Travelers Reports Strong Second Quarter and Year-to-Date Results

Excellent Underlying Results, Net Favorable Prior Year Reserve Development and Higher Net Investment Income More Than Offset Significant Catastrophe Losses from Severe Convective Storms

Second Quarter 2024 Net Income per Diluted Share of $2.29 and Return on Equity of 8.6%

Second Quarter 2024 Core Income per Diluted Share of $2.51 and Core Return on Equity of 8.1%

• Second quarter net income of $534 million and core income of $585 million.
• Consolidated combined ratio improved 6.3 points from the prior year quarter to 100.2%.
• Catastrophe losses of $1.509 billion pre-tax, compared to $1.481 billion pre-tax in the prior year quarter.
• Underlying combined ratio improved 3.4 points from the prior year quarter to an excellent 87.7%.
• Net favorable prior year reserve development of $230 million pre-tax, with favorable development in all three segments.
• Record net written premiums of $11.115 billion, up 8%, with growth in all three segments.
• Net investment income increased 24% pre-tax over the prior year quarter, primarily due to strong fixed income returns and growth in fixed maturity investments.
• Total capital of $498 million returned to shareholders, including $253 million of share repurchases.
• Book value per share of $109.08, up 14% over June 30, 2023; adjusted book value per share of $126.52, up 10% over June 30, 2023.
• Board of Directors declares regular cash dividend of $1.05 per share.

NEW YORK--(BUSINESS WIRE)--The Travelers Companies, Inc. today reported net income of $534 million, or $2.29 per diluted share, for the quarter ended June 30, 2024, compared to a net loss of $14 million, or $0.07 per diluted share, in the prior year quarter. Core income in the current quarter was $585 million, or $2.51 per diluted share, compared to $15 million, or $0.06 per diluted share, in the prior year quarter. Core income increased primarily due to a higher underlying underwriting gain (i.e., excluding net prior year reserve development and catastrophe losses), higher net favorable prior year reserve development and higher net investment income, partially offset by higher catastrophe losses. Net realized investment losses in the current quarter were $65 million pre-tax ($51 million after-tax), compared to net realized investment losses of $35 million pre-tax ($29 million after-tax) in the prior year quarter. Per diluted share amounts benefited from the impact of share repurchases.

Consolidated Highlights
($ in millions, except for per share amounts, and after-tax, except for premiums and revenues)	Three Months Ended June 30,									Six Months Ended June 30,
	2024			2023			Change			2024			2023			Change
Net written premiums	$	11,115		$	10,318		8	%		$	21,297		$	19,714		8	%
Total revenues	$	11,283		$	10,098		12			$	22,511		$	19,802		14
Net income (loss)	$	534		$	(14	)	NM			$	1,657		$	961		72
per diluted share	$	2.29		$	(0.07	)	NM			$	7.09		$	4.09		73
Core income	$	585		$	15		NM			$	1,681		$	985		71
per diluted share	$	2.51		$	0.06		NM			$	7.20		$	4.19		72
Diluted weighted average shares outstanding		231.5			229.7		1				231.8			233.3		(1	)
Combined ratio		100.2	%		106.5	%	(6.3	)	pts		97.1	%		101.1	%	(4.0	)	pts
Underlying combined ratio		87.7	%		91.1	%	(3.4	)	pts		87.7	%		90.8	%	(3.1	)	pts
Return on equity		8.6	%		(0.2	)%	8.8		pts		13.3	%		8.6	%	4.7		pts
Core return on equity		8.1	%		0.2	%	7.9		pts		11.8	%		7.4	%	4.4		pts

	As of						Change From
	June 30, 2024		December 31, 2023		June 30, 2023		December 31, 2023		June 30, 2023
Book value per share	$	109.08	$	109.19	$	95.46	—	%	14	%
Adjusted book value per share		126.52		122.90		115.45	3	%	10	%
NM = Not meaningful.
See Glossary of Financial Measures for definitions and the statistical supplement for additional financial data.

“We are pleased to have generated a strong bottom line result in a quarter that included a record level of severe convective storms across the United States,” said Alan Schnitzer, Chairman and Chief Executive Officer. “Core income of $585 million, or $2.51 per diluted share, benefited from excellent underlying results, favorable net prior year reserve development and higher investment income.

“Underlying underwriting income of $1.2 billion pre-tax was up 55% over the prior year quarter, driven by record net earned premiums of $10.2 billion and a consolidated underlying combined ratio that improved 3.4 points to an excellent 87.7%. Net earned premiums were higher in all three of our business segments. The underlying combined ratio in our Business Insurance segment was an excellent 89.2%; the underlying combined ratio in our Bond & Specialty Insurance business improved 1.7 points to a very strong 86.1%; and the underlying combined ratio in Personal Insurance improved by nearly eight points to a terrific 86.3%. Our high-quality investment portfolio continued to perform well, generating after-tax net investment income of $727 million, driven by strong and reliable returns from our growing fixed income portfolio and higher returns from our non-fixed income portfolio. We returned $498 million of excess capital to our shareholders this quarter, including $253 million of share repurchases.

“Through terrific marketplace execution across all three segments, we grew net written premiums in the quarter by 8% to $11.1 billion. In Business Insurance, we grew net written premiums by 7% to $5.5 billion. Renewal premium change in the segment remained very strong at 10.1%, while retention remained high at 85% and new business increased 9% to a record $732 million. In Bond & Specialty Insurance, we grew net written premiums by 8% to more than $1 billion, with excellent retention of 90% in our high-quality management liability business. In our industry-leading surety business, we grew net written premiums by 11%. Given the attractive returns, we are very pleased with the strong production results in both of our commercial business segments. In Personal Insurance, continued strong pricing drove 9% growth in net written premiums, with growth of 10% in Auto and 8% in Home.

“We continue to be very confident in the outlook for our business. Our results for the first half of the year include strong premium growth, excellent underlying underwriting profitability, record operating cash flow and steadily rising investment returns in our growing fixed income portfolio. With a strong and diversified business and balance sheet, we delivered 13.6% core return on equity over the last twelve months, despite elevated industrywide catastrophe losses. We also continue to grow adjusted book value per share, while making important investments in our business and returning substantial excess capital to shareholders. With this momentum and plenty of opportunity ahead of us, we remain well positioned for success this year and beyond.”

