The Travelers Companies, Inc. (TRV) 18 Apr 192019 Q1 Earnings call transcript

Company Profile

Participants

Abbe Goldstein	SVP, IR
Alan Schnitzer	Chairman & CEO
Daniel Frey	EVP & CFO
Gregory Toczydlowski	EVP & President, Business Insurance
Thomas Kunkel	EVP and President, Bond & Specialty Insurance
Michael Klein	EVP, President, Personal Insurance and Head, Enterprise Business Intelligence & Analytics
Jay Gelb	Barclays Bank
Michael Phillips	Morgan Stanley
Elyse Greenspan	Wells Fargo Securities
Ryan Tunis	Autonomous Research
Brian Meredith	UBS Investment Bank
Michael Zaremski	Crédit Suisse
Lawrence Greenberg	Janney Montgomery Scott
Meyer Shields	KBW
Joshua Shanker	Deutsche Bank
Amit Kumar	The Buckingham Research Group
Yaron Kinar	Goldman Sachs Group
Jeffrey Schmitt	William Blair & Company

Call transcript

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Operator

Good morning, ladies and gentlemen. Welcome to the First Quarter 2019 Results Teleconference For Travelers. [Operator Instructions].

As a reminder, this conference is being recorded on April 18, 2019. At this time, I would like to turn the conference over to Ms. President Relations. Vice Senior Goldstein, of Investor Abbe Ms. Goldstein, begin. you may

Abbe Goldstein

our morning, welcome you. all discussion supplement seen this of released Thank webcast of release, Travelers presentation and have Hopefully, our and morning. results. to Good earlier financial XXXX first you press quarter

the these under can at materials of found on section. All website our be travelers.com Investor

Personal Tom & today be Alan Greg Frey, Insurance; Insurance. and go Officer; Financial the to financial They our and of Segment the current Klein will results will prepared Schnitzer, Presidents, refer Dan through the market of Bond They will Speaking we will they our of discuss business questions. Toczydlowski Kunkel then and Michael and as remarks webcast Insurance; presentation Business take Chief environment. Specialty Chairman and of three CEO;

to webcast. Before to attention end explanatory draw turn call I the I'd of like to at your Alan, note the the included the over

may the Schnitzer. now, Investor I'd financial call other turn The expressed presentation to included any statements. Our future investors we involves the available XX-Q These materially website. and obligation are in forward-looking under materials guarantee are statements. results or update questions, a is And to to some performance. supplement statements Also includes statement measures. SEC. statements forward-looking release on from forward-looking our press and press our of and Actual that any may forward-looking to today remarks uncertainties the not undertake with differ and Alan our forward-looking section company or those not cautions filed recent responses to do factors over release, XX-K We in earnings our described of non-GAAP in variety in most Reconciliations implied mention recent earnings and the a in factors. financial in like due our risks

Alan Schnitzer

Abbe. and today. Good thank everyone, for joining you, us Thank morning, you

we're seeing priorities the on engaged Our our impacts. in are focus executing XX,XXX and strategic employees

was As our productivity towards top strategic the this a results contributing. ratio underlying almost more XX% of year improvements our Net our record we we The past, progress fronts. and strong improved creating in quarter are efficiency. segments return of underwriting business both on billion improving achieved prior ratio. highest X productivity a gain Core in strong combined over each segments up than to and X% the the all attractive results for points. business income The is equity quarter million with on efforts each opportunities the business prior in improved $X.X $XXX across reflect by to quarter $XXX The with XX% we've return quarter, of business explained efficiency combined over up reflecting were the in equity two volumes our generating of of in and The Earned the XX.X% first level higher in geared line of income each $XXX delivered was XX.X%, and a nearly segments. also pretax quarter, on ratio million year of XX.X% point Notably, years. two was XX%, combined and premiums up of lower segments. the million, up highest level core XX% years.

