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 19th, 2022. 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 2022 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'd 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 statements 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.

Thank you, Abby. Good morning, everyone, and thank you for joining us today. I'd like to start by acknowledging the devastation and loss of life caused by Hurricanes Ian and Fiona. We're thinking of all those who have been impacted and are supporting the Red Cross's disaster relief efforts. In addition, as always after events like these, we're focused on taking care of our customers. We're on track to meet our objective of resolving 90% of our property claims arising out of the storms within 30 days. My thanks to all our claim colleagues who are working hard to make that happen. Moving to our results, we're pleased to report this morning A solid bottom line for the quarter, particularly in light of the significant industry-wide catastrophe losses. Strong and improved underwriting profitability in our commercial business segments. Progress addressing the environmental headwinds facing the personal insurance industry. A meaningful contribution from net investment income, including positive returns from our alternative investment portfolio, notwithstanding the challenging equity markets. very strong production in all three of our business segments, resulting in strong growth in net written premiums, and another quarter of successful execution on a number of important strategic initiatives. Core income for the quarter was $526 million, or $2.20 per diluted share, generating core return on equity of 7.9%. These results benefited from record net earned premiums of $8.6 billion, up 10% over the prior year quarter, and a solid underlying combined ratio of 92.5%. In the nine months, core return on equity was 10.9%. Given the challenging environmental issues impacting the personal insurance industry, these consolidated results once again demonstrate the benefit of our diversified portfolio of businesses. We're particularly pleased with the continued strong underlying results in our commercial businesses. Looking at the two commercial segments together, The aggregate BI-BSI underlying combined ratio was an excellent 88% for the quarter. As expected, results in personal insurance were impacted by elevated severity in both auto and home. As you'll hear from Michael, we're continuing to make progress addressing the environmental loss cost issues. In terms of catastrophe losses, as I've described before, Strategic efforts we have undertaken in recent years have enabled us to more effectively manage our exposure to catastrophes and more efficiently mobilize our claim response. And while there is always the potential for us to have outsized exposure to an event, those efforts contributed to losses for us from Hurricane Ian that, based on current estimates, are favorable relative to our corresponding market share. That's consistent with our experience over the past five years. Our share of the industry's property cat losses over that period has been meaningfully lower than our corresponding market share. Our capabilities position us well for a trend of increasing frequency and severity of losses from natural catastrophes. Turning to investments, our high-quality investment portfolio generated net investment income of $505 million after tax for the quarter, reflecting higher returns from our fixed income portfolio and positive returns in our non-fixed income portfolio. Our strong operating results over the past few quarters together with our solid balance sheet enabled us to grow adjusted book value per share by 7% over the past year after making important investments in our business and continuing to return excess capital to shareholders. During the quarter, we returned $722 million of excess capital to our shareholders, including $501 million of share repurchases. Turning to the top line, thanks to excellent execution by our colleagues in the field, and the strong franchise value we offer to our customers and distribution partners, we grew net written premiums by 10% this quarter to a record $9.2 billion. In business insurance, net written premiums grew by 9%. Renewal premium change was very strong at a historically high 10.2%, while pure renewal rate change of 5% was higher than in the first half of the year. Retention remained very strong at 86%, and new business increased 9% from the prior year period. Underneath the headline numbers, execution in terms of rate and retention at a segmented level continued to be exceptional. In bond and specialty insurance, net written premiums increased by 8%, driven by excellent production in both our surety and management liability businesses. Surety net written premiums were up 18%. Management liability premiums were up 4%, driven by renewal premium change of 9%, retention that increased to 89%, and 20% growth in new business. In personal insurance, renewal premium change was meaningfully higher, both year over year and sequentially, as we continue to address the environmental headwinds. You'll hear more shortly from Greg, Jeff, and Michael about our segment results. Before I turn the call over to Dan, I'd like to comment on a public policy issue. Hurricane Ian puts a spotlight on the troubled condition of the Florida insurance market. Other states may be headed for similar challenges. As policymakers consider how best to address the availability and affordability of insurance, we would urge them to consider the impacts of the unhealthy tort environment, fraud and abuse by a few that impact too many, and regulatory practices that undermine free market principles. I believe those factors are at least as consequential as the weather itself to the industry's ability to provide our communities with effective and efficient ways to manage risk. We're looking forward to being a participant in constructive conversations about solutions in the days ahead. To sum things up, building on our strong results so far this year, we're confident about our outlook. Our commercial lines businesses are generating terrific results. We're achieving meaningful price increases in personal lines. And our high-quality investment portfolio is poised to generate meaningfully higher levels of fixed income NII going forward. When we combine that and the success we've had with our Perform and Transform call to action, we're very confident in our ability to continue to create shareholder value over time. And with that, I'm pleased to turn the call over to Dan.