Consolidated Results
	Three Months Ended June 30,												Six Months Ended June 30,
($ in millions and pre-tax, unless noted otherwise)	2024				2023				Change				2024				2023				Change
Underwriting gain (loss):	$	(65	)		$	(640	)		$	575			$	512			$	(273	)		$	785
Underwriting gain (loss) includes:
Net favorable prior year reserve development		230				60				170				321				165				156
Catastrophes, net of reinsurance		(1,509	)			(1,481	)			(28	)			(2,221	)			(2,016	)			(205	)
Net investment income		885				712				173				1,731				1,375				356
Other income (expense), including interest expense		(99	)			(85	)			(14	)			(187	)			(193	)			6
Core income (loss) before income taxes		721				(13	)			734				2,056				909				1,147
Income tax expense (benefit)		136				(28	)			164				375				(76	)			451
Core income		585				15				570				1,681				985				696
Net realized investment losses after income taxes		(51	)			(29	)			(22	)			(24	)			(24	)			—
Net income (loss)	$	534			$	(14	)		$	548			$	1,657			$	961			$	696
Combined ratio		100.2	%			106.5	%			(6.3	)	pts		97.1	%			101.1	%			(4.0	)	pts
Impact on combined ratio
Net favorable prior year reserve development		(2.2	)	pts		(0.7	)	pts		(1.5	)	pts		(1.5	)	pts		(0.9	)	pts		(0.6	)	pts
Catastrophes, net of reinsurance		14.7		pts		16.1		pts		(1.4	)	pts		10.9		pts		11.2		pts		(0.3	)	pts
Underlying combined ratio		87.7	%			91.1	%			(3.4	)	pts		87.7	%			90.8	%			(3.1	)	pts
Net written premiums
Business Insurance	$	5,539			$	5,175				7	%		$	11,135			$	10,332				8	%
Bond & Specialty Insurance		1,040				964				8				1,983				1,850				7
Personal Insurance		4,536				4,179				9				8,179				7,532				9
Total	$	11,115			$	10,318				8	%		$	21,297			$	19,714				8	%

Second Quarter 2024 Results
(All comparisons vs. second quarter 2023, unless noted otherwise)

Net income of $534 million increased $548 million, due to higher core income, partially offset by higher net realized investment losses. Core income of $585 million increased $570 million, primarily due to a higher underlying underwriting gain, higher net favorable prior year reserve development and higher net investment income, partially offset by higher catastrophe losses. The underlying underwriting gain benefited from higher business volumes. Net realized investment losses were $65 million pre-tax ($51 million after-tax), compared to net realized investment losses of $35 million pre-tax ($29 million after-tax) in the prior year quarter.

Combined ratio:

• The combined ratio of 100.2% improved 6.3 points due to an improvement in the underlying combined ratio (3.4 points), higher net favorable prior year reserve development (1.5 points) and lower catastrophe losses as a percentage of net earned premiums (1.4 points).

• The underlying combined ratio improved 3.4 points to 87.7%. See below for further details by segment.

• Net favorable prior year reserve development occurred in all segments. See below for further details by segment.

• Catastrophe losses primarily resulted from numerous severe wind and hail storms in multiple states.

Net investment income of $885 million pre-tax ($727 million after-tax) increased 24%. Income from the fixed income investment portfolio increased over the prior year quarter due to a higher average yield and growth in fixed maturity investments. Income from the non-fixed income investment portfolio increased over the prior year quarter primarily due to higher private equity partnership returns. Non-fixed income returns are generally reported on a one-quarter lagged basis and directionally follow the broader equity markets.

Net written premiums of $11.115 billion increased 8%. See below for further details by segment.

Year-to-Date 2024 Results
(All comparisons vs. year-to-date 2023, unless noted otherwise)

Net income of $1.657 billion increased $696 million, due to higher core income. Core income of $1.681 billion increased $696 million, primarily due to a higher underlying underwriting gain, higher net investment income and higher net favorable prior year reserve development, partially offset by higher catastrophe losses. The underlying underwriting gain benefited from higher business volumes. The underlying underwriting gain in the prior year included a one-time tax benefit of $211 million due to the expiration of the statute of limitations with respect to a tax item. Net realized investment losses were $30 million pre-tax ($24 million after-tax), compared to net realized investment losses of $29 million pre-tax ($24 million after-tax) in the prior year.

Combined ratio:

• The combined ratio of 97.1% improved 4.0 points due to an improvement in the underlying combined ratio (3.1 points), higher net favorable prior year reserve development (0.6 points) and lower catastrophe losses as a percentage of net earned premiums (0.3 points).

• The underlying combined ratio of 87.7% improved 3.1 points. See below for further details by segment.

• Net favorable prior year reserve development occurred in all segments. See below for further details by segment.

• Catastrophe losses included the second quarter events described above, as well as severe wind and hail storms in the central and eastern regions of the United States in the first three months of 2024.

Net investment income of $1.731 billion pre-tax ($1.425 billion after-tax) increased 26% driven by the same factors described above for the second quarter of 2024.

Net written premiums of $21.297 billion increased 8%. See below for further details by segment.

Shareholders’ Equity

Shareholders’ equity of $24.862 billion decreased slightly from year-end 2023, primarily due to higher net unrealized investment losses, common share repurchases and dividends to shareholders, largely offset by net income of $1.657 billion. Net unrealized investment losses included in shareholders’ equity were $5.043 billion pre-tax ($3.976 billion after-tax), compared to $3.970 billion pre-tax ($3.129 billion after-tax) at year-end 2023. The increase in net unrealized investment losses was driven primarily by higher interest rates. Book value per share of $109.08 was comparable with year-end 2023. Adjusted book value per share of $126.52, which excludes net unrealized investment gains (losses), increased 3% from year-end 2023.

The Company repurchased 1.2 million shares during the second quarter at an average price of $211.24 per share for a total cost of $253 million. At June 30, 2024, the Company had $5.540 billion of capacity remaining under its share repurchase authorizations approved by the Board of Directors. At the end of the quarter, statutory capital and surplus was $25.210 billion, and the ratio of debt-to-capital was 24.4%. The ratio of debt-to-capital excluding after-tax net unrealized investment gains (losses) included in shareholders’ equity was 21.8%, within the Company’s target range of 15% to 25%.

The Board of Directors declared a regular quarterly dividend of $1.05 per share. The dividend is payable September 30, 2024, to shareholders of record at the close of business on September 10, 2024.

Business Insurance Segment Financial Results
	Three Months Ended June 30,												Six Months Ended June 30,
($ in millions and pre-tax, unless noted otherwise)	2024				2023				Change				2024				2023				Change
Underwriting gain (loss):	$	193			$	(14	)		$	207			$	527			$	259			$	268
Underwriting gain (loss) includes:
Net favorable (unfavorable) prior year reserve development		34				(101	)			135				34				(82	)			116
Catastrophes, net of reinsurance		(389	)			(396	)			7				(598	)			(595	)			(3	)
Net investment income		632				509				123				1,241				982				259
Other income (expense)		(10	)			(10	)			—				(19	)			(43	)			24
Segment income before income taxes		815				485				330				1,749				1,198				551
Income tax expense		159				83				76				329				40				289
Segment income	$	656			$	402			$	254			$	1,420			$	1,158			$	262
Combined ratio		96.1	%			100.1	%			(4.0	)	pts		94.7	%			96.9	%			(2.2	)	pts
Impact on combined ratio
Net (favorable) unfavorable prior year reserve development		(0.6	)	pts		2.2		pts		(2.8	)	pts		(0.3	)	pts		0.9		pts		(1.2	)	pts
Catastrophes, net of reinsurance		7.5		pts		8.5		pts		(1.0	)	pts		5.8		pts		6.5		pts		(0.7	)	pts
Underlying combined ratio		89.2	%			89.4	%			(0.2	)	pts		89.2	%			89.5	%			(0.3	)	pts
Net written premiums by market
Domestic
Select Accounts	$	975			$	883				10	%		$	1,949			$	1,791				9	%
Middle Market		2,769				2,618				6				5,982				5,544				8
National Accounts		312				277				13				639				571				12
National Property and Other		912				862				6				1,554				1,452				7
Total Domestic		4,968				4,640				7				10,124				9,358				8
International		571				535				7				1,011				974				4
Total	$	5,539			$	5,175				7	%		$	11,135			$	10,332				8	%

Second Quarter 2024 Results
(All comparisons vs. second quarter 2023, unless noted otherwise)

Segment income for Business Insurance was $656 million after-tax, an increase of $254 million. Segment income increased primarily due to net favorable prior year reserve development compared to net unfavorable prior year reserve development in the prior year quarter, higher net investment income and a higher underlying underwriting gain. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

• The combined ratio of 96.1% improved 4.0 points due to net favorable prior year reserve development compared to net unfavorable prior year reserve development in the prior year quarter (2.8 points), lower catastrophe losses (1.0 points) and an improvement in the underlying combined ratio (0.2 points).