Our high-quality investment portfolio investment after-tax. performed $XXX well, generating income of net million

returns, prior fixed in income While net to higher from income quarter results return. year equity the below slightly due benefited investment lower private

management after share strategy. contributed of this book book X% value share to long-standing quarter returning in per strong of value X% Our with results excess capital per our million shareholders $XXX growth and to in of consistent adjusted growth capital

marketplace our pleased very with execution to of Turning the remain production, we strategies.

reinsurance reflect the treaty, grew billion, we increase written new catastrophe an $X.X premiums of you X%. up were premiums, record of the X%. gross Net with written $X.X During discussed a last which quarter, we the quarter, billion, to impact

That premium Business achieved growth renewal Insurance, Our premiums the high increased and by renewal gross as more speaks written retention of change we're premium In again once X%, of X%, positive levels reflects premium high renewal change of we on books. of business of quality than putting X%. rate change. the the including

both For those rate RPC, in were the years. levels highest five and almost

thoughtfully with by in the Comp, As our and objectives. coordination of you granular lines, of and That's rate price year-over-year were with the was but to sequentially partners. to gains execution the We'll result return increases expect and up and the deliberate Workers' lines. each product might our Auto meet close of property distribution exception our led both Commercial in great selectively continue see and

business maintained Importantly, up X%, driven high we our in in by we written retention a volume in both historical were premiums up Agency In level and Homeowners at our auto while high-performing we prior X%, Specialty written that at as Bond of generated and are agency year Insurance, both Surety were In business, and high a is our premiums strong premium & and were retention new new margins, story, levels highs domestic great current business. of reflecting consistently business. gross gross Liability was know both quarters. businesses. which Management Personal improving levels the you higher encouraged historically results

and You'll shortly Michael Greg, our hear about Tom segment more results. from

our as X.X% profits per years $X.XX that a consecutive of that, in growth we increases excellent production. strong to a marking share, of rate Board our first in quarter On more annual of has terms to with dividend We declared in confidence results report of increase business, of period. of top To to and that of another had dividend our X% pleased XX than generated has compound I'm Directors up, both a returns. over start quarter quarterly Lastly, a the year. it sum terrific our reflection performance

Dan. performance, over to us over continue to time. to position And industry-leading turn and advantages commitment I'll that, competitive Our it delivering with innovation results

Daniel Frey

and combined resulted for And partially core favorable These offset XX%, returns. Core private were year the volumes net lower quarter. up year up our the and lower higher driven equity gain, PYD, quarter by increased improvements was earned per share XX% from quarter, business Pretax improved from up prior from million which Earnings net earnings losses of per XX.X%. the all income ROE Alan. excludes core XX.X% G&A in you, X%. initiatives million, ratio point efficiency premiums benefited in margins, impacts flat, by consolidated improvements in the of a and expense productivity cats the by from three Underlying up improved driven $XXX prior higher was catastrophe by operating by and $XXX results year share nearly first Thank segments. and ratio. from X.X and while underwriting underlying and underlying reserve grew lower by development underwriting execution as resulted respectively. XX%, underlying were XX% insurance of expenses Successful prior lower leverage XX%,

first quarter. million pretax primarily Net Our Business performance million the PYD pretax, in the in of million Insurance, reserve favorable the creating prior down This quarter. in $XXX during cases of potential $XX development from quarter $XX general in in that York the better-than-expected include The statutory extends child exposure auto. of time-barred. year the was catastrophe pretax claims first Act results the resulted million Personal net year's million change $XX year from liability $XX quarter net enactment net of prior In significantly compares $XXX In of sexual prior from primarily for legislation Victims Insurance, previously quarter. first unfavorable Child line first down million favorable pretax in losses, quarter. New year limitations pretax of million from to the to favorable resulted abuse, PYD PYD in the last were $XXX

decreased the offset unfavorable Insurance have the net reserve reserve than York of NII X% by million development, average Commercial on largely income reflected market are from the us reported reported more lower investment and as net Lower of increased law and Pretax in returns by the returns million, comp to change, was Excluding income $XXX the favorable net due equity net fixed consequently to workers' the year modest had us fourth Fixed development. private returns assets. would favorable these in results income unchanged generally by XXXX, the to Auto commercial portfolio. equity $XX assets were downturn quarter year private of reserve quarter invested Business income invested the nonfixed increase amount impact pretax in our as yield higher New had development, an prior multi-parallel by and lag. in prior on higher portfolio average quarter a

