaker Change: Okay, Perfect and then you talked a bit about personal auto I guess, we're kind of hearing a bit of a mixed bag between different companies on where they are with rates and how much. They want to grow can you just at a higher level can you talk about what youre seeing this quarter versus maybe the last couple of quarters and so on.

Speaker Change:

Speaker Change: The reinsurance protection on the casualty book could you could you just walk through.

Speaker Change: Sort of a thought process of of getting the reinsurance and is it just sort of I mean, you guys are it's seems like you guys are reacting sooner than many in the industry and is that just sort of added protection as you lean into growth or I'd be interested in sort of the thought process there.

Speaker Change: Over the last quarter and the competitive environment in personal auto.

Speaker Change: <unk>.

Speaker Change: Sure Michael It's Michael here.

Speaker Change: Yes.

Speaker Change: I would say the competitive environment last quarter versus this quarter is fairly consistent.

Speaker Change: And I would say our observations on what's happening in the marketplace are fairly consistent I think the good news is that.

Speaker Change: David Let me start and then I'll turn it over to Dana if I leave anything out or I would say the changes we made we made because we could and every every renewal of every reinsurance treaty. We take a look at our business, we take a look at the reinsurance marketplace.

Speaker Change: That we continue to make progress as we pursue auto growth new business was up 6% relative to the fourth quarter of last year.

Speaker Change: This quarters fourth quarter, new business is actually a record for fourth quarter, new business for us in auto.

Speaker Change: And make the best.

Speaker Change: Risk reward decisions, we can make and so what what we were able to achieve for the price we were able to achieve it we thought it made a lot of sense, but I would describe.

Speaker Change: And as I mentioned in states that aren't constrained by our property actions were growing both new policies and new business premium.

Speaker Change: Mary course process and a terrific result.

Speaker Change: In aggregate. So we're encouraged by the progress in and I would say the marketplaces remained relatively consistent over the last couple of quarters.

Brian Meredith: We'll go next to Brian Meredith with UBS financial.

Speaker Change: Okay.

Speaker Change: Yeah. Thank you.

Speaker Change: Just curious looking at the <unk> results you know the underlying combined ratio is as good as it's been in 20 years.

Speaker Change: And that concludes our Q&A session I will now turn the conference back over to Abbe for closing remarks. Thank.

Speaker Change: I'm just curious in your thoughts are we kind of sitting here at peak margins is there more room for improvement.

Abbe: Thanks, everyone for joining us we appreciate your time and as always if there's any follow ups. Please reach out directly to Investor Relations. We hope you have a good day and thank you Dan.

Speaker Change: How should we kind of think about the margins returned to joining of the business, which a record.

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

Speaker Change: Yeah.

Speaker Change: Well, thanks for that Brian They are terrific margins and we're very pleased with these margins I'm not I'm not going to forecast the margins for you, but what I will tell you is we love the business that we're putting on the books and we loved the pricing we love the stability in the marketplace. We loved the retention that we're seeing.

Abbe: Yeah.

Speaker Change: And these you take a look at his RPC, which is near double digits. That's.

Speaker Change: It's about the highest its ever been over a long period of time, so market feels stable for us and we feel good about the outlook, but I'm going to stop short of telling you what the direction is going to be.

Abbe: Yeah.

Speaker Change: I appreciate that and then maybe a little bit of a follow up that I'm curious your comments and thoughts on the tort environment right now I'm always appreciate your comments on it anything that youre seeing are happening that maybe point system improvement potentially going forward or or vice versa.

Abbe: Yes.

Abbe: Yes.

Speaker Change: Yeah.

Speaker Change: Yes, the tort environment is.

Speaker Change: It's definitely continues to be front and center in front of mind for us.

Speaker Change: It's an environmental issue that we're all facing.

Speaker Change: From a public policy perspective, the insurance industry might be the tip of the spear, but this is really an industry for businesses and consumers and I think there's a growing recognition of that it also has contributed to some very difficult insurance markets in a few states and we've seen a couple of states.

Speaker Change: Take action to respond to that.

Speaker Change: And in a couple of other states, we've had some favorable development in terms of of some.

Speaker Change: Asian around third party litigation financing disclosure, which we think is positive and hope as a trend so.

Speaker Change: <unk> continues to be front and center for Us and we continue to.

Speaker Change: Trying to get at it.

Speaker Change: Yeah.

Speaker Change: Great. Thank you.