• The underlying combined ratio remained excellent at 89.2%.

• Net favorable prior year reserve development was primarily driven by better than expected loss experience in the domestic operations’ workers’ compensation product line for multiple accident years, partially offset by higher than expected loss experience in the general liability product line for recent accident years, driven by excess coverages, as well as an addition to reserves related to run-off.

Net written premiums of $5.539 billion increased 7%, reflecting strong renewal premium change and retention, as well as higher levels of new business.

Year-to-Date 2024 Results
(All comparisons vs. year-to-date 2023, unless noted otherwise)

Segment income for Business Insurance was $1.420 billion after-tax, an increase of $262 million. Segment income increased primarily due to higher net investment income and net favorable prior year reserve development compared to net unfavorable prior year reserve development in the prior year period, partially offset by a lower underlying underwriting gain. The underlying underwriting gain benefited from higher business volumes. The underlying underwriting gain in the prior year period included a one-time tax benefit of $171 million due to the expiration of the statute of limitations with respect to a tax item.

Combined ratio:

• The combined ratio of 94.7% improved 2.2 points due to net favorable prior year reserve development compared to net unfavorable prior year reserve development in the prior year period (1.2 points), lower catastrophe losses as a percentage of net earned premiums (0.7 points) and an improvement in the underlying combined ratio (0.3 points).

• The underlying combined ratio remained excellent at 89.2%.

• Net favorable prior year reserve development was primarily driven by the same factors described above for the second quarter of 2024.

Net written premiums of $11.135 billion increased 8%, reflecting the same factors described above for the second quarter of 2024.

Bond & Specialty Insurance Segment Financial Results
	Three Months Ended June 30,												Six Months Ended June 30,
($ in millions and pre-tax, unless noted otherwise)	2024				2023				Change				2024				2023				Change
Underwriting gain:	$	115			$	205			$	(90	)		$	259			$	376			$	(117	)
Underwriting gain includes:
Net favorable prior year reserve development		24				119				(95	)			48				177				(129	)
Catastrophes, net of reinsurance		(40	)			(21	)			(19	)			(45	)			(26	)			(19	)
Net investment income		94				78				16				184				151				33
Other income		5				6				(1	)			11				10				1
Segment income before income taxes		214				289				(75	)			454				537				(83	)
Income tax expense		44				59				(15	)			89				100				(11	)
Segment income	$	170			$	230			$	(60	)		$	365			$	437			$	(72	)
Combined ratio		87.7	%			77.1	%			10.6		pts		86.1	%			78.5	%			7.6		pts
Impact on combined ratio
Net favorable prior year reserve development		(2.5	)	pts		(13.0	)	pts		10.5		pts		(2.5	)	pts		(9.9	)	pts		7.4		pts
Catastrophes, net of reinsurance		4.1		pts		2.3		pts		1.8		pts		2.3		pts		1.5		pts		0.8		pts
Underlying combined ratio		86.1	%			87.8	%			(1.7	)	pts		86.3	%			86.9	%			(0.6	)	pts
Net written premiums
Domestic
Management Liability	$	586			$	541				8	%		$	1,129			$	1,052				7	%
Surety		325				293				11				621				550				13
Total Domestic		911				834				9				1,750				1,602				9
International		129				130				(1	)			233				248				(6	)
Total	$	1,040			$	964				8	%		$	1,983			$	1,850				7	%

Second Quarter 2024 Results
(All comparisons vs. second quarter 2023, unless noted otherwise)

Segment income for Bond & Specialty Insurance was $170 million after-tax, a decrease of $60 million. Segment income decreased primarily due to lower net favorable prior year reserve development and higher catastrophe losses, partially offset by a higher underlying underwriting gain and higher net investment income. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

• The combined ratio of 87.7% increased 10.6 points due to lower net favorable prior year reserve development (10.5 points) and higher catastrophe losses (1.8 points), partially offset by an improvement in the underlying combined ratio (1.7 points).

• The underlying combined ratio improved 1.7 points to a very strong 86.1%.

• Net favorable prior year reserve development was primarily driven by better than expected loss experience in the domestic operations’ fidelity and surety product lines for recent accident years.

Net written premiums of $1.040 billion increased 8%, reflecting strong production in both surety and management liability.

Year-to-Date 2024 Results
(All comparisons vs. year-to-date 2023, unless noted otherwise)

Segment income for Bond & Specialty Insurance was $365 million after-tax, a decrease of $72 million. Segment income decreased primarily due to lower net favorable prior year reserve development and higher catastrophe losses, partially offset by higher net investment income and a higher underlying underwriting gain. The underlying underwriting gain benefited from higher business volumes. The underlying underwriting gain in the prior year period included a one-time tax benefit of $9 million due to the expiration of the statute of limitations with respect to a tax item.

Combined ratio:

• The combined ratio of 86.1% increased 7.6 points due to lower net favorable prior year reserve development (7.4 points) and higher catastrophe losses (0.8 points), partially offset by an improvement in the underlying combined ratio (0.6 points).

• The underlying combined ratio improved 0.6 points to a very strong 86.3%.

• Net favorable prior year reserve development was primarily driven by the same factors described above for the second quarter of 2024.

Net written premiums of $1.983 billion increased 7%, reflecting the same factors described above for the second quarter of 2024.

