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, which time will be given instructions for the question and answer session. As a reminder, this conference is being recorded on October 17th, 2024. 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 2024 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 Klang 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 prepared 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 our 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 caused by recent hurricanes Helene and Milton. These were powerful storms, and our hearts go out to all those who have been impacted. Of course, we send our thoughts and prayers, but we're also sending claim resources. From our National Catastrophe Center in Hartford, we're managing the deployment of hundreds of travelers' claim professionals, along with mobile claim offices and quick response vehicles. We've activated thousands more cross-trained colleagues across the country to support our local response. Our catastrophe response model enables us to adjust virtually every claim with a traveler's claim professional and without resorting to independent adjusters. That results in a better outcome for our customers and distribution partners. Thanks to these efforts and the advanced analytics and geospatial tools that we leverage, we're on track this year to meet our objective of resolving 90% of our claims from natural catastrophes within 30 days. That can make the difference between whether a customer of ours is able to celebrate the holiday season in their living room instead of a hotel room. I'd also like to express my deep gratitude to our claim organization. The entire team tirelessly delivers exceptional technical expertise and support to our customers, demonstrating day in and day out the value of the traveler's promise. Turning to results, we are very pleased to have generated outstanding top and bottom line results this quarter. Excellent underlying underwriting income, higher net investment income, and net favorable prior year reserve development all contributed to core income of more than $1.2 billion, or $5.24 per diluted share, generating core return on equity of 16.6%. Underlying underwriting income of $1.5 billion pre-tax was up 73% over the prior year quarter, driven by record net earned premiums of $10.7 billion, up 10%, and an underlying combined ratio that improved five points to an excellent 85.6%. Both underwriting income and underlying margins were strong in all three of our segments. The underlying combined ratio in our business insurance segment improved nearly two points to an excellent 87.9%, and our bond and specialty business delivered a very strong underlying combined ratio of 85.6%. The underlying combined ratio in personal insurance improved 11.5 points to an exceptional 82.7%. These terrific segment results contributed to a reported consolidated combined ratio that improved nearly 8 points to 93.2%. Turning to investments, our high-quality investment portfolio continued to perform well, with after-tax net investment income up 16%, to $742 million, driven by strong and reliable returns from our growing fixed income portfolio and higher returns from our non-fixed income portfolio. Our underwriting and investment results, together with our strong balance sheet, enabled us to grow adjusted book value per share by 4% during the quarter, and that's after returning $496 million of excess capital to shareholders and continuing to make important investments in our business, as we notched another quarter of successful execution on a number of important strategic initiatives. Turning to the top line, we grew net written premiums by 8% to $11.3 billion. The strong value proposition that we offer to our customers and distribution partners, along with outstanding execution by our colleagues in the field, contributed to our top line success. In business insurance, we grew net written premiums by 9% to more than $5.5 billion. Renewal premium change in the segment remained very strong, increasing to 10.5%. driven by strong contributions from the liability coverages. Renewal rate change accelerated to 7.3% in the quarter and was steady or higher in every product line. Even with the firm pricing environment, retention in the segment ticked up to 86%. The combination of strong pricing and excellent retention reflects our deliberate execution and a marketplace that is reacting in a generally disciplined way to the headwinds of social and economic inflations. In bond and specialty insurance, we grew net written premiums by 7% to a record $1.1 billion, driven by excellent retention of 90% in our high-quality management liability business and strong production in our market-leading surety business. We grew surety net written premiums by 7% from a very strong result in the prior year quarter. We are very pleased to have generated terrific production results across our commercial segments where margins continue to be attractive. That includes our ENS offerings where we've grown net written premiums by 13% year to date. In personal insurance, we were pleased to grow net written premiums by 7% driven by strong renewal price change in both auto and home. The strong production results across our three segments are a reflection of our view that in order to achieve our objective of industry leading returns over time, we need an effective strategy to grow profitably over time. As we've shared before, we seek to achieve profitable growth by investing in franchise value, making sure that we offer the products, services, and experiences that our customers want to buy and our distribution partners want to sell. Also central to our growth strategy is our very granular approach to risk selection, underwriting, and pricing, which we've discussed many times. As a result of that approach and investments we've made over decades in leading data and analytics, Our growth in insured exposures correlates to returns. In other words, generally speaking, the more attractive the returns in a business, the more we've been growing insured exposures in that business. All of which is to say, Traveler's unique combination of franchise value and execution yields very effective capital deployment and high-quality profitable growth. The numbers speak for themselves. Over the last four years, we've grown our premium base by more than $13 billion, nearly a 50% increase, while simultaneously improving our underwriting margins. The result is that we've more than doubled our underlying underwriting income and increased our total underwriting income by more than 80%. The combination of strong underwriting income and the reliable investment income from our substantial and growing investment portfolio makes for a powerful earnings engine. That's what's driving our strong results this quarter and year to date, and that's what's driving our core return on equity of 15.9% over the last 12 months. And that's what gives us great confidence in the outlook for our business into 2025 and beyond. With that, I'm pleased to turn the call over to Dan.