TRAVELERS COMPANIES, INC. – 10-Q – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion and analysis of the Company's financial condition
and results of operations.

FINANCIAL HIGHLIGHTS

2023 First Quarter Consolidated Results of Operations

•Net income of $975 million, or $4.18 per share basic and $4.13 per share
diluted
•Net earned premiums of $8.85 billion
•Catastrophe losses of $535 million ($422 million after-tax)
•Net favorable prior year reserve development of $105 million ($83 million
after-tax)
•Combined ratio of 95.4%
•Net investment income of $663 million ($557 million after-tax)
•One-time tax benefit of $211 million due to the expiration of the statute of
limitations with respect to a tax item
•Net realized investment gains of $6 million ($5 million after-tax)
•Operating cash flows of $1.01 billion

2023 First Quarter Consolidated Financial Condition

•Total investments of $82.04 billion; fixed maturities and short-term securities
comprised 93% of total investments
•Total assets of $118.35 billion
•Total debt of $7.29 billion, resulting in a debt-to-total capital ratio of
24.0% (21.3% excluding net unrealized investment losses, net of tax)
•Total capital returned to shareholders of $680 million, comprising $462 million
of share repurchases and $218 million of dividends
•Shareholders' equity of $23.05 billion
•Net unrealized investment losses of $4.91 billion ($3.87 billion after-tax)
•Book value per common share of $99.80
•Holding company liquidity of $1.55 billion

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                 THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

                MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

CONSOLIDATED OVERVIEW

Consolidated Results of Operations

                                                           Three Months 

Ended

                                                               March 31,
(in millions, except ratio and per share amounts)          2023           2022
Revenues
Premiums                                               $   8,854       $ 8,014
Net investment income                                        663           637
Fee income                                                   106           103
Net realized investment gains (losses)                         6           (23)
Other revenues                                                75            78
Total revenues                                             9,704         8,809
Claims and expenses
Claims and claim adjustment expenses                       5,959         

5,039

Amortization of deferred acquisition costs                 1,462         

1,310

General and administrative expenses                        1,267         1,191
Interest expense                                              88            87
Total claims and expenses                                  8,776         7,627
Income before income taxes                                   928         1,182
Income tax expense (benefit)                                 (47)          164
Net income                                             $     975       $ 1,018
Net income per share
Basic                                                  $    4.18       $  4.20
Diluted                                                $    4.13       $  4.15
Combined ratio
Loss and loss adjustment expense ratio                      66.7  %       62.3  %
Underwriting expense ratio                                  28.7          29.0
Combined ratio                                              95.4  %       91.3  %


The following discussions of the Company's net income and segment income are
presented on an after-tax basis.  Discussions of the components of net income
and segment income are presented on a pre-tax basis, unless otherwise noted.
Discussions of net income per common share are presented on a diluted basis.

Overview

Diluted net income per share of $4.13 in the first quarter of 2023 decreased by
less than 1% from diluted net income per share of $4.15 in the same period of
2022.  Net income of $975 million in the first quarter of 2023 decreased by 4%
from net income of $1.02 billion in the same period of 2022.  The lower rate of
decrease in diluted net income per share reflected the impact of share
repurchases in recent periods. The decrease in income before income taxes in the
first quarter of 2023 primarily reflected the pre-tax impacts of (i) higher
catastrophe losses and (ii) lower net favorable prior year reserve development,
partially offset by (iii) higher underwriting margins excluding catastrophe
losses and prior year reserve development ("underlying underwriting margins"),
(iv) net realized investment gains compared to net realized investment losses in
the first quarter of 2022 and (v) higher net investment income. Catastrophe
losses in the first quarters of 2023 and 2022 were $535 million and $160
million, respectively. Net favorable prior year reserve development in the first
quarters of 2023 and 2022 was $105 million and $153 million, respectively. The
higher underlying underwriting margins in the first quarter of 2023 were driven
by Business Insurance and Personal Insurance, partially offset by Bond &
Specialty Insurance. The Company recorded an income tax benefit in the first
quarter of 2023 compared with income tax expense in the same period of 2022. The
change in income taxes primarily reflected 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 and the impact of the decrease in income
before income taxes, partially offset by a $47 million reduction in income tax
expense in the first quarter of 2022 as a result of the resolution of prior year
tax matters.

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                 THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

                MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

The Company has insurance operations in Canada, the United Kingdom, the Republic
of Ireland and throughout other parts of the world as a corporate member of
Lloyd's, as well as in Brazil and Colombia through joint ventures.  Because
these operations are conducted in local currencies other than the U.S. dollar,
the Company is subject to changes in foreign currency exchange rates. For the
three months ended March 31, 2023 and 2022, changes in foreign currency exchange
rates impacted reported line items in the statement of income by insignificant
amounts.  The impact of these changes was not material to the Company's net
income or segment income for the periods reported.