Personal Insurance Segment Financial Results
	Three Months Ended June 30,												Six Months Ended June 30,
($ in millions and pre-tax, unless noted otherwise)	2024				2023				Change				2024				2023				Change
Underwriting loss:	$	(373	)		$	(831	)		$	458			$	(274	)		$	(908	)		$	634
Underwriting loss includes:
Net favorable prior year reserve development		172				42				130				239				70				169
Catastrophes, net of reinsurance		(1,080	)			(1,064	)			(16	)			(1,578	)			(1,395	)			(183	)
Net investment income		159				125				34				306				242				64
Other income		16				21				(5	)			37				39				(2	)
Segment income (loss) before income taxes		(198	)			(685	)			487				69				(627	)			696
Income tax expense (benefit)		(45	)			(147	)			102				2				(172	)			174
Segment income (loss)	$	(153	)		$	(538	)		$	385			$	67			$	(455	)		$	522
Combined ratio		108.5	%			122.0	%			(13.5	)	pts		102.8	%			112.0	%			(9.2	)	pts
Impact on combined ratio
Net favorable prior year reserve development		(4.2	)	pts		(1.2	)	pts		(3.0	)	pts		(2.9	)	pts		(1.0	)	pts		(1.9	)	pts
Catastrophes, net of reinsurance		26.4		pts		29.1		pts		(2.7	)	pts		19.5		pts		19.5		pts		—		pts
Underlying combined ratio		86.3	%			94.1	%			(7.8	)	pts		86.2	%			93.5	%			(7.3	)	pts
Net written premiums
Domestic
Automobile	$	2,001			$	1,823				10	%		$	3,860			$	3,477				11	%
Homeowners and Other		2,347				2,173				8				3,982				3,738				7
Total Domestic		4,348				3,996				9				7,842				7,215				9
International		188				183				3				337				317				6
Total	$	4,536			$	4,179				9	%		$	8,179			$	7,532				9	%

Second Quarter 2024 Results
(All comparisons vs. second quarter 2023, unless noted otherwise)

Segment loss for Personal Insurance was $153 million after-tax, compared with a segment loss of $538 million in the prior year quarter. The improvement in segment loss was primarily due to a higher underlying underwriting gain, higher net favorable prior year reserve development and higher net investment income, partially offset by higher catastrophe losses. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

• The combined ratio of 108.5% improved 13.5 points due to an improvement in the underlying combined ratio (7.8 points), higher net favorable prior year reserve development (3.0 points) and lower catastrophe losses as a percentage of net earned premiums (2.7 points).

• The underlying combined ratio of 86.3% improved 7.8 points, reflecting improvement in both Automobile and Homeowners and Other.

• Net favorable prior year reserve development was primarily driven by better than expected loss experience in the domestic operations in both the homeowners and other and automobile product lines for recent accident years.

Net written premiums of $4.536 billion increased 9%, reflecting strong renewal premium change in both Domestic Automobile and Homeowners and Other.

Year-to-Date 2024 Results
(All comparisons vs. year-to-date 2023, unless noted otherwise)

Segment income for Personal Insurance was $67 million after-tax, compared with a segment loss of $455 million in 2023. Segment income increased primarily due to a higher underlying underwriting gain, higher net favorable prior year reserve development and higher net investment income, partially offset by higher catastrophe losses. The underlying underwriting gain benefited from higher business volumes. The underlying underwriting gain in the prior year period included a one-time tax benefit of $31 million due to the expiration of the statute of limitations with respect to a tax item.

Combined ratio:

• The combined ratio of 102.8% improved 9.2 points due to an improvement in the underlying combined ratio (7.3 points) and higher net favorable prior year reserve development (1.9 points).

• The underlying combined ratio of 86.2% improved 7.3 points, reflecting improvement in both Automobile and Homeowners and Other.

• Net favorable prior year reserve development was primarily driven by the same factors described above for the second quarter of 2024.

Net written premiums of $8.179 billion increased 9%, reflecting the same factor described above for the second quarter of 2024.

Financial Supplement and Conference Call

The information in this press release should be read in conjunction with the financial supplement that is available on our website at Travelers.com. Travelers management will discuss the contents of this release and other relevant topics via webcast at 9 a.m. Eastern (8 a.m. Central) on Friday, July 19, 2024. Investors can access the call via webcast at investor.travelers.com or by dialing 1.888.440.6281 within the United States or 1.646.960.0218 outside the United States. Prior to the webcast, a slide presentation pertaining to the quarterly earnings will be available on the Company’s website.

Following the live event, replays will be available via webcast for one year at investor.travelers.com and by telephone for 30 days by dialing 1.800.770.2030 within the United States or 1.647.362.9199 outside the United States. All callers should use conference ID 5449478.

About Travelers

The Travelers Companies, Inc. (NYSE: TRV) is a leading provider of property casualty insurance for auto, home and business. A component of the Dow Jones Industrial Average, Travelers has more than 30,000 employees and generated revenues of more than $41 billion in 2023. For more information, visit Travelers.com.

Travelers may use its website and/or social media outlets, such as Facebook and X, as distribution channels of material Company information. Financial and other important information regarding the Company is routinely accessible through and posted on our website at investor.travelers.com, our Facebook page at facebook.com/travelers and our X account (@Travelers) at twitter.com/travelers. In addition, you may automatically receive email alerts and other information about Travelers when you enroll your email address by visiting the Email Notifications section at investor.travelers.com.

Travelers is organized into the following reportable business segments:

Business Insurance - Business Insurance offers a broad array of property and casualty insurance products and services to its customers, primarily in the United States, as well as in Canada, the United Kingdom, the Republic of Ireland and throughout other parts of the world, including as a corporate member of Lloyd’s.

Bond & Specialty Insurance - Bond & Specialty Insurance offers surety, fidelity, management liability, professional liability, and other property and casualty coverages and related risk management services to its customers, primarily in the United States, and certain surety and specialty insurance products in Canada, the United Kingdom and the Republic of Ireland, as well as Brazil through a joint venture, in each case utilizing various degrees of financially-based underwriting approaches.

Personal Insurance - Personal Insurance offers a broad range of property and casualty insurance products and services covering individuals’ personal risks, primarily in the United States, as well as in Canada. Personal Insurance’s primary products of automobile and homeowners insurance are complemented by a broad suite of related coverages.

* * * * *

Forward-Looking Statements

This press release contains, and management may make, certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. Words such as “may,” “will,” “should,” “likely,” “probably,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “views,” “ensures,” “estimates” and similar expressions are used to identify these forward-looking statements. These statements include, among other things, the Company’s statements about:

• the Company’s outlook, the impact of trends on its business and its future results of operations and financial condition;
• the impact of legislative or regulatory actions or court decisions;
• share repurchase plans;
• future pension plan contributions;
• the sufficiency of the Company’s reserves, including asbestos;
• the impact of emerging claims issues as well as other insurance and non-insurance litigation;
• the cost and availability of reinsurance coverage;
• catastrophe losses and modeling;
• the impact of investment, economic and underwriting market conditions, including interest rates and inflation;
• the Company’s approach to managing its investment portfolio;
• the impact of changing climate conditions;
• strategic and operational initiatives to improve profitability and competitiveness;
• the Company’s competitive advantages and innovation agenda, including executing on that agenda with respect to artificial intelligence;
• the Company’s cybersecurity policies and practices;
• new product offerings;
• the impact of developments in the tort environment;
• the impact of developments in the geopolitical environment; and
• the impact of the Company’s acquisition of Corvus Insurance Holdings, Inc.

The Company cautions investors that such statements are subject to risks and uncertainties, many of which are difficult to predict and generally beyond the Company’s control, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.

Some of the factors that could cause actual results to differ include, but are not limited to, the following:

Insurance-Related Risks

• high levels of catastrophe losses;
• actual claims may exceed the Company’s claims and claim adjustment expense reserves, or the estimated level of claims and claim adjustment expense reserves may increase, including as a result of, among other things, changes in the legal/tort, regulatory and economic environments, including increased inflation;
• the Company’s potential exposure to asbestos and environmental claims and related litigation;
• the Company is exposed to, and may face adverse developments involving, mass tort claims; and
• the effects of emerging claim and coverage issues on the Company’s business are uncertain, and court decisions or legislative changes that take place after the Company issues its policies can result in an unexpected increase in the number of claims.

