Third Quarter 2023 Presentation

THIRD QUARTER 2023 RESULTS

October 18, 2023

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

THIRD QUARTER 2023 OVERVIEW

Travelers Reports Third Quarter 2023 Net Income of $404 million and Core Income of $454 million Third Quarter 2023 Net Income per Diluted Share of $1.74 and Retuon Equity of 7.7%

Third Quarter 2023 Core Income per Diluted Share of $1.95 and Core Retuon Equity of 6.9%

Excellent underlying underwriting income of $868 million pre-tax, up 43%.
Consolidated combined ratio of 101.0%; and underlying combined ratio of 90.6%, a 1.9 point improvement.
Catastrophe losses of $850 million pre-tax compared to $512 million pre-tax in the prior year quarter.
Net unfavorable prior year reserve development of $154 million pre-tax primarily due to an addition to asbestos reserves of $284 million pre-tax.
Record net written premiums of $10.493 billion, up 14% over the prior year quarter, including growth in all three segments.
Strong renewal premium change in all three segments, including record levels in Business Insurance and Personal Automobile.
Net investment income increased 30% pre-tax over the prior year quarter primarily due to strong fixed income returns.

CONSOLIDATED PERFORMANCE

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

			THIRD QUARTER
		2023		2022		Change
Core income	$	454	$	526		(14) %
per diluted share	$	1.95	$	2.20		(11) %
Included the following items:
Net favorable (unfavorable) prior year reserve development	$	(122)	$	16
Catastrophes, net of reinsurance		(669)		(404)
Total items	$	(791)	$	(388)
Loss and loss adjustment expense ratio		73.0	%	70.1	%
Underwriting expense ratio		28.0		28.1
Combined ratio 1		101.0	%	98.2	%	(2.8) pts
Net favorable (unfavorable) prior year reserve development		(1.6)		0.2
Catastrophes, net of reinsurance		(8.8)		(5.9)
Underlying combined ratio		90.6	%	92.5	%	1.9	pts
Net written premiums	$	10,493	$	9,198		14	%

YEAR-TO-DATE

	2023			2022		Change
$	1,439		$	2,188		(34) %
$	6.15		$	9.02		(32) %
$	8		$	367
	(2,262)			(1,118)
$	(2,254)		$	(751)
	72.6	%		67.3	%
	28.4			28.7
	101.0	%		96.0	%	(5.0) pts
	0.1			1.9
	(10.3)			(5.7)
	90.8	%		92.2	%	1.4	pts
$	30,207		$	26,585		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.

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

September 30,	December 31,
		2023		2022
$	8,031	$	7,292
		26,444		26,458

$	34,475	$	33,750
		23.3%		21.6%

		228.4		232.1
$	87.47	$	92.90
$	115.78	$	114.00
$	97.53	$	96.00
$	23,267	$	23,677
$	1,748	$	1,452

Capital

Continued strong capitalization to support the Company's business operations.
Repurchased 0.6 million shares in third quarter 2023 for a total cost of $101 million.
Dividends in the third quarter were $232 million.

Leverage

Debt-to-capitalratio1 of 23.3% 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

$635 $542 $539 $595$505 $531$557$594 $640

2021 1

2022 1

1Q'22

2Q'22

3Q'22

4Q'22

1Q'23

2Q'23

3Q'23

After-tax yield

3.0%

2.5%

2.7%

2.3%

2.4%

2.5%

2.7%

2.8%

Third 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, primarily due to higher private equity partnership returns (non-fixed income returns are generally reported on a one-quarter lagged basis)

FIXED INCOME2

$429 $467 $436 $447$475$510 $524 $541 $582

Long-term

Short-term

20211 20221 1Q'22 2Q'22 3Q'22 4Q'22 1Q'23 2Q'23 3Q'23

After-tax yield

Total 2.2% 2.3% 2.2% 2.2% 2.3% 2.5% 2.5% 2.6% 2.7% Short-term 0.1% 1.7% 0.2% 0.9% 2.1% 3.4% 4.3% 4.7% 5.0% Long-term 2.3% 2.3% 2.3% 2.3% 2.4% 2.4% 2.5% 2.5% 2.6%

