The Travelers Companies, Inc.

Good morning, ladies and gentlemen. Welcome to the second quarter results teleconference for travelers. We ask that you hold all questions until the completion of formal remarks, at which time you will be given instructions for the question and answer session. As a reminder, this conference is being recorded on July 20, 2021. At this time, I would like to turn the conference over to Ms. Abby Goldstein, Senior Vice President of Investor Relations. Ms. Goldstein, you may begin.

Thank you. Good morning and welcome to Travelers' discussion of our second quarter 2021 results. We released our press release, financial supplement, and webcast presentation earlier this morning. All of these materials can be found on our website at travelers.com under the Investors section. Speaking today will be Alan Schnitzer, Chairman and CEO of Dan Fry, Chief Financial Officer, and our three segment presidents, Greg Toblowski of Business Insurance, Tom Kunkel of Bond and Specialty Insurance, and Michael Klein of Personal Insurance. They will discuss the financial results of our business and the current market environment. They will refer to the webcast presentation as they go through prepared remarks, and then we will take questions. Before I turn the call over to Alan, I would like to draw your attention to the explanatory note included at the end of the webcast presentation. Our presentation today includes forward-looking statements. The company cautions investors that any forward-looking statement involves risks and uncertainties and is not a guarantee of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statement due to a variety of factors. These factors are prescribed under forward-looking statements in our earnings press release and in our most recent 10Q and 10K filed with the SEC. We do not undertake any obligation to update forward-looking statements. Also in our remarks or responses to questions, we may mention some non-GAAP financial measures. Reconciliations are included in our recent earnings press release, financial supplement, and other materials available in the investor section on our website. And now I'd like to turn the call over to Alan Schnitzer.

Thank you, Abby. Good morning, everyone, and thank you for joining us today. we are very pleased to report excellent underwriting investment results for the second quarter and first half of the year. Core income for the quarter was $879 million, or $3.45 per diluted share, generating a core return on equity of 13.7%. In terms of underwriting results, higher underlying underwriting income and net favorable prior year reserve development, as well as a lower level of catastrophe losses, all contributed to higher core income. Underlying underwriting income was 8 percent higher than in the prior year quarter, driven by record net earned premiums of $7.6 billion and an excellent underlying combined ratio of 91.4 percent. We are particularly pleased with the continued strong underlying fundamentals in each of our three business segments. In business insurance, net earned premiums were higher and the underlying combined ratio improved by 3.7 points. On specialty insurance and personal insurance, both delivered meaningful increases in net earned premiums and continued strong margins. Turning to investments, our high-quality investment portfolio generated net investment income of $682 million after tax, reflecting very strong returns in our non-fixed income portfolio. These excellent results, together with our strong balance sheet, enabled us to grow adjusted book value per share by 13% over the past year, after making important investments for the future and returning significant excess capital to our shareholders. During the quarter, we returned $625 million of excess capital to shareholders, including $401 million of share repurchases. Turning to the top line, the combination of the strong franchise value we offer to our customers and distribution partners, together with excellent execution by our field organization, produced terrific results. During the quarter, we grew net written premiums to $8.1 billion, an increase of 11%, or 8% after adjusting for the auto premium refunds in the prior year quarter. Each of our three segments contributed meaningfully to the top line growth. In business insurance, net written premiums grew by 5%, driven by retention, which ticked up almost a point, grew premium change at a near record high of 9.5%, and 9% growth in new business. Combination of strong pricing and higher retention reflects continuing strength in the pricing environment. Inside renewal premium change, pure renewal rate change was a strong 7.1%. Greg will share more detail about the texture underneath renewal rate change in a few minutes. Renewal premium change also included the highest exposure growth we've seen in nine quarters, an encouraging sign of improvement in U.S. economic activity. In bond and specialty insurance, net written premiums increased by 16%, driven by record-renewal premium change of 12.7% in our management liability business, while retention remains strong. In our commercial businesses, written pricing continues to comfortably outpace estimated loss trend, which will continue to benefit margins as it earns in. Continuing strong pricing and retentions reflect the industry's clear-eyed view of the ongoing headwinds impacting returns for the industry, including weather volatility, low interest rates, and social inflation. We expect pricing to continue to outpace loss trends for some time. Turning to personal insurance, production was again excellent this quarter. Net written premiums increased 8% after adjusting for the auto premium refunds in the prior year quarter. Policies in force in both auto and homeowners are at record levels, driven by continuing strong retention and growth in new business. While the impact of the pandemic on claim frequency seems to be attracting a lot of attention when it comes to personal auto, we've been equally focused on applying our company-wide perform and transform mandate to this business. We are very pleased with the results. We've accelerated our domestic auto policies and force growth from 1% to 4% over the last six quarters, bringing PIV count to a record high. This demonstrates the ongoing success of our three-pronged strategy in personal insurance to meet customers where they are, serve them how they want, and give them what they need. Going forward, we will continue to invest in advanced segmentation, multi-channel distribution, and providing great experiences to continue to deliver profitable growth. Michael will share more detail in a few minutes. Our excellent top and bottom line results this quarter for the first half of the year demonstrate the continued successful execution of our strategy to grow the top line of attractive returns, as well as the effectiveness of our well-defined and consistent investment philosophy. Our focused and well-executed innovation agenda has been an important contributor to the growth and profitability we have achieved. We will continue to relentlessly pursue our priorities of extending our lead and risk expertise, providing great experiences for our customers, distribution partners, and employees, and improving productivity and efficiency. With the momentum we have and the best talent in the industry, we are well positioned to continue to create meaningful shareholder value over time. And with that, I'm pleased to turn the call over to Dan.