Speaker Change: Well move next to Westmarc excuse me Carmichael with autonomous research.

Speaker Change: Hey, good morning, and thanks for taking my question. My first one is on catastrophes in the 2025 plan I think you mentioned there is nothing in there related to California, wildfires, but you.

Speaker Change: Your full year assumption that six nine points I think that's a little bit maybe below the last couple of years. So could you maybe just help us with what's going into that planning assumption.

Abbe: Thank you.

Speaker Change: Sure well, yeah, there's a lot of methodology and thought.

Abbe: Okay.

Speaker Change: Frankly judgment that goes into that number and.

Speaker Change: I think it would be premature to assume that what we've seen in the last couple of years that that high watermark as the new normal going forward, but certainly we take a look at that and incorporated into our thinking.

Speaker Change: We've waived the more recent years more heavily as we've come up with a cat plan. So I think I think that six nine points on a point basis would cover the cat losses in seven out of the last 10 years or something like that so we've got a bias toward the high end of recent experience, but again, we think it would be a little premature to assume that this high watermark.

Speaker Change: A new normal.

Speaker Change: Got it. Thank you and my follow up on reserve development and <unk> I know you talked about favorability in workers' comp are you able to size the gross amount of favorable development for us in the fourth quarter.

Dan Fry: <unk>, it's Dan. So we were you can think about that as comp in the fourth quarter being in the ballpark of around $250 million of goodness.

Speaker Change: Okay. Thank you.

Speaker Change: We'll take our next question from Alex Scott at Barclays.

Alex Scott: Hey, good morning. Thanks first one I have is on the personal lines business I appreciate that there's a big event going on in homeowners right now, but just the underlying results this quarter kind of coming along faster than I would've guessed I'm wondering if it changes your approach to the market.

Speaker Change: You know how competitive do you wanna be on price and your desire to grow et cetera.

Michael Klein: Sure Alex This is Michael.

Speaker Change: I would say.

Michael Klein: Not really.

Michael Klein: As I mentioned in my prepared remarks, if you look at the full year results at about a 94 and you take out <unk> you get to a 98 that is not delivering targeted returns in the property line of business.

Michael Klein: We also throughout the year have commented on favorable frequency in property offset by a bit of a persistent severity.

Michael Klein: Hard to know how much of that favorable frequency is going to persist and so that's really why I said, we still have work to do in property and our focus on property really remains on improving profitability and generating consistent.

Michael Klein: Returns.

Got it. Thank you as a follow up I wanted to see if I could ask one on.

Michael Klein: On the ongoing wildfires in California.

Michael Klein: Yeah any any additional color you can help us with regard to your exposure maybe.

Michael Klein: In Pacific Palisades in particular, the way you approach the more wildfire prone areas of that market.

Michael Klein: Anything on additional living expenses that they might just help as well I know you're not willing to quantify at this point that totally makes sense like anything that could kind of help us understand.

Michael Klein: Yeah.

Michael Klein: Alex I just I just don't think there's a lot we can share there we have and I think Michael shared this recently.

Michael Klein: We've taken.

Speaker Change: <unk> taken steps to thoughtfully manage our exposure in wildfire prone areas others have too. So we don't we don't know what that's done to our relative market share in some of these places.

Michael Klein: <unk>.

Michael Klein: So I don't I don't know if there's any any real color that we can give a bit.

Michael Klein: Beyond what we've already shared.

Michael Klein: Yeah.

Michael Klein: We'll go next to Elyse Greenspan at Wells Fargo.

Elyse Greenspan: Hi, Thanks, Good morning, My first question.

Speaker Change: I just want to go back to the business insurance underlying loss ratio. So you guys saw in the third quarter right. There was a 180 basis points of year over year improvement and you said that there was you know.

Speaker Change: No real noise to call out so that was kind of a good run rate now it seems like 60 basis points. This quarter is a run rate I know you guys said that you.

Speaker Change: There was some conservatism put into the casualty picks, but I believe that was the case in every quarter. This year. So what was the change from the 180 to the 60 that now seems like run rate from Q3 to Q4 on the underlying loss ratio.

Speaker Change: Daily stand so what are we talking about adjustments to jump off point of run rate again, we really think it's important to look at the business comparing the fourth quarter to the fourth quarter, the third quarter to the third quarter not either the sequential quarter or the sequential margin improvement. So we're trying to give you a <unk>.

