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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

2

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.

3

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%

2.5%

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%

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

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%

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

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.

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.

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