Fourth Quarter 2023 Presentation

FOURTH QUARTER 2023 RESULTS

January 19, 2024

L O N G - TERM FINANCIAL STRATEGY

	Generation of	Balanced
Meaningful	top-tier earnings	approach to
and sustainable	and capital	rightsizing capital
competitive	substantially	and growing book
advantages	in excess of	value per share
	growth needs	over time

CREATE SHAREHOLDER VALUE

Objective: Mid-Teens Core ROE Over Time

FOURTH QUARTER 2023 OVERVIEW

Travelers Reports Excellent Fourth Quarter 2023 Results

Record Quarterly Net Income per Diluted Share of $6.99 and Retuon Equity of 29.0%

Record Quarterly Core Income per Diluted Share of $7.01 and Core Retuon Equity of 24.0%

Full Year Net Income of $2.991 billion and Retuon Equity of 13.6%

Full Year Core Income of $3.072 billion and Core Retuon Equity of 11.5%

Record quarterly net income of $1.626 billion and core income of $1.633 billion, driven by both underwriting and investment results.
Exceptional consolidated combined ratio of 85.8%, an 8.7 point improvement, and underlying combined ratio of 85.9%, a 5.5 point improvement.
Net written premiums of $9.994 billion for the quarter, up 13%, and full year net written premiums of $40.201 billon, up 14%; both periods reflect growth in all three segments.
Net investment income increased 24% pre-tax over the prior year quarter primarily due to strong fixed income returns and growth in fixed maturity investments.
Total capital of $298 million returned to shareholders in the quarter; full year total capital returned to shareholders of $1.944 billion.
Book value per share of $109.19, up 18% over year-end 2022, driven by lower interest rates; adjusted book value per share of $122.90, up 8% over year-end 2022.
Board of Directors declares regular cash dividend of $1.00 per share.

CONSOLIDATED PERFORMANCE

($ in millions, except per share amounts, after-tax, except for premiums)

		FOURTH QUARTER
		2023			2022		Change
Core income	$	1,633		$	810		NM
per diluted share	$	7.01		$	3.40		NM
Included the following items:
Net favorable prior year reserve development	$	105		$	145
Catastrophes, net of reinsurance		(99)			(362)
Total items	$	6		$	(217)
Loss and loss adjustment expense ratio		58.4	%		66.6	%
Underwriting expense ratio		27.4			27.9
Combined ratio 1		85.8	%		94.5	%	8.7	pts
Net favorable prior year reserve development		1.3			2.1
Catastrophes, net of reinsurance		(1.2)			(5.2)
Underlying combined ratio		85.9	%		91.4	%	5.5	pts
Net written premiums	$	9,994		$	8,829		13	%

FULL YEAR

	2023			2022		Change
$	3,072		$	2,998		2	%
$	13.13		$	12.42		6	%
$	113		$	512
	(2,361)			(1,480)
$	(2,248)		$	(968)
	68.9	%		67.1	%
	28.1			28.5
	97.0	%		95.6	%	(1.4) pts
	0.4			1.9
	(7.9)			(5.5)
	89.5	%		92.0	%	2.5	pts
$	40,201		$	35,414		14	%

4	1 A favorable impact to the combined ratio is indicated as a positive item, and an unfavorable impact is indicated as a negative item.
	Note: NM = Not meaningful.

VERY STRONG FINANCIAL POSITION

($ and shares in millions, except per share amounts)

Debt

Common equity 1 Total capital 1Debt-to-capital1

Common shares outstanding

Book value per common share

Adjusted book value per common share 1

Tangible book value per common share 1, 2

Statutory capital and surplus

Holding company liquidity

December 31,	December 31,
		2023		2022
$	8,031	$	7,292
		28,050		26,458

$	36,081	$	33,750
		22.3%		21.6%

		228.2		232.1
$	109.19	$	92.90
$	122.90	$	114.00
$	104.57	$	96.00
$	25,114	$	23,677
$	1,544	$	1,452

Capital

Continued strong capitalization to support the Company's business operations.
Repurchased 0.4 million shares in fourth quarter 2023 for a total cost of $66 million; 5.7 million shares for full year 2023 for a total of $1.029 billion.
Dividends in the fourth quarter were $232 million; $915 million for full year 2023.

Leverage

Debt-to-capitalratio1 of 22.3% comfortably within target range of 15% - 25%.
Next maturing long-term debt of $200 million in April 2026.

Very high-quality investment portfolio

Fixed maturities average weighted quality: Aa2, AA.
Fixed maturities at or above investment grade: 98.7%.

5	1	Excludes net unrealized investment gains (losses), net of tax, included in shareholders' equity.
2	Excludes the after-tax value of goodwill and other intangible assets.

NET INVESTMENT INCOME

($ in millions, after-tax)

TOTAL

$542 $609 $539 $595$505 $531 $557$594$640 $645

20221

20231

1Q'22

2Q'22

3Q'22

4Q'22

1Q'23

2Q'23

3Q'23

4Q'23

After-tax yield

2.5% 2.7% 2.5% 2.7% 2.3% 2.4% 2.5% 2.7% 2.8% 2.8%

Fourth Quarter 2023 vs. Prior Year Quarter Commentary

Net investment income (NII) from the long-term and short-term fixed income portfolios increased due to a higher average yield and growth in average invested assets
NII from the non-fixed income portfolio increased slightly, primarily due to higher private equity partnership returns, partially offset by lower real estate partnership returns (non-fixed income returns are generally reported on a one-quarter lagged basis)