Speaker Change: <unk> points of was there anything, particularly unusual in a quarter that as you think about that as your modeled beginning point for the next year's quarter that you'd call out.

Speaker Change: Not to say that there is zero besides pricing there are as we've said in each of the quarters. This year, there's a number of puts and takes each year, but none of them were individually that significant and so we're down to a point where inside of a point of change and we're trying to say is there anything in there that really seems like it's <unk>.

Speaker Change: As normal and should be adjusted or are we thinking about it is not.

Speaker Change: Our quote unquote clean jump off point and that's that's the color. We're trying to give you there not to the basis point of how much is <unk>.

Speaker Change: Movement going to be in one quarter versus the next.

Speaker Change: Thanks, and then my follow up.

Speaker Change: Wanted to go back to the California fires for a second.

Speaker Change: We obviously can look at.

Speaker Change: <unk> sure.

Speaker Change: Market share is there any commentary I guess, you would give relative to statewide share.

Speaker Change: For travelers relative to potential share in the impacted areas and my second question, Dan on the reinsurance coverage right.

Speaker Change: I'll go get cover right. So I know there is.

Speaker Change: With like a $4 billion retention and then there was deductibles but.

The virus is a large event this does.

Speaker Change: Earmark your cats, I think to a certain degree right for the full year I just wanted to make sure I'm thinking about that correctly.

Speaker Change: Please let me start on on your market share question, and then I'll turn it over to Dan for the reinsurance question. So you could take some estimate of market share and apply it to an estimate of industry loss and that would give you you know what I would describe as a point of reference so pretty blunt instrument, though for a few reasons first it's obviously pretty sensitive.

Speaker Change: Whatever estimate you have insured losses for the industry and that's going to develop over time.

Speaker Change: When it comes to market share the publicly available market share is dated information doesn't reflect actions, we or others have taken to manage exposure and it doesn't reflect any differences that might exist between local market share and statewide market share. So those are the those are the cautions I'd give you in in in applying that but yes.

Speaker Change: So it's a reference point I get it.

Speaker Change: And then at least with regard to the 2025.

Speaker Change: <unk>, you're right one of the one of the we think great features of our treaty is that it is in aggregate and it is an aggregate cover so while I wouldn't expect recoveries under the treaty from the California wildfires to the degree that they impact first quarter earnings and it's and it's a big number there is 100 million dollar per event deduct.

Speaker Change: Well as I said in my prepared remarks, and as you can see on the chart, but yes. This will accumulate towards the $4 billion retention, which if theres a very active second quarter for cats are a very active third quarter for cats, it's possible that we'd be talking about recoveries under the treaty.

Speaker Change: Yes.

Speaker Change: Well move next to Iran Qunar at Jefferies.

Speaker Change: Thank you good morning.

Speaker Change: Just going back topic of the day, the California wildfires.

Speaker Change: Can you maybe talk about how if at all.

Speaker Change: So you would impact the company's appetite for home and property business in the state.

Speaker Change: Would you look to further prune exposure to wildfires or do you believe that the actions that you've taken.

Speaker Change: To date positioning well from that perspective.

Speaker Change: Yeah.

Speaker Change: I'll start and then Michael I'll turn it over.

Michael Klein: It's going to depend on on how the market reacts to it.

Speaker Change: The.

Speaker Change: Insurance market was challenged going into this there were some recently adopted reforms and I think that was a good start it's possible that this is going to be a catalyst for further and meaningful reforms.

Speaker Change: So I think we're just going to wait and need to see how that shakes out before we.

Speaker Change: Make any decisions.

Speaker Change: Yeah, and the only thing I would add to that your own as we've been shrinking in California coming into the event.

Speaker Change: We have a rate increase for property on file with the department as we speak which clearly doesn't include the losses from the California wildfires, So all of that while certainly.

Speaker Change: Feed into our assessment of actions, we need to we need to take going forward.

Speaker Change: Okay.

Speaker Change: Makes sense.

Speaker Change: And then Michael maybe another question for you it sounds like your appetite for auto is personal auto is growing you're open for business and a growing number of states.

Speaker Change: At the same time Im sure Youre seeing the same headlines we are on tariffs.

Speaker Change: Right.

Speaker Change: Yeah.

Speaker Change: Are your is your appetite for auto.

Speaker Change: Taking into account the potential for tariffs or is that something that you will react to if and when we actually see.

Speaker Change: Put in place.

