The Travelers Companies, Inc.

Good morning, ladies and gentlemen. Welcome to the Third 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 October 19, 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 third 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, Dan Fry, Chief Financial Officer, and our three segment presidents, Greg Teslowski of Business Insurance, Jeff Clank 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 your 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 described 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.

Alan Schnitzer Thank you, Abby. Good morning, everyone, and thank you for joining us today. We're pleased to report strong top and bottom-line results for the quarter and the first nine months of the year, including very strong underlying underwriting profitability and healthy top-line growth. Core income year-to-date of $2.2 billion is about $800 million higher year-over-year, generating core internal equity of 11.6 percent. Core income for the quarter was $655 million, or $2.60 per diluted share, generating core return on equity of 10.1% despite a high level of catastrophe losses. Our CAT losses, while well below our market share, were well above the prior year quarter and the 10-year average for the quarter. Underlying underwriting income of $632 million pre-tax was 6% higher than in the prior year quarter, driven by record net earned premiums of $7.8 billion and a very strong underlying combined ratio 91.4%. We are particularly pleased with the continued strong underlying fundamentals in our commercial businesses. The underlying combined ratio improved by almost four points in business insurance and more than five points in bond and specialty insurance. As you'll hear in a few minutes from Michael, underlying results in personal insurance were impacted by auto frequency returning to pre-pandemic levels and elevated severity in both auto and property due to higher costs for labor and materials. Our consolidated results demonstrate the value of having a diversified group of businesses. Turning to investments, our high-quality investment portfolio generated net investment income of $645 million after tax, reflecting reliable performance in our fixed-income portfolio and very strong returns in our non-fixed-income portfolio. These results, together with our strong balance sheet and cash flow, enabled us to grow adjusted book value per share by 10% over the past year after making important investments for the future and returning significant excess capital to our shareholders. During the quarter, we returned $821 million of excess capital to shareholders, including $601 million of share repurchases. Turning to the top line, net written premiums grew 7% to a record $8.3 billion. Each of our three segments again contributed meaningfully to the top-line growth. In business insurance, net written premiums grew by 5 percent, with renewal premium change of 9.9 percent, up more than 200 basis points year-over-year, and near our all-time high. Renewal premium change was driven by continued strong renewal rate change and higher exposure growth. Importantly, at the same time, retention was also higher, Our ability to continue to drive price change at historical highs while increasing retention reflects excellent marketplace execution and the stability of the pricing environment. In bond and specialty insurance, net written premiums increased by 19%, driven by record renewal premium change of 13.6% in our management liability business and continued strong retention. We are also pleased to report strong production in our surety business, In our commercial businesses, written pricing continues to outpace estimated loss trend, which will continue to benefit margins as it earns in. Given social and other inflation, the frequency and severity of weather-related loss activity, and the low interest rate environment, we expect the pricing environment to remain strong. In personal insurance, net written premiums increased by 7%. Policies enforced in both auto and homeowners were at record levels. driven by continued strong retention and growth in new business. Before I wrap up on results, I'd like to spend a minute discussing how our leading data and analytics and risk expertise contributed to our relatively favorable loss experience with Hurricane Ida. As I shared in our first quarter earnings call, our share of the industry's property cat losses over the past five years have been meaningfully lower than our corresponding market share, And while there is always the potential for us to have outsized exposure to an event, it was no accident that we again outperformed in Hurricane Ida. Our leading underwriting expertise, supported by cutting-edge data analytics, are key to an effective assessment of risk and reward. For us, third-party models are a starting point for our more advanced proprietary cap modelings. At the portfolio level, the insights from our models warned us away from the coasts where Ida made landfall, given the impediments to achieving an appropriate risk-adjusted return. In the other states along Ida's path, we effectively managed risk selection, pricing, and other terms and conditions by putting sophisticated data and analytics at the fingertips of our frontline underwriters. These include robust flood risk scoring, location intelligence down to the parcel level, hail dashboards, and output from our risk control engineers. Within personal insurance, we continue to see the benefits from our highly segmented Quantum Home 2.0 product, which is now rolled out in more than 40 states. In the Northeast, extreme rainfall from Ida resulted in significant claim activity for the industry, including from water and drainage backups. which is a coverage we provide in our QH 2.0 product. The model underneath the product leverages data and analytics to underwrite and price that coverage on a very granular basis. In addition to underwriting, data and analytics are increasingly informing our claims handling strategies. For example, our AI-assisted claim damage detection model was a key part of our IDA claim response. This model uses AI and high-resolution aerial imagery to detect the extent of damage to individual properties as soon as a day after an event. Within two days of impact, we were collecting and analyzing aerial imagery of customer properties along IDA's path as it moved across 20 states. This enabled us to remotely identify which of our customers' properties had sustained exterior damage and effectively organize our claim response. In some cases, we can use this technology to adjust and pay total losses before the customer has even been able to return to their home. We also utilized other virtual capabilities in our IDA response, such as image share and live video capture on a majority of claims with interior damage. These leading edge capabilities enhance the claim experience for our customers by cutting significant time out of the claim process, expediting an accurate loss assessment, and in many cases, eliminating the need for physical inspection. Again with IDA, we've successfully closed 90% of all homeowners' claims within 30 days. All of this also results in a more efficient outcome for our shareholders. As strategic as the data and analytics are, maybe even more important is the culture that brings it all together. Our collaborative approach to developing a holistic, 360-degree view of risk Incorporating underwriting, claim, actuarial, risk control, legal and regulatory inputs is an important differentiating factor in effectively managing risk and reward. That culture is decades in the making and very hard to replicate. Before I turn the call over to Dan, I'd like to welcome Jeff Klink, President of our Bond and Specialty Insurance segment to the call. As I shared last quarter, Jeff is a 22-year veteran of Travelers most recently as a member of Tom Conklin's leadership team and head of our management liability business. Jeff succeeded Tom following his retirement last month. We're fortunate to have Jeff in the role, and you'll hear from him in a few minutes. To sum it up, we're pleased with our results for the quarter and year to date. Our significant and hard-to-replicate competitive advantages position us very well to continue to deliver meaningful shareholder value over time. And with that, I'm pleased to turn the call over to Dan.