Revenues

Earned Premiums
Earned premiums in the first quarter of 2023 were $8.85 billion, $840 million or
10% higher than in the same period of 2022.  In Business Insurance, earned
premiums in the first quarter 2023 increased by 10% over the same period of
2022.  In Bond & Specialty Insurance, earned premiums in the first quarter of
2023 increased by 7% over the same period of 2022.  In Personal Insurance,
earned premiums in the first quarter of 2023 increased by 12% over the same
period of 2022.  Factors contributing to the changes in earned premiums in each
segment are discussed in more detail in the segment discussions that follow.

Net Investment Income
The following table sets forth information regarding the Company's investments.
                                         Three Months Ended
                                             March 31,
(dollars in millions)                   2023           2022
Average investments (1)              $ 88,740       $ 86,345
Pre-tax net investment income             663            637
After-tax net investment income           557            539
Average pre-tax yield (2)                 3.0  %         2.9  %
Average after-tax yield (2)               2.5  %         2.5  %

_________________________________________________________

(1)Excludes net unrealized investment gains and losses and reflects cash,
receivables for investment sales, payables on investment purchases and accrued
investment income.
(2)Excludes net realized and net unrealized investment gains and losses.

Net investment income in the first quarter of 2023 was $663 million, $26 million
or 4% higher than in the same period of 2022.  Net investment income from fixed
maturity investments in the first quarter 2023 was $575 million, $70 million
higher than in the same period of 2022. The increase primarily resulted from
higher long-term average yields and a higher average level of fixed maturity
investments. Net investment income from short-term securities in the first
quarter of 2023 was $47 million, $45 million higher than in the same period of
2022, primarily resulting from higher short-term average yields. The Company's
remaining investment portfolios had net investment income of $53 million in the
first quarter of 2023, $89 million lower than in the same period of 2022. The
decline in net investment income from these portfolios primarily reflected lower
private equity and real estate partnerships returns. Included in
other investments are private equity, hedge fund and real estate
partnerships that are accounted for under the equity method of accounting and
typically report their financial statement information to the Company one month
to three months following the end of the reporting period. Accordingly, net
investment income from these other investments is generally reflected in the
Company's financial statements on a quarter lag basis.

Fee Income
Fee income in the first quarter of 2023 was $106 million, $3 million higher than
in the same period of 2022. The National Accounts market in Business Insurance
is the primary source of the Company's fee-based business and is discussed in
the Business Insurance segment discussion that follows.

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                 THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES

                MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued

Net Realized Investment Gains (Losses)
The following table sets forth information regarding the Company's net realized
investment gains (losses).
                                                                               Three Months Ended
                                                                                   March 31,
(in millions)                                                                2023              2022
Impairment gains (losses):
Fixed maturities                                                         $      (1)         $     (1)

Net realized investment gains (losses) on equity securities still
held

                                                                            17               (14)

Other net realized investment gains (losses), including from sales

   (10)               (8)
Total                                                                    $       6          $    (23)


Net realized investment gains on equity securities still held were $17 million
in the first quarter of 2023, driven by the impact of changes in fair value
attributable to favorable equity markets. Net realized investment losses on
equity securities still held were $14 million in the first quarter of 2022,
driven by the impact of changes in fair value attributable to unfavorable equity
markets.

Other Revenues
Other revenues in the first quarter of 2023 were $75 million, $3 million lower
than in the same period of 2022. Other revenues include revenues from Simply
Business, installment premium charges and other policyholder service charges.

Claims and Expenses

Claims and Claim Adjustment Expenses
Claims and claim adjustment expenses in the first quarter of 2023 were $5.96
billion, $920 million or 18% higher than in the same period of 2022, primarily
reflecting the impacts of (i) higher business volumes, (ii) higher catastrophe
losses, (iii) elevated losses in the automobile product line in Personal
Insurance, (iv) lower net favorable prior year reserve development and (v) loss
activity related to the disruption in the banking sector in Bond & Specialty
Insurance, partially offset by (vi) property losses that were lower than a
somewhat elevated level in the prior year quarter in Business Insurance.
Catastrophe losses in the first quarter of 2023 primarily resulted from severe
wind and hail storms in multiple states. Catastrophe losses in the first quarter
of 2022 primarily resulted from winter storms and wind storms in several regions
of the United States.

Factors contributing to net favorable prior year reserve development during the
first quarters of 2023 and 2022 are discussed in more detail in note 7 of the
notes to the unaudited consolidated financial statements.

Significant Catastrophe Losses
The following table presents the amount of losses recorded by the Company for
significant catastrophes that occurred in the three months ended March 31, 2023
and 2022, the amount of net unfavorable (favorable) prior year reserve
development recognized in the three months ended March 31, 2023 and 2022 for
significant catastrophes that occurred in 2022 and 2021, and the estimate of
ultimate losses for those catastrophes at March 31, 2023 and December 31, 2022.
For purposes of the table, a significant catastrophe is an event for which the
Company estimates its ultimate losses will be $100 million or more after
reinsurance and before taxes. The Company's threshold for disclosing
catastrophes is primarily determined at the reportable segment level and for
2023 ranged from $20 million to $30 million of losses before reinsurance and
taxes. For the Company's definition of a catastrophe, refer to "Part II-Item
7-Management's Discussion and Analysis of Financial Condition and Results of
Operations- Consolidated Overview" in the Company's 2022 Annual Report.

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