Third Quarter 2023 Form 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________________

FORM 10-Q

_________________________________________________________

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

___________________________________________________________________

Commission file number: 001-10898

___________________________________________________________________

The Travelers Companies, Inc.

(Exact name of registrant as specified in its charter)

____________________________________________________________________

Minnesota	41-0518860
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

485 Lexington Avenue

New York, NY 10017

(Address of principal executive offices) (Zip Code)

(917) 778-6000

(Registrant's telephone number, including area code)

_________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, without par value		TRV		New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to

file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	ý	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ý

The number of shares of the Registrant's Common Stock, without par value, outstanding at October 13, 2023 was 228,399,446.

The Travelers Companies, Inc.

Quarterly Report on Form 10-Q

For Quarterly Period Ended September 30, 2023

_________________________________________________________

TABLE OF CONTENTS

	Part I - Financial Information
Item 1.	Financial Statements:
	Consolidated Statement of Income (Unaudited) - Three and Nine Months Ended September 30,
	2023 and 2022
	Consolidated Statement of Comprehensive Income (Loss) (Unaudited) - Three and Nine
	Months Ended September 30, 2023 and 2022
	Consolidated Balance Sheet - September 30, 2023 (Unaudited) and December 31, 2022
	Consolidated Statement of Changes in Shareholders' Equity (Unaudited) - Three and Nine
	Months Ended September 30, 2023 and 2022
	..........................................................................................................................................................
	Consolidated Statement of Cash Flows (Unaudited) - Nine Months Ended September 30, 2023
	and 2022
	Notes to Consolidated Financial Statements (Unaudited)
	..........................................................................................................................................................
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations
	..........................................................................................................................................................
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
	..........................................................................................................................................................
Item 4.	Controls and Procedures
	Part II - Other Information
Item 1.	Legal Proceedings
	..........................................................................................................................................................
Item 1A.	Risk Factors
	..........................................................................................................................................................
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity
	Securities
	..........................................................................................................................................................
Item 5.	Other Information
	..........................................................................................................................................................
Item 6.	Exhibits
	..........................................................................................................................................................
	SIGNATURES

Page

PART 1 - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME (Unaudited)

(in millions, except per share amounts)

		Three Months Ended			Nine Months Ended
		September 30,			September 30,
		2023			2022			2023			2022
Revenues
Premiums	$	9,718	$	8,615	$	27,788	$	24,946
Net investment income		769			593			2,144			1,937
Fee income		112			104			324			307
Net realized investment losses		(65)			(93)			(94)			(211)
Other revenues		101			84			275			269
.........................................................................Total revenues		10,635			9,303			30,437			27,248
Claims and expenses
Claims and claim adjustment expenses		7,149			6,088			20,335			16,930
Amortization of deferred acquisition costs		1,604			1,406			4,585			4,081
General and administrative expenses		1,312			1,193			3,887			3,607
Interest expense		98			88			278			263
......................................................Total claims and expenses		10,163			8,775			29,085			24,881
...................................................Income before income taxes		472			528			1,352			2,367
Income tax expense (benefit)		68			74			(13)			344
...............................................................................Net income	$	404	$	454	$	1,365	$	2,023
Net income per share

Basic	$	1.75		$	1.91		$	5.89		$	8.43
Diluted
$	1.74		$	1.89		$	5.83		$	8.34
Weighted average number of common shares outstanding

Basic		228.8			235.4			230.0			238.3
Diluted
	231.1			237.9			232.5			240.9
Cash dividends declared per common share
$	1.00	$	0.93	$	2.93	$	2.74

The accompanying notes are an integral part of the consolidated financial statements.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(in millions)

		Three Months Ended			Nine Months Ended
		September 30,			September 30,
		2023			2022			2023		2022
.................................................................................Net income	$	404	$	454	$	1,365	$	2,023
Other comprehensive income (loss):
Changes in net unrealized gains (losses) on investment
securities:
Having no credit losses recognized in the consolidated		(2,391)						(1,986)
statement of income				(3,204)					(11,078)
Having credit losses recognized in the consolidated		-						-
statement of income				-					(3)
Net changes in benefit plan assets and obligations		(3)			12			(10)		34
Net changes in unrealized foreign currency translation		(118)			(251)			13		(423)
...................Other comprehensive loss before income taxes		(2,512)			(3,443)			(1,983)		(11,470)
Income tax benefit		(509)			(690)			(416)		(2,369)
.................................Other comprehensive loss, net of taxes		(2,003)			(2,753)			(1,567)		(9,101)
................................................................Comprehensive loss	$	(1,599)	$	(2,299)	$	(202)	$	(7,078)

