The Travelers Companies, Inc.

Thank you. Good morning, and welcome to Travelers' discussion of our first quarter 2025 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 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. We are pleased to report a substantial profit for the quarter, despite the devastating January California wildfires. We delivered core income of $443 million, or $1.91 per diluted share, as outstanding underlying results, strong net favorable prior year reserve development, and higher investment income more than offset catastrophe losses. Over the last four quarters, thanks to strong underlying fundamentals, we generated a core return on equity of 14.5%. That demonstrates our ability to deliver healthy returns over time notwithstanding elevated industry-wide catastrophe losses. Underlying underwriting income of $1.6 billion pre-tax was up more than 30% over the prior year quarter. That was driven by strong net earned premiums of $10.7 billion and a consolidated underlying combined ratio that improved 2.9 points to an excellent 84.8%. All three segments contributed to these underlying results with strong and higher net earned premiums, and excellent underlying profitability. The underlying combined ratio in business insurance improved to an excellent 88.2%. The underlying combined ratio in our bond and specialty business was a very strong 87.3%, and the underlying combined ratio in personal insurance improved by more than six points to a terrific 79.9%. Consistent with the announcement we made in February, Our catastrophe losses from the California wildfires were $1.7 billion pre-tax. I'm grateful to our claim team, their continued excellent work taking care of our customers and supporting the community's recovery. We've already paid out nearly three-quarters of a billion dollars, including substantial advance payments to our customers who suffered total losses. Even after that, operating cash flows for the quarter were a very strong $1.4 billion. Turning to investments, our high-quality investment portfolio continued to perform well. After-tax net investment income of $763 million for the quarter was driven by strong and reliable returns from our growing fixed income portfolio and positive returns from our thoughtfully managed alternative investment portfolio. Our underwriting and investment results, together with our strong balance sheet, enabled us to return nearly $600 million of excess capital to shareholders. including $358 million of share repurchases. At the same time, we continued to make important investments in our business as we completed another quarter of successful execution on a number of important strategic initiatives. Even after this deployment of capital, adjusted book value per share increased by 11% as compared to a year ago. In recognition of our strong financial position and confidence in the outlook for our business, I'm pleased to share that our Board of Directors declared a 5% increase in our quarterly cash dividend to $1.10 per share, marking 21 consecutive years of dividend increases, with a compound annual growth rate of 8% over that period. Turning to production, excellent execution by our field organization drove our top line growth, with all three of our segments contributing. During the quarter, we grew net written premiums to $10.5 billion. In business insurance, we grew net written premiums by 2% to a record $5.7 billion after the seeded premium impact of the enhanced casualty reinsurance program that we announced last quarter. As we previewed with you, that reduced the segment's net written premium growth in the quarter by 4 percentage points as a full year's worth of seeded premium was booked in the first quarter. We know premium change in the segment was double digits or high single digits in every line other than workers' comp. Even with strong pricing pretty much across the board, retention improved nearly two points from the fourth quarter to 86% and was higher in every line. That dynamic of strong pricing and retention speaks to continued discipline in the marketplace. New business for the segment was a record $735 million a reflection of the fact that our customers and distribution partners value the products and services that we offer and the experiences that we provide. In bond and specialty insurance, we grew net written premiums by 6% to $1 billion, with excellent retention of 89% in our high-quality management liability business. In our industry-leading surety business, we grew net written premiums by 13%. Given the attractive returns, we are very pleased with the strong production results in both of our commercial business segments. In personal insurance, net written premiums grew 5% to $3.8 billion, driven by strong renewal premium change, particularly in our homeowner's business. 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 how Travelers has positioned for what feels like an uncertain macroeconomic road ahead. In short, we are entering 2025 in a position of strength. We are a market leader in a diversified portfolio of businesses, each with a strong value proposition to offer to our customers and distribution partners. Our underlying margins are in great shape, and in each segment, we have attractive loss ratios and expense ratios that reflect years of strategic focus on optimizing operating leverage. Our cash flow is strong and resilient. Our investment portfolio was thoughtfully managed to deliver highly reliable returns, including through periods of market stress. And we have a fortress balance sheet featuring a strong capital base and almost no debt coming due in the next eight years. On top of all that, we have the resources and financial strength to continue making strategic investments in our business without interruption. All of which is to say, Just as we have successfully served our customers and distribution partners and created shareholder value over time, including through periods of economic disruption, we are very well positioned to continue doing so now. And with that, I'm pleased to turn the call over to Dan.