Financial, Economic and Credit Risks

• a period of financial market disruption or an economic downturn;
• the Company’s investment portfolio is subject to credit and interest rate risk, and may suffer reduced or low returns or material realized or unrealized losses;
• the Company is exposed to credit risk related to reinsurance and structured settlements, and reinsurance coverage may not be available to the Company;
• the Company is exposed to credit risk in certain of its insurance operations and with respect to certain guarantee or indemnification arrangements that it has with third parties;
• a downgrade in the Company’s claims-paying and financial strength ratings; and
• the Company’s insurance subsidiaries may be unable to pay dividends to the Company’s holding company in sufficient amounts.

Business and Operational Risks

• the intense competition that the Company faces, including with respect to attracting and retaining employees, and the impact of innovation, technological change and changing customer preferences on the insurance industry and the markets in which it operates;
• disruptions to the Company’s relationships with its independent agents and brokers or the Company’s inability to manage effectively a changing distribution landscape;
• the Company’s efforts to develop new products or services, expand in targeted markets, improve business processes and workflows or make acquisitions may not be successful and may create enhanced risks;
• the Company’s pricing and capital models may provide materially different indications than actual results;
• loss of or significant restrictions on the use of particular types of underwriting criteria, such as credit scoring, or other data or methodologies, in the pricing and underwriting of the Company’s products;
• the Company is subject to additional risks associated with its business outside the United States; and
• future pandemics (including new variants of COVID-19).

Technology and Intellectual Property Risks

• as a result of cyber attacks (the risk of which could be exacerbated by geopolitical tensions) or otherwise, the Company may experience difficulties with technology, data and network security or outsourcing relationships;
• the Company’s dependence on effective information technology systems and on continuing to develop and implement improvements in technology, including with respect to artificial intelligence; and
• the Company may be unable to protect and enforce its own intellectual property or may be subject to claims for infringing the intellectual property of others.

Regulatory and Compliance Risks

• changes in regulation, including higher tax rates; and
• the Company’s compliance controls may not be effective.

In addition, the Company’s share repurchase plans depend on a variety of factors, including the Company’s financial position, earnings, share price, catastrophe losses, maintaining capital levels appropriate for the Company’s business operations, changes in levels of written premiums, funding of the Company’s qualified pension plan, capital requirements of the Company’s operating subsidiaries, legal requirements, regulatory constraints, other investment opportunities (including mergers and acquisitions and related financings), market conditions, changes in tax laws (including the Inflation Reduction Act of 2022) and other factors.

Our forward-looking statements speak only as of the date of this press release or as of the date they are made, and we undertake no obligation to update forward-looking statements. For a more detailed discussion of these factors, see the information under the captions “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Forward Looking Statements” in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 15, 2024, as updated by our periodic filings with the SEC.

GLOSSARY OF FINANCIAL MEASURES AND RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

The following measures are used by the Company’s management to evaluate financial performance against historical results, to establish performance targets on a consolidated basis and for other reasons as discussed below. In some cases, these measures are considered non-GAAP financial measures under applicable SEC rules because they are not displayed as separate line items in the consolidated financial statements or are not required to be disclosed in the notes to financial statements or, in some cases, include or exclude certain items not ordinarily included or excluded in the most comparable GAAP financial measure. Reconciliations of these measures to the most comparable GAAP measures also follow.

In the opinion of the Company’s management, a discussion of these measures provides investors, financial analysts, rating agencies and other financial statement users with a better understanding of the significant factors that comprise the Company’s periodic results of operations and how management evaluates the Company’s financial performance.

Some of these measures exclude net realized investment gains (losses), net of tax, and/or net unrealized investment gains (losses), net of tax, included in shareholders’ equity, which can be significantly impacted by both discretionary and other economic factors and are not necessarily indicative of operating trends.

Other companies may calculate these measures differently, and, therefore, their measures may not be comparable to those used by the Company’s management.

RECONCILIATION OF NET INCOME TO CORE INCOME AND CERTAIN OTHER NON-GAAP MEASURES

Core income (loss) is consolidated net income (loss) excluding the after-tax impact of net realized investment gains (losses), discontinued operations, the effect of a change in tax laws and tax rates at enactment, and cumulative effect of changes in accounting principles when applicable. Segment income (loss) is determined in the same manner as core income (loss) on a segment basis. Management uses segment income (loss) to analyze each segment’s performance and as a tool in making business decisions. Financial statement users also consider core income (loss) when analyzing the results and trends of insurance companies. Core income (loss) per share is core income (loss) on a per common share basis.

Reconciliation of Net Income (Loss) to Core Income (Loss) less Preferred Dividends
	Three Months Ended June 30,					Six Months Ended June 30,				Twelve Months Ended June 30,
($ in millions, after-tax)	2024		2023			2024		2023		2024
Net income (loss)	$	534	$	(14	)	$	1,657	$	961	$	3,687
Adjustments:
Net realized investment losses		51		29			24		24		81
Core income	$	585	$	15		$	1,681	$	985	$	3,768

	Three Months Ended June 30,					Six Months Ended June 30,
($ in millions, pre-tax)	2024		2023			2024		2023
Net income (loss)	$	656	$	(48	)	$	2,026	$	880
Adjustments:
Net realized investment losses		65		35			30		29
Core income (loss)	$	721	$	(13	)	$	2,056	$	909

	Twelve Months Ended December 31,													Average Annual
($ in millions, after-tax)	2023		2022		2021			2020			2019			2005 - 2018
Net income	$	2,991	$	2,842	$	3,662		$	2,697		$	2,622		$	3,035
Less: Loss from discontinued operations		—		—		—			—			—			(31	)
Income from continuing operations		2,991		2,842		3,662			2,697			2,622			3,066
Adjustments:
Net realized investment (gains) losses		81		156		(132	)		(11	)		(85	)		(41	)
Impact of changes in tax laws and/or tax rates (1) (2)		—		—		(8	)		—			—			9
Core income		3,072		2,998		3,522			2,686			2,537			3,034
Less: Preferred dividends		—		—		—			—			—			2
Core income, less preferred dividends	$	3,072	$	2,998	$	3,522		$	2,686		$	2,537		$	3,032
(1) Impact is recognized in the accounting period in which the change is enacted
(2) 2017 reflects impact of Tax Cuts and Jobs Act of 2017 (TCJA)

Reconciliation of Net Income (Loss) per Share to Core Income per Share on a Diluted Basis
	Three Months Ended June 30,					Six Months Ended June 30,
	2024		2023			2024		2023
Diluted income (loss) per share
Net income (loss)	$	2.29	$	(0.07	)	$	7.09	$	4.09
Adjustments:
Net realized investment losses, after-tax		0.22		0.13			0.11		0.10
Core income	$	2.51	$	0.06		$	7.20	$	4.19

Reconciliation of Segment Income (Loss) to Total Core Income
	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions, after-tax)	2024			2023			2024			2023
Business Insurance	$	656		$	402		$	1,420		$	1,158
Bond & Specialty Insurance		170			230			365			437
Personal Insurance		(153	)		(538	)		67			(455	)
Total segment income		673			94			1,852			1,140
Interest Expense and Other		(88	)		(79	)		(171	)		(155	)
Total core income	$	585		$	15		$	1,681		$	985

RECONCILIATION OF SHAREHOLDERS’ EQUITY TO ADJUSTED SHAREHOLDERS’ EQUITY AND CALCULATION OF RETURN ON EQUITY AND CORE RETURN ON EQUITY

Adjusted shareholders’ equity is shareholders’ equity excluding net unrealized investment gains (losses), net of tax, included in shareholders’ equity, net realized investment gains (losses), net of tax, for the period presented, the effect of a change in tax laws and tax rates at enactment (excluding the portion related to net unrealized investment gains (losses)), preferred stock and discontinued operations.