The accompanying notes are an integral part of the consolidated financial statements.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in millions)

		September 30,		December 31,
			2023			2022
			(Unaudited)
Assets
Fixed maturities, available for sale, at fair value (amortized cost $80,792 and $77,380;	$	72,584
allowance for expected credit losses of $4 and $3)	$	71,160
Equity securities, at fair value (cost $546 and $747)			573			807
Real estate investments			960			952
Short-termsecurities			4,488			3,470
Other investments			4,351			4,065
................................................................................................................Total investments			82,956			80,454
Cash			593			799
Investment income accrued			623			650
Premiums receivable (net of allowance for expected credit			10,345
losses of $68 and $77)					8,922
Reinsurance recoverables (net of allowance for estimated uncollectible			8,267
reinsurance of $121 and $132)					8,063
Ceded unearned premiums			1,389			1,024
Deferred acquisition costs			3,330			2,836
Deferred taxes			2,393			1,877
Contractholder receivables (net of allowance for expected credit			3,467
losses of $20 and $17)					3,579
Goodwill			3,955			3,952
Other intangible assets			278			287
Other assets			3,788			3,274
..........................................................................................................................Total assets	$	121,384	$	115,717
Liabilities

Claims and claim adjustment expense reserves	$	61,709	$	58,649
Unearned premium reserves			21,058			18,240
Contractholder payables			3,487			3,596
Payables for reinsurance premiums			807			419
Debt			8,031			7,292
Other liabilities			6,314			5,961
.....................................................................................................................Total liabilities			101,406			94,157
Shareholders' equity

Common stock (1,750.0 shares authorized; 228.4 and 232.1 shares issued and outstanding) .......

Retained earnings ...........................................................................................................................

Accumulated other comprehensive loss .........................................................................................

Treasury stock, at cost (558.8 and 553.5 shares)............................................................................

Total shareholders' equity .................................................................................................

Total liabilities and shareholders' equity .........................................................................

24,831 24,565

44,198 43,516

(8,012) (6,445)

(41,039) (40,076)

19,978 21,560 $ 121,384 $ 115,717

The accompanying notes are an integral part of the consolidated financial statements.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)

(in millions)

			Three Months Ended			Nine Months Ended
			September 30,			September 30,
			2023			2022			2023		2022
Common stock
Balance, beginning of period	$	24,776	$	24,419	$	24,565	$	24,154
Employeeshare-basedcompensation		8			11			102		176
Compensation amortization under share-based plans and other		47						164
changes				42					142
Balance, end of period		24,831			24,472			24,831		24,472
Retained earnings
Balance, beginning of period		44,026			42,684			43,516		41,555
Net income		404			454			1,365		2,023
Dividends		(232)			(221)			(683)		(660)
Other		-			-			-		(1)
Balance, end of period		44,198			42,917			44,198		42,917
Accumulated other comprehensive income (loss), net of tax
Balance, beginning of period		(6,009)			(5,155)			(6,445)		1,193
Other comprehensive loss		(2,003)			(2,753)			(1,567)		(9,101)
Balance, end of period		(8,012)			(7,908)			(8,012)		(7,908)
Treasury stock, at cost
Balance, beginning of period		(40,938)			(39,074)			(40,076)		(38,015)
Treasury stock acquired - share repurchase authorizations		(100)			(500)			(900)		(1,500)
Net shares acquired related to employee share-based		(1)						(63)
compensation plans				(1)					(60)
Balance, end of period		(41,039)			(39,575)			(41,039)		(39,575)
...............................................Total shareholders' equity	$	19,978	$	19,906	$	19,978	$	19,906
Common shares outstanding

Balance, beginning of period		228.9			237.3			232.1		241.2
Treasury stock acquired - share repurchase authorizations		(0.6)			(3.1)			(5.0)		(8.9)
Net shares issued under employee share-based compensation		0.1						1.3
plans				0.1					2.0
Balance, end of period		228.4			234.3			228.4		234.3

The accompanying notes are an integral part of the consolidated financial statements.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

(in millions)