NON-FIXED INCOME2

$214
			$157
	$84	$113
						$63	$67
				$38	$29	$43

20211	20221	1Q'22	2Q'22	3Q'22	4Q'22	1Q'23	2Q'23	3Q'23
After-tax yield
15.2%	5.5%	7.5%	10.2%	2.5%	1.9%	2.8%	4.0%	4.3%

6	1	2021 and 2022 data represent quarterly average.
2	Excludes investment expenses.

LEADING CORE RETURN ON EQUITY AT INDUSTRY-LOW VOLATILITY

13.1%	10.7%	10.9%	11.3%	13.7%
8.8%				8.8%
1.0%	8.0%	7.8%
0.2%

	1.5%	1.1%	6.9%	3.3%
	0.3%	0.3%	0.7%
		0.1%

4.9%

4.3%					4.4%
7.6%			3.1%
6.2%	2.7%	6.4%	6.1%	5.5%

	2005
	through	2018	2019	2020	2021
	2017
				Full Year
	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 (loss) and other

11.3%

7.1%

1.2%

0.2%

4.2%

5.7%

2022

10.9%7.2%

7.9%

7.1%0.8%

0.7%

1.5%

0.1%

3.8%

6.4%

5.5%

-0.7%

20222023

Year-to-Date

BUSINESS INSURANCE PERFORMANCE

($ in millions)

			THIRD QUARTER
		2023		2022		Change
Segment income	$	468	$	471		(1) %
Loss and loss adjustment expense ratio		70.0	%	66.9	%
Underwriting expense ratio		29.1		29.4
Combined ratio 1		99.1	%	96.3	%	(2.8) pts
Net favorable (unfavorable) prior year reserve development		(5.3)		(1.4)
Catastrophes, net of reinsurance		(4.1)		(4.9)
Underlying combined ratio		89.7	%	90.0	%	0.3	pts
Net written premiums
Domestic
Select Accounts	$	824	$	739		12	%
Middle Market		2,750		2,465		12
National Accounts		247		247		-
National Property and Other		874		702		25
Total Domestic		4,695		4,153		13
International		385		217		77
Total Business Insurance	$	5,080	$	4,370		16	%

YEAR-TO-DATE

2023		2022		Change
$ 1,626		$ 1,806		(10) %
68.0	%	63.6	%
29.7		29.9
97.7	%	93.5	%	(4.2) pts
(2.4)		2.0
(5.7)		(4.1)
89.6	%	91.4	%	1.8 pts

$	2,615	$	2,365	11	%
	8,294		7,410	12
	818		790	4
	2,326		1,889	23
	14,053		12,454	13
	1,359		791	72
$	15,412	$	13,245	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 )

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

7.2%





			5.0%
		4.7%		4.7%
4.4%	4.4%

1Q'22	2Q'22	3Q'22	4Q'22	1Q'23	2Q'23
87%	86%	86%	87%	87%	87%
9.1%	10.4%	10.0%	9.9%	9.8%	12.9%
$552	$499	$504	$555	$639	$674

Renewal Premium Change1 %

Renewal Rate Change2 %

Exposure/Other %

7.9%

3Q'23

87%

12.9%

$695

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

Renewal Premium Change1 %

Renewal Rate Change2 %

Exposure/Other %

2.9%	3.1%	3.2%	3.0%	3.1%	3.3%
						1.9%

1Q'22	2Q'22	3Q'22	4Q'22	1Q'23	2Q'23	3Q'23
83%	83%	83%	83%	85%	85%	85%
10.3%	10.2%	10.2%	10.3%	9.6%	10.5%	10.3%
$110	$106	$94	$99	$128	$136	$140

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.

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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 11:17:09 UTC.