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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

2

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.

3

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%

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%

8%

6%

4%

2%

-

($ 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.

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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