		Nine Months Ended September 30,
			2023			2022
Cash flows from operating activities		$	1,365	$	2,023
Net income
Adjustments to reconcile net income to net cash provided by operating activities:		94			211
Net realized investment losses
Depreciation and amortization		552			639
Deferred federal income tax benefit		(107)			(130)
Amortization of deferred acquisition costs		4,585			4,081
Equity in income from other investments		(144)			(319)
Premiums receivable		(1,422)			(861)
Reinsurance recoverables		(204)			185
Deferred acquisition costs		(5,079)			(4,419)
Claims and claim adjustment expense reserves		3,053			1,694
Unearned premium reserves		2,817			2,033
Other		97			(12)
......................................................................Net cash provided by operating activities		5,607			5,125
Cash flows from investing activities		4,909			5,481
Proceeds from maturities of fixed maturities
Proceeds from sales of investments:		4,619			3,951
Fixed maturities
Equity securities		117			104
Real estate investments		-			10
Other investments		166			242
Purchases of investments:		(13,054)			(12,100)
Fixed maturities
Equity securities		(80)			(112)
Real estate investments		(46)			(28)
Other investments		(375)			(414)
Net purchases ofshort-termsecurities		(1,018)			(107)
Securities transactions in the course of settlement		60			214
Acquisition, net of cash acquired		-			(4)
Other		(335)			(291)
...............................................................................Net cash used in investing activities		(5,037)			(3,054)
Cash flows from financing activities		(894)			(1,500)
Treasury stock acquired - share repurchase authorizations
Treasury stock acquired - net employee share-based compensation		(63)			(60)
Dividends paid to shareholders		(676)			(656)
Issuance of debt		738			-
Issuance of common stock - employee share options		117			205
...............................................................................Net cash used in financing activities		(778)			(2,011)
Effect of exchange rate changes on cash		2			(48)
Net increase (decrease) in cash		(206)			12
Cash at beginning of year		799			761
..................................................................................................................Cash at end of period	$	593		$	773
Supplemental disclosure of cash flow information	$	152	$	663
Income taxes paid
Interest paid	$	234	$	234

The accompanying notes are an integral part of the consolidated financial statements.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Basis of Presentation

The interim consolidated financial statements include the accounts of The Travelers Companies, Inc. (together with its subsidiaries, the Company). These financial statements are prepared in conformity with U.S. generally accepted accounting principles (GAAP) and are unaudited. In the opinion of the Company's management, all adjustments necessary for a fair presentation have been reflected. Certain financial information that is normally included in annual financial statements prepared in accordance with GAAP, but that is not required for interim reporting purposes, has been omitted. All material intercompany transactions and balances have been eliminated. The accompanying interim consolidated financial statements and related notes should be read in conjunction with the Company's consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 (the Company's 2022 Annual Report).

The preparation of the interim consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim consolidated financial statements and the reported amounts of revenues and claims and expenses during the reporting period. Actual results could differ from those estimates.

Adoption of Accounting Standards

For information regarding accounting standards that the Company adopted during the periods presented, see note 1 of the notes to the consolidated financial statements in the Company's 2022 Annual Report.

Income Taxes

The Company recognized a one-time tax benefit of $211 million in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item impacted by the repeal of Internal Revenue Code Section 847, which related to the discounting of property-casualty loss reserves.

2. SEGMENT INFORMATION

Nature of Operations

The Company's results are reported in the following three business segments - Business Insurance, Bond & Specialty Insurance and Personal Insurance. These segments reflect the manner in which the Company's businesses are currently managed and represent an aggregation of products and services based on the type of customer, how the business is marketed and the manner in which risks are underwritten. For more information regarding the Company's nature of operations, see the "Nature of Operations" section of note 1 of the notes to the consolidated financial statements in the Company's 2022 Annual Report.