Thank you, Alan. Travelers delivered $443 million of core income in the first quarter, despite significant losses from the California wildfires. The higher level of CAT losses was partially offset by a significant increase in underlying underwriting income, higher level of net favorable prior year reserve development, and higher net investment income. And as you heard from Alan, trailing 12-month core return on equity was 14.5%. Our pre-tax underlying underwriting gain of $1.6 billion was up 32% from the prior year quarter. reflecting higher levels of earned premium and an underlying combined ratio that improved by 2.9 points to 84.8%. The underlying combined ratio was our second best result ever, and once again featured very strong results in all three business segments. We were pleased with the first quarter expense ratio of 28.3%, an improvement of 40 basis points from the prior year quarter. For the full year, we remain comfortable with an expense ratio expectation of 28 to 28 and a half percent. Our continued focus on operating leverage enables us to maintain this level of expense ratio even as we increase the amount of strategic technology spend to further strengthen our competitive advantages, positioning us for continued success well into the future. We reported net favorable prior year reserve development of $378 million pre-tax in the first quarter, with all three segments contributing. In business insurance, net favorable development of $74 million pretax was driven by workers' comp. In bond and specialty, net favorable PYD of $67 million pretax was driven by better-than-expected results in management liability and surety. Personal insurance recorded net favorable PYD of $237 million pretax with significant improvements in both auto and home. Catastrophe losses for the quarter totaled $2.3 billion pre-tax, driven by the California wildfires in January, for which our estimate of $1.7 billion is unchanged from the estimate we pre-announced in February. After-tax net investment income increased 9% from the prior year quarter to $763 million. Our fixed income NII was higher than in the prior year quarter and in line with our expectations, benefiting from both higher yields and a higher level of invested assets. Our outlook for fixed income NII by quarter, including earnings from short-term securities, is $725 million after tax in the second quarter, growing to approximately $755 million in the third quarter, and then to around $790 million in the fourth quarter. NII from our alternative investment portfolio was also positive in the quarter. Given recent movement in the equity markets, this is a good time to remind you that results for our private equities, hedge funds, and real estate partnerships are generally reported to us on a one-quarter lag. And while not perfectly correlated, our non-fixed income returns tend to directionally follow the broader equity markets. In other words, the impact of the decline in financial markets that occurred in the first quarter will be reflected in our second quarter results. Turning to capital management, operating cash flows for the quarter of $1.4 billion were again very strong, despite the elevated payout related to the California wildfires. And we ended the quarter withholding company liquidity of approximately $1.6 billion. As interest rates decreased during the quarter, our net unrealized investment loss decreased from $3.6 billion after tax at year end to $3.3 billion after tax on March 31st. Adjusted book value per share, which excludes unrealized investment gains and losses, was $138.99 at quarter end, basically unchanged from year end and up 11% from a year ago. Share repurchases this quarter included $250 million of open market repurchases. We had an additional $108 million of buybacks in connection with employee share-based compensation plans. We have approximately $4.8 billion remaining under prior Board authorizations for share repurchases. Dividends were $241 million in the quarter, and as Alan mentioned earlier, our board authorized a 5 cent increase in the quarterly dividend to $1.10 per share. In summary, our first quarter results once again demonstrate the significant earnings power that results from our ability to leverage our competitive advantages to grow premiums across our well-diversified book of business while maintaining very attractive margins, along with steadily increasing net investment income from our growing investment portfolio. And with that, I'll turn the call over to Greg for discussion of business insurance.