Reconciliation of Shareholders’ Equity to Adjusted Shareholders’ Equity
	As of June 30,
($ in millions)	2024		2023
Shareholders’ equity	$	24,862	$	21,855
Adjustments:
Net unrealized investment losses, net of tax, included in shareholders’ equity		3,976		4,576
Net realized investment losses, net of tax		24		24
Adjusted shareholders’ equity	$	28,862	$	26,455

	As of December 31,													Average Annual
($ in millions)	2023		2022		2021			2020			2019			2005 - 2018
Shareholders’ equity	$	24,921	$	21,560	$	28,887		$	29,201		$	25,943		$	24,659
Adjustments:
Net unrealized investment (gains) losses, net of tax, included in shareholders’ equity		3,129		4,898		(2,415	)		(4,074	)		(2,246	)		(1,232	)
Net realized investment (gains) losses, net of tax		81		156		(132	)		(11	)		(85	)		(41	)
Impact of changes in tax laws and/or tax rates (1) (2)		—		—		(8	)		—			—			20
Preferred stock		—		—		—			—			—			(45	)
Loss from discontinued operations		—		—		—			—			—			31
Adjusted shareholders’ equity	$	28,131	$	26,614	$	26,332		$	25,116		$	23,612		$	23,392
(1) Impact is recognized in the accounting period in which the change is enacted
(2) 2017 reflects impact of Tax Cuts and Jobs Act of 2017 (TCJA)

Return on equity is the ratio of annualized net income (loss) less preferred dividends to average shareholders’ equity for the periods presented. Core return on equity is the ratio of annualized core income (loss) less preferred dividends to adjusted average shareholders’ equity for the periods presented. In the opinion of the Company’s management, these are important indicators of how well management creates value for its shareholders through its operating activities and its capital management.

Average shareholders’ equity is (a) the sum of total shareholders’ equity excluding preferred stock at the beginning and end of each of the quarters for the period presented divided by (b) the number of quarters in the period presented times two. Adjusted average shareholders’ equity is (a) the sum of total adjusted shareholders’ equity at the beginning and end of each of the quarters for the period presented divided by (b) the number of quarters in the period presented times two.

Calculation of Return on Equity and Core Return on Equity
	Three Months Ended June 30,						Six Months Ended June 30,						Twelve Months Ended June 30,
($ in millions, after-tax)	2024			2023			2024			2023			2024
Annualized net income (loss)	$	2,134		$	(56	)	$	3,313		$	1,922		$	3,687
Average shareholders’ equity		24,942			22,453			24,957			22,380			23,320
Return on equity		8.6	%		(0.2	)%		13.3	%		8.6	%		15.8	%
Annualized core income	$	2,341		$	57		$	3,362		$	1,969		$	3,768
Adjusted average shareholders’ equity		28,817			26,690			28,600			26,688			27,728
Core return on equity		8.1	%		0.2	%		11.8	%		7.4	%		13.6	%

	Twelve Months Ended December 31,															Average Annual
($ in millions, after-tax)	2023			2022			2021			2020			2019			2005 - 2018
Net income, less preferred dividends	$	2,991		$	2,842		$	3,662		$	2,697		$	2,622		$	3,033
Average shareholders’ equity		22,031			23,384			28,735			26,892			24,922			24,677
Return on equity		13.6	%		12.2	%		12.7	%		10.0	%		10.5	%		12.3	%
Core income, less preferred dividends	$	3,072		$	2,998		$	3,522		$	2,686		$	2,537		$	3,032
Adjusted average shareholders’ equity		26,772			26,588			25,718			23,790			23,335			23,401
Core return on equity		11.5	%		11.3	%		13.7	%		11.3	%		10.9	%		13.0	%

RECONCILIATION OF NET INCOME (LOSS) TO UNDERWRITING GAIN EXCLUDING CERTAIN ITEMS

Underwriting gain (loss) is net earned premiums and fee income less claims and claim adjustment expenses and insurance-related expenses. In the opinion of the Company’s management, it is important to measure the profitability of each segment excluding the results of investing activities, which are managed separately from the insurance business. This measure is used to assess each segment’s business performance and as a tool in making business decisions. Underwriting gain, excluding the impact of catastrophes and net favorable (unfavorable) prior year loss reserve development, is the underwriting gain adjusted to exclude claims and claim adjustment expenses, reinstatement premiums and assessments related to catastrophes and loss reserve development related to time periods prior to the current year. In the opinion of the Company’s management, this measure is meaningful to users of the financial statements to understand the Company’s periodic earnings and the variability of earnings caused by the unpredictable nature (i.e., the timing and amount) of catastrophes and loss reserve development. This measure is also referred to as underlying underwriting gain, underlying underwriting margin, underlying underwriting income or underlying underwriting result.

A catastrophe is a severe loss designated, or reasonably expected by the Company to be designated, a catastrophe by one or more industry recognized organizations that track and report on insured losses resulting from catastrophic events, such as Property Claim Services (PCS) for events in the United States and Canada. Catastrophes can be caused by various natural events, including, among others, hurricanes, tornadoes and other windstorms, earthquakes, hail, wildfires, severe winter weather, floods, tsunamis, volcanic eruptions and other naturally-occurring events, such as solar flares. Catastrophes can also be man-made, such as terrorist attacks and other intentionally destructive acts including those involving nuclear, biological, chemical and radiological events, cyber events, explosions and destruction of infrastructure. Each catastrophe has unique characteristics and catastrophes are not predictable as to timing or amount. Their effects are included in net and core income (loss) and claims and claim adjustment expense reserves upon occurrence. A catastrophe may result in the payment of reinsurance reinstatement premiums and assessments from various pools.

The Company’s threshold for disclosing catastrophes is primarily determined at the reportable segment level. If a threshold for one segment or a combination thereof is reached and the other segments have losses from the same event, losses from the event are identified as catastrophe losses in the segment results and for the consolidated results of the Company. Additionally, an aggregate threshold is applied for international business across all reportable segments. The threshold for 2024 ranges from $20 million to $30 million of losses before reinsurance and taxes.