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

2. SEGMENT INFORMATION, Continued

The following tables summarize the components of the Company's revenues, income (loss) and total assets by reportable business segments:

			Business		Bond & Specialty			Personal		Total
(For the three months ended September 30, in millions)								Reportable
		Insurance			Insurance			Insurance		Segments
2023
Premiums	$	4,956	$	935	$	3,827	$	9,718
Net investment income			551			86			132		769
Fee income			102			-			10		112
Other revenues			71			6			24		101
...............................................Total segment revenues(1)	$	5,680	$	1,027	$	3,993	$	10,700
...................................................Segment income (loss)(1)		$	468		$	265		$	(193)	$	540
2022
Premiums	$	4,353	$	877	$	3,385	$	8,615
Net investment income			426			65			102		593
Fee income			96			-			8		104
Other revenues			56			6			22		84
...............................................Total segment revenues(1)	$	4,931	$	948	$	3,517	$	9,396
...................................................Segment income (loss)(1)		$	471		$	242		$	(111)	$	602

________________________________________________________

Segment revenues for reportable business segments exclude net realized investment gains (losses) and revenues included in "interest expense and other." Segment income (loss) for reportable business segments excludes the after-tax impact of net realized investment gains (losses) and income (loss) from "interest expense and other."

			Business		Bond & Specialty			Personal		Total
(For the nine months ended September 30, in millions)								Reportable
		Insurance			Insurance			Insurance		Segments
2023
Premiums	$	14,077	$	2,721	$	10,990	$	27,788
Net investment income			1,533			237			374		2,144
Fee income			299			-			25		324
Other revenues			185			18			72		275
..............................................Total segment revenues(1)	$	16,094	$	2,976	$	11,461	$	30,531
..................................................Segment income (loss)(1)		$	1,626		$	702		$	(648)	$	1,680
2022
Premiums	$	12,642	$	2,548	$	9,756	$	24,946
Net investment income			1,415			188			334		1,937
Fee income			285			-			22		307
Other revenues			194			14			61		269
..............................................Total segment revenues(1)	$	14,536	$	2,750	$	10,173	$	27,459
..................................................Segment income (loss)(1)		$	1,806		$	687		$	(79)	$	2,414

_______________________________________________________

Segment revenues for reportable business segments exclude net realized investment gains (losses) and revenues included in "interest expense and other." Segment income (loss) for reportable business segments excludes the after-tax impact of net realized investment gains (losses) and income (loss) from "interest expense and other."

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

2. SEGMENT INFORMATION, Continued Business Segment Reconciliations

			Three Months Ended			Nine Months Ended
			September 30,			September 30,
(in millions)			2023			2022			2023		2022
Revenue reconciliation
Earned premiums
Business Insurance:
Domestic:
Workers' compensation	$	876	$	872	$	2,584	$	2,566
Commercial automobile		816			754			2,375		2,202
Commercial property		828			668			2,297		1,914
General liability		804			728			2,312		2,116
Commercialmulti-peril		1,211			1,057			3,456		3,034
Other		21			19			55		52
Total Domestic		4,556			4,098			13,079		11,884
International		400			255			998		758
Total Business Insurance		4,956			4,353			14,077		12,642
Bond & Specialty Insurance:
Domestic:
Fidelity and surety		333			307			964		876
General liability		414			396			1,218		1,154
Other		57			57			168		166
Total Domestic		804			760			2,350		2,196
International		131			117			371		352
Total Bond & Specialty Insurance		935			877			2,721		2,548
Personal Insurance:
Domestic:
Automobile		1,772			1,575			5,084		4,544
Homeowners and Other		1,896			1,648			5,434		4,714
Total Domestic		3,668			3,223			10,518		9,258
International		159			162			472		498
Total Personal Insurance		3,827			3,385			10,990		9,756
Total earned premiums		9,718			8,615			27,788		24,946
Net investment income		769			593			2,144		1,937
Fee income		112			104			324		307
Other revenues		101			84			275		269
Total segment revenues		10,700			9,396			30,531		27,459
Net realized investment losses		(65)			(93)			(94)		(211)
Total revenues	$	10,635	$	9,303	$	30,437	$	27,248
Income reconciliation, net of tax

Total segment income	$	540	$	602	$	1,680	$	2,414
Interest Expense and Other(1)		(86)			(76)			(241)		(226)
Core income		454			526			1,439		2,188
Net realized investment losses		(50)			(72)			(74)		(165)
Net income	$	404	$	454	$	1,365	$	2,023

_________________________________________________________

The primary component of Interest Expense and Other was after-tax interest expense of $78 million and $70 million for the three months ended September 30, 2023 and 2022, respectively, and $220 million and $208 million for the nine months ended September 30, 2023 and 2022, respectively.

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Disclaimer

The Travelers Companies Inc. published this content on 18 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 October 2023 11:17:44 UTC.

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