Speaker Change: Sure. It's a great question and I would lean more towards the ladder in terms of your question I think certainly it's hypothetical it's hard to predict we don't know which countries, we don't know what amounts and where auto parts and autos coming from it.

Speaker Change: It depends a lot on which countries youre talking about and.

Speaker Change: What level of those tariffs are at and so.

Speaker Change: As opposed to trying to predict it we're looking at our prospective view of rate adequacy, we feel great about the margins in the business today, we're actively pursuing auto growth it.

Speaker Change: We will continue to do so and then we will reflect any changes in our pricing.

Speaker Change: When and if we know what they are and and then factor that into their calculus at that point in time.

Speaker Change: Okay.

Speaker Change: We will take our next question from Josh Shanker at Bank of America.

Thank you.

Josh Shanker: I hate asking more wildfire questions I understand you don't know, but education very valuable to us can you tell us the degree to which some travelers policies might exclude fire.

Josh Shanker: Or is it a travelers policy one that has not been put anyone's the fair plan.

Josh Shanker: It has comprehensive coverage.

Josh Shanker: Sure Josh its Michael So we write two types of property policies in California.

Speaker Change: You're right our standard quantum home two property policy that does include coverage for a wildfire.

Speaker Change: In areas, where we do not have an appetite to write policies that cover fire. We do right. What we call a dicey policy, which you can think of as a policy that excludes.

Speaker Change: Losses from fire and wildfires.

Speaker Change: Some customers pair that with a fair play and policy. Because then they have the travelers claim service to have the travelers coverage for non fire losses, and so we do have both types of policies in force in the state.

Speaker Change: And then just one other question and I'm not trying to pin a number.

Speaker Change: Brown.

Speaker Change: Just trying to be smart.

Speaker Change: What is travelers appetite for 5 million dollar homes in the state of California or whatnot.

Speaker Change: I don't really I don't think of travelers is targeting high net worth individuals, but California's an expensive real estate market can you just talk about our appetite and what are the normal travelers target home in that state.

Michael Klein: Yes, sure sure Josh It's Michael again, I would say are our appetite for and our exposure to $5 million homes in California is very limited.

Michael Klein: You know and we've talked about in the past our appetite really is middle market in mass affluent business I would say when you get to <unk>.

Michael Klein: 5 million dollar homes, we would consider that really more high net worth business and were not a significant player in that market.

Speaker Change: Thank you very much for the answers.

Michael Klein: Yeah.

We have time for one more question and that question comes from the line of Michael Philips at Oppenheimer.

Michael Philips: Thanks, Good morning, and thanks for fitting me I'm wondering if you could peel back the growth commercial auto mid teens right now how much of that is rate how much of that as well.

Speaker Change: And then maybe any comments on commercial auto that youre seeing in frequency and severity would be appreciated. Thank you.

Speaker Change: Hey, Michael I'm, not going to get into the details on loss trend on that but give you a little bit of color on the top line Delta that you asked about but the thrust of that is renewal premium change. So it really is rate and exposure that's driving that top line growth.

Speaker Change: Okay, Perfect and then you talked a bit about personal auto I guess, we're kind of hearing a bit of a mixed bag between different companies on where they are with rates and how much they want to grow.

Speaker Change: At a higher level can you talk about what you're seeing this quarter versus maybe the last couple of quarters.

Speaker Change: Over the last quarter and the competitive environment in personal auto.

Speaker Change: Yeah.

Speaker Change: Sure Michael It's Michael here.

Speaker Change: Yes.

Speaker Change: I would say the competitive environment last quarter versus this quarter is fairly consistent.

Speaker Change: And I would say our observations on what's happening in the marketplace are fairly consistent I think the good news is that.

Speaker Change: That we continue to make progress as we pursue auto growth new business was up 6% relative to the fourth quarter of last year.

Speaker Change: This quarters fourth quarter, new business is actually a record for fourth quarter, new business for us in auto.

Speaker Change: And as I mentioned in states that aren't constrained by our property actions were growing both new policies and new business premium.

Speaker Change: In aggregate. So we're encouraged by the progress in and I would say the marketplaces remained relatively consistent over the last couple of quarters.

Speaker Change: Okay.

Speaker Change: And that concludes our Q&A session I will now turn the conference back over to Abbe for closing remarks. Thanks.

Speaker Change: Thanks, everyone for joining us we appreciate your time and as always if there's any follow up please reach out directly to Investor Relations. We hope you have a good day and thank you Dan.

Speaker Change: And this concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.