Net favorable (unfavorable) prior year loss reserve development is the increase or decrease in incurred claims and claim adjustment expenses as a result of the re-estimation of claims and claim adjustment expense reserves at successive valuation dates for a given group of claims, which may be related to one or more prior years. In the opinion of the Company’s management, a discussion of loss reserve development is meaningful to users of the financial statements as it allows them to assess the impact between prior and current year development on incurred claims and claim adjustment expenses, net and core income (loss), and changes in claims and claim adjustment expense reserve levels from period to period.

Reconciliation of Net Income (Loss) to Pre-Tax Underlying Underwriting Income (also known as Underlying Underwriting Gain)
	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions, after-tax, except as noted)	2024			2023			2024			2023
Net income (loss)	$	534		$	(14	)	$	1,657		$	961
Net realized investment losses		51			29			24			24
Core income		585			15			1,681			985
Net investment income		(727	)		(594	)		(1,425	)		(1,151	)
Other (income) expense, including interest expense		84			70			158			158
Underwriting income (loss)		(58	)		(509	)		414			(8	)
Income tax expense (benefit) on underwriting results		(7	)		(131	)		98			(265	)
Pre-tax underwriting income (loss)		(65	)		(640	)		512			(273	)
Pre-tax impact of net favorable prior year reserve development		(230	)		(60	)		(321	)		(165	)
Pre-tax impact of catastrophes		1,509			1,481			2,221			2,016
Pre-tax underlying underwriting income	$	1,214		$	781		$	2,412		$	1,578

Reconciliation of Net Income (Loss) to After-Tax Underlying Underwriting Income (also known as Underlying Underwriting Gain)
	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions, after-tax)	2024			2023			2024			2023
Net income (loss)	$	534		$	(14	)	$	1,657		$	961
Net realized investment losses		51			29			24			24
Core income		585			15			1,681			985
Net investment income		(727	)		(594	)		(1,425	)		(1,151	)
Other (income) expense, including interest expense		84			70			158			158
Underwriting income (loss)		(58	)		(509	)		414			(8	)
Impact of net favorable prior year reserve development		(182	)		(47	)		(253	)		(130	)
Impact of catastrophes		1,192			1,171			1,755			1,593
Underlying underwriting income	$	952		$	615		$	1,916		$	1,455

	Twelve Months Ended December 31,
($ in millions, after-tax)	2023			2022			2021			2020			2019			2018			2017			2016			2015			2014			2013			2012
Net income	$	2,991		$	2,842		$	3,662		$	2,697		$	2,622		$	2,523		$	2,056		$	3,014		$	3,439		$	3,692		$	3,673		$	2,473
Net realized investment (gains) losses		81			156			(132	)		(11	)		(85	)		(93	)		(142	)		(47	)		(2	)		(51	)		(106	)		(32	)
Impact of changes in tax laws and/or tax rates (1) (2)		—			—			(8	)		—			—			—			129			—			—			—			—			—
Core income		3,072			2,998			3,522			2,686			2,537			2,430			2,043			2,967			3,437			3,641			3,567			2,441
Net investment income		(2,436	)		(2,170	)		(2,541	)		(1,908	)		(2,097	)		(2,102	)		(1,872	)		(1,846	)		(1,905	)		(2,216	)		(2,186	)		(2,316	)
Other (income) expense, including interest expense		337			277			235			232			214			248			179			78			193			159			61			171
Underwriting income		973			1,105			1,216			1,010			654			576			350			1,199			1,725			1,584			1,442			296
Impact of net (favorable) unfavorable prior year reserve development		(113	)		(512	)		(424	)		(276	)		47			(409	)		(378	)		(510	)		(617	)		(616	)		(552	)		(622	)
Impact of catastrophes		2,361			1,480			1,459			1,274			699			1,355			1,267			576			338			462			387			1,214
Underlying underwriting income	$	3,221		$	2,073		$	2,251		$	2,008		$	1,400		$	1,522		$	1,239		$	1,265		$	1,446		$	1,430		$	1,277		$	888
(1) Impact is recognized in the accounting period in which the change is enacted
(2) 2017 reflects impact of Tax Cuts and Jobs Act of 2017 (TCJA)

COMBINED RATIO AND ADJUSTMENTS FOR UNDERLYING COMBINED RATIO

Combined ratio: For Statutory Accounting Practices (SAP), the combined ratio is the sum of the SAP loss and LAE ratio and the SAP underwriting expense ratio as defined in the statutory financial statements required by insurance regulators. The combined ratio, as used in this earnings release, is the equivalent of, and is calculated in the same manner as, the SAP combined ratio except that the SAP underwriting expense ratio is based on net written premiums and the underwriting expense ratio as used in this earnings release is based on net earned premiums.

For SAP, the loss and LAE ratio is the ratio of incurred losses and loss adjustment expenses less certain administrative services fee income to net earned premiums as defined in the statutory financial statements required by insurance regulators. The loss and LAE ratio as used in this earnings release is calculated in the same manner as the SAP ratio.

For SAP, the underwriting expense ratio is the ratio of underwriting expenses incurred (including commissions paid), less certain administrative services fee income and billing and policy fees and other, to net written premiums as defined in the statutory financial statements required by insurance regulators. The underwriting expense ratio as used in this earnings release, is the ratio of underwriting expenses (including the amortization of deferred acquisition costs), less certain administrative services fee income, billing and policy fees and other, to net earned premiums.

The combined ratio, loss and LAE ratio, and underwriting expense ratio are used as indicators of the Company’s underwriting discipline, efficiency in acquiring and servicing its business and overall underwriting profitability. A combined ratio under 100% generally indicates an underwriting profit. A combined ratio over 100% generally indicates an underwriting loss.

Underlying combined ratio represents the combined ratio excluding the impact of net prior year reserve development and catastrophes. The underlying combined ratio is an indicator of the Company’s underwriting discipline and underwriting profitability for the current accident year.

Other companies’ method of computing similarly titled measures may not be comparable to the Company’s method of computing these ratios.

Calculation of the Combined Ratio
	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions, pre-tax)	2024			2023			2024			2023
Loss and loss adjustment expense ratio
Claims and claim adjustment expenses	$	7,373		$	7,227		$	14,029		$	13,186
Less:
Policyholder dividends		12			10			24			22
Allocated fee income		42			40			81			82
Loss ratio numerator	$	7,319		$	7,177		$	13,924		$	13,082
Underwriting expense ratio
Amortization of deferred acquisition costs	$	1,678		$	1,519		$	3,376		$	2,981
General and administrative expenses (G&A)		1,478			1,308			2,884			2,575
Less:
Non-insurance G&A		106			92			208			187
Allocated fee income		73			66			143			130
Billing and policy fees and other		30			28			60			56
Expense ratio numerator	$	2,947		$	2,641		$	5,849		$	5,183
Earned premium	$	10,243		$	9,216		$	20,369		$	18,070
Combined ratio (1)
Loss and loss adjustment expense ratio		71.4	%		77.9	%		68.4	%		72.4	%
Underwriting expense ratio		28.8	%		28.6	%		28.7	%		28.7	%
Combined ratio		100.2	%		106.5	%		97.1	%		101.1	%
Impact on combined ratio:
Net favorable prior year reserve development		(2.2	)%		(0.7	)%		(1.5	)%		(0.9	)%
Catastrophes, net of reinsurance		14.7	%		16.1	%		10.9	%		11.2	%
Underlying combined ratio		87.7	%		91.1	%		87.7	%		90.8	%
(1) For purposes of computing ratios, billing and policy fees and other (which are a component of other revenues) are allocated as a reduction of underwriting expenses. In addition, fee income is allocated as a reduction of losses and loss adjustment expenses and underwriting expenses. These allocations are to conform the calculation of the combined ratio with statutory accounting. Additionally, general and administrative expenses include non-insurance expenses that are excluded from underwriting expenses, and accordingly are excluded in calculating the combined ratio.