FIXED INCOME2

$467$566$436 $447 $475$510 $524$541 $582 $619

Long-term

Short-term

20221 20231 1Q'22 2Q'22 3Q'22 4Q'22 1Q'23 2Q'23 3Q'23 4Q'23 After-taxyield

Total 2.3% 2.7% 2.2% 2.2% 2.3% 2.5% 2.5% 2.6% 2.7% 2.8% Short-term 1.7% 4.6% 0.2% 0.9% 2.1% 3.4% 4.3% 4.7% 5.0% 4.8% Long-term 2.3% 2.6% 2.3% 2.3% 2.4% 2.4% 2.5% 2.5% 2.6% 2.7%

NON-FIXED INCOME2

			$157
$84		$113
$52						$63	$67
			$38	$29	$43	$34


20221	20231	1Q'22	2Q'22	3Q'22	4Q'22	1Q'23	2Q'23	3Q'23	4Q'23
After-tax yield
5.5%	3.3%	7.5%	10.2%	2.5%	1.9%	2.8%	4.0%	4.3%	2.2%

6	1	2022 and 2023 data represent quarterly average.
2	Excludes investment expenses.

LEADING CORE RETURN ON EQUITY AT INDUSTRY-LOW VOLATILITY

13.0%

10.9%

11.3%

13.7%

11.3%

11.5%

8.7%
1.0%		7.8%
	0.2%	1.1%

0.3%

4.3%

7.5%

6.4% 3.1%

2005
through	2019
2018

	8.8%
6.9%	3.3%

0.7%

0.1%

4.9%

4.4%

6.1%5.5%

20202021

Full Year

7.1%

1.2%

0.2%

4.2%

5.7%

2022

8.0%

0.7%

3.5%

6.6%

2023

	Long-term fixed net investment portfolio investment income less holding company interest expense
	Short-term fixed net investment portfolio investment income
	Non-fixed net investment portfolio investment income
7	Underwriting gain and other

BUSINESS INSURANCE PERFORMANCE

($ in millions)

			FOURTH QUARTER
		2023			2022		Change
Segment income	$	957		$	725		32	%
Loss and loss adjustment expense ratio		57.7	%		60.4	%
Underwriting expense ratio		28.8			29.1
Combined ratio 1		86.5	%		89.5	%	3.0	pts
Net favorable (unfavorable) prior year reserve development		1.1			2.8
Catastrophes, net of reinsurance		(0.8)		(2.8)
Underlying combined ratio		86.8	%		89.5	%	2.7	pts
Net written premiums
Domestic
Select Accounts	$	862		$	734		17	%
Middle Market		2,751			2,513		9
National Accounts		317			295		7
National Property and Other		682			578		18
Total Domestic		4,612			4,120		12
International		406			270		50
Total Business Insurance	$	5,018		$	4,390		14	%

FULL YEAR

2023		2022		Change
$ 2,583		$ 2,531		2 %
65.3	%	62.8	%
29.4		29.7
94.7	%	92.5	%	(2.2) pts
(1.5)		2.2
(4.3)		(3.8)
88.9	%	90.9	%	2.0 pts

$	3,477	$	3,099	12	%
	11,045		9,923	11
	1,135		1,085	5
	3,008		2,467	22
	18,665		16,574	13
	1,765		1,061	66
$	20,430	$	17,635	16	%

8	1 A favorable impact to the combined ratio is indicated as a positive item, and an unfavorable impact is indicated as a negative item.

DOMESTIC BUSINESS INSURANCE ( E X . N AT I O N A L A C C O U N T S )

				I L L U S T R AT I V E	B U S I N E S S S TAT I S T I C S
12%


10%										7.8%


8%									7.1%



6%






4%				4.8%	5.1%			4.7%
4.4%	4.5%


2%
-

($ in millions)	1Q'22	2Q'22	3Q'22	4Q'22	1Q'23	2Q'23	3Q'23
Retention	87%	86%	86%	87%	87%	87%	87%
Renewal premium	9.5%	9.8%	10.2%	10.0%	9.7%	12.9%	13.0%
change1

New business	$553	$500	$506	$554	$639	$674	$694

Renewal Premium Change1 %

Renewal Rate Change2 %

Exposure/Other %

7.4%

4Q'23

87%

11.8%

$672

9	1	Represents the estimated change in average premium on policies that renew, including rate and exposure changes.
2	Represents the estimated change in average premium on policies that renew, excluding exposure changes.

Note: Statistics are in part dependent on the use of estimates and are therefore subject to change.

DOMESTIC BUSINESS INSURANCE: SELECT ACCOUNTS

12%

10%

($ in millions)

Retention

Renewal premium

change1

New business

I L L U S T R AT I V E B U S I N E S S S TAT I S T I C S







				3.3%

2.9%	3.1%	3.2%	2.9%

					1.9%

1Q'22	2Q'22	3Q'22	4Q'22	1Q'23	2Q'23
83%	83%	83%	83%	85%	85%
10.3%	10.3%	10.3%	9.7%	9.2%	10.3%
$110	$106	$94	$98	$127	$136

Renewal Premium Change1 %

Renewal Rate Change2 %

Exposure/Other %

4.1%

2.9%

3Q'23	4Q'23
85%	85%
10.3%	11.9%
$140	$147

10	1	Represents the estimated change in average premium on policies that renew, including rate and exposure changes.
2	Represents the estimated change in average premium on policies that renew, excluding exposure changes.

Note: Statistics are in part dependent on the use of estimates and are therefore subject to change.

Attachments

Disclaimer

The Travelers Companies Inc. published this content on 18 January 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 January 2024 12:07:13 UTC.

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