RECONCILIATION OF BOOK VALUE PER SHARE AND SHAREHOLDERS’ EQUITY TO CERTAIN NON-GAAP MEASURES

Book value per share is total common shareholders’ equity divided by the number of common shares outstanding. Adjusted book value per share is total common shareholders’ equity excluding net unrealized investment gains and losses, net of tax, included in shareholders’ equity, divided by the number of common shares outstanding. In the opinion of the Company’s management, adjusted book value per share is useful in an analysis of a property casualty company’s book value per share as it removes the effect of changing prices on invested assets (i.e., net unrealized investment gains (losses), net of tax), which do not have an equivalent impact on unpaid claims and claim adjustment expense reserves. Tangible book value per share is adjusted book value per share excluding the after-tax value of goodwill and other intangible assets divided by the number of common shares outstanding. In the opinion of the Company’s management, tangible book value per share is useful in an analysis of a property casualty company’s book value on a nominal basis as it removes certain effects of purchase accounting (i.e., goodwill and other intangible assets), in addition to the effect of changing prices on invested assets.

Reconciliation of Shareholders’ Equity to Tangible Shareholders’ Equity, Excluding Net Unrealized Investment Losses, Net of Tax and Calculation of Book Value Per Share, Adjusted Book Value Per Share and Tangible Book Value Per Share
	As of
($ in millions, except per share amounts)	June 30, 2024			December 31, 2023			June 30, 2023
Shareholders’ equity	$	24,862		$	24,921		$	21,855
Less: Net unrealized investment losses, net of tax, included in shareholders’ equity		(3,976	)		(3,129	)		(4,576	)
Shareholders’ equity, excluding net unrealized investment losses, net of tax, included in shareholders’ equity		28,838			28,050			26,431
Less:
Goodwill		4,250			3,976			3,975
Other intangible assets		371			277			283
Impact of deferred tax on other intangible assets		(86	)		(69	)		(67	)
Tangible shareholders’ equity, excluding net unrealized investment losses, net of tax, included in shareholders’ equity	$	24,303		$	23,866		$	22,240
Common shares outstanding		227.9			228.2			228.9
Book value per share	$	109.08		$	109.19		$	95.46
Adjusted book value per share		126.52			122.90			115.45
Tangible book value per share, excluding net unrealized investment losses, net of tax, included in shareholders’ equity		106.62			104.57			97.14

RECONCILIATION OF TOTAL CAPITALIZATION TO TOTAL CAPITALIZATION EXCLUDING NET UNREALIZED INVESTMENT GAINS (LOSSES), NET OF TAX

Total capitalization is the sum of total shareholders’ equity and debt. Debt-to-capital ratio excluding net unrealized gains (losses) on investments, net of tax, included in shareholders’ equity, is the ratio of debt to total capitalization excluding the after-tax impact of net unrealized investment gains and losses included in shareholders’ equity. In the opinion of the Company’s management, the debt-to-capital ratio is useful in an analysis of the Company’s financial leverage.

	As of
($ in millions)	June 30, 2024			December 31, 2023
Debt	$	8,032		$	8,031
Shareholders’ equity		24,862			24,921
Total capitalization		32,894			32,952
Less: Net unrealized investment losses, net of tax, included in shareholders’ equity		(3,976	)		(3,129	)
Total capitalization excluding net unrealized losses on investments, net of tax, included in shareholders’ equity	$	36,870		$	36,081
Debt-to-capital ratio		24.4	%		24.4	%
Debt-to-capital ratio excluding net unrealized investment losses, net of tax, included in shareholders’ equity		21.8	%		22.3	%

RECONCILIATION OF INVESTED ASSETS TO INVESTED ASSETS EXCLUDING NET UNREALIZED INVESTMENT GAINS (LOSSES)
	As of June 30,
($ in millions)	2024			2023
Invested assets	$	89,511		$	82,973
Less: Net unrealized investment losses, pre-tax		(5,043	)		(5,815	)
Invested assets excluding net unrealized investment losses	$	94,554		$	88,788

	As of December 31,
($ in millions)	2023			2022			2021		2020		2019		2018			2017		2016		2015		2014		2013		2012
Invested assets	$	88,810		$	80,454		$	87,375	$	84,423	$	77,884	$	72,278		$	72,502	$	70,488	$	70,470	$	73,261	$	73,160	$	73,838
Less: Net unrealized investment gains (losses), pre-tax		(3,970	)		(6,220	)		3,060		5,175		2,853		(137	)		1,414		1,112		1,974		3,008		2,030		4,761
Invested assets excluding net unrealized investment gains (losses)	$	92,780		$	86,674		$	84,315	$	79,248	$	75,031	$	72,415		$	71,088	$	69,376	$	68,496	$	70,253	$	71,130	$	69,077

OTHER DEFINITIONS

Gross written premiums reflect the direct and assumed contractually determined amounts charged to policyholders for the effective period of the contract based on the terms and conditions of the insurance contract. Net written premiums reflect gross written premiums less premiums ceded to reinsurers.

For Business Insurance and Bond & Specialty Insurance, retention is the amount of premium available for renewal that was retained, excluding rate and exposure changes. For Personal Insurance, retention is the ratio of the expected number of renewal policies that will be retained throughout the annual policy period to the number of available renewal base policies. For all of the segments, renewal rate change represents the estimated change in average premium on policies that renew, excluding exposure changes. Exposure is the measure of risk used in the pricing of an insurance product. The change in exposure is the amount of change in premium on policies that renew attributable to the change in portfolio risk. Renewal premium change represents the estimated change in average premium on policies that renew, including rate and exposure changes. New business is the amount of written premium related to new policyholders and additional products sold to existing policyholders. These are operating statistics, which are in part dependent on the use of estimates and are therefore subject to change. For Business Insurance, retention, renewal premium change and new business exclude National Accounts. For Bond & Specialty Insurance, retention, renewal premium change and new business exclude surety and other products that are generally sold on a non-recurring, project specific basis. For each of the segments, production statistics referred to herein are domestic only unless otherwise indicated.

Statutory capital and surplus represents the excess of an insurance company’s admitted assets over its liabilities, including loss reserves, as determined in accordance with statutory accounting practices.

Holding company liquidity is the total funds available at the holding company level to fund general corporate purposes, primarily the payment of shareholder dividends and debt service. These funds consist of total cash, short-term invested assets and other readily marketable securities held by the holding company.

For a glossary of other financial terms used in this press release, we refer you to the Company’s most recent annual report on Form 10-K filed with the SEC on February 15, 2024, and subsequent periodic filings with the SEC.