primary $X.X net will than the benefit have billion. on about X.X our more in assumed treaty incur rate point ratio. XXXX. underlying underlying above impact ceded new recoveries which this written added full earned from excluded an year this we quarter, cost providing the in our combined that quarters the a combined in written treaty is Based the is premiums, from loss this premium assume rate net quarter. reinsurance $X year. new Most recorded that would written PCS-designated on losses, total of losses, would events on earnings reinsurance the gross the likely the year. year will four discussed growth reason likely we any only the or up remaining losses full all premiums for As minimal cat adverse retention for affect results in call catastrophe of aggregate year, half an of treaty ratio last we for benefit of on reflected treaty premium in basis, the impact the that of the but treaty XXXX, front, ceded growth for would second On which Because quarters we our coverage all the premiums weather the recoveries are million the And new results. impact this is The not less recur and is in a

by our total for underlying XXXX Of we be ratios combined course, impacted effect and the actually the on of level experience. PCS events will

the at market debt is $XXX with Operating million billion. capital debt and again, of holding we company Turning strong, all levels, maturity quarter XX-year $X.X June. new $XXX very company took attractive in approximately cash and at liquidity of ahead or than our were of advantage better issued our elevated million March. the for capital management. temporarily issued the liquidity to target $XXX were, Holding upcoming as X.X%, quarter million of debt early we ended We rates flows in ratios of

the we're adjust So company of high first end the holding quarter. an exiting will naturally second the level that of quarter artificially before liquidity carrying itself

share, per the a to year-end unrealized at XX, quarter. rates $X excludes And March book interest investment of decreased as and of which from gain gain, result, unrealized million after-tax a unrealized billion terms the XX. net as Adjusted $XXX $XXX after-tax we value share $XXX returned $XX.XX loss and In gains year-end. our during the higher net was of went investment first per of at our to at unrealized repurchases losses X% excess quarter, million. to million March raised share. dividends shareholders $X.XX of from of than share capital We comprising $XXX per as Board And dividend $X.XX Alan noted, quarterly this million

all over the microphone position. across for So remain key with of that, discussion strong And pleased financial our turn Insurance. a we to with Greg Business measures, I'll

Gregory Toczydlowski

Thanks, Insurance our strong in results. a underwriting and as first production Dan. quarter reflected Business had

change split importantly, a highest to almost between million, the continue Significantly, ratio while Segment As for us strategic after retention both quarter, And underlying was future. initiatives year while rate improved were the you years. XX.X%. we from to renewal heard in at of The and and by quarter the ratio the XX% was prior for that the very loss ratio impact cat combined the point The Alan evenly X.X the underlying levels. X.X reinsurance invest five change maintaining income ratio the point, by strong position premium on treaty. achieved treaty renewal premium increased also we in earned ratio. levels even combined from $XXX expense combined the new say, about

just prior X.X down I'll point The the break was of a than in me loss the minute. provide further. underlying in international a year elevated combined about higher point quarter, bit underlying driven comments on by ratio our some Let a additional losses ratio international business.

weather change than lower point the the to underlying loss expectations. maintaining from driven generally with Auto of the reported the about impact ratio cat X.X prior mostly treaty continued non-cat The the dollars. G&A which the also generally point growth flat a by underlying our less was insurance X.X was new addition, well higher consistent reestimates a the in premium losses points, X.X in as which little estimates the little of with by line we as than expense loss fourth In ratio volumes in was XXXX. from offset more while expense of losses, quarter favorable included Commercial Auto quarter by year for were in quarter X.X

other improvement resulted assessment. the state The a this half the from to related of benefit quarter

turn a to spend we're business. I I'll minute the Before in more seeing in international what top on line production, our

row For property-driven These loss experienced what we and pursuing large activity. with shared to primarily a believe now, a are meaningful in some We're losses. be losses to we've higher industry-wide couple that elevated attritional increases predominantly into quarters a number have from a address small rate of we've losses lesser challenges. degree come you

These targeted accounts. actions market profitability. and measures our risk making well progress measures exit efforts we're in applying results the underway, in we're response lines our taking and seeing are certain losses to improve in control addition, and and production to to the these reflect In selection we're risk

Now were the year, Gross the X% to reflecting the prior written premiums top up for line. production quarter results. over strong

grow We top to initiatives strategic line having impact profitably. with us opportunities to be the continue pleased and are that our creating for the

in renewal Auto In year was quarter, terms of renewal the and of X.X we the the achieved change rate prior of the and way. from The property production, point quarter, with including X.X% premium renewal both leading Commercial X% of X.X%. the up domestic lines change fourth change rate strong

historically increases, same XX%. high achieved the time we we at these Importantly, of retentions as maintained pricing

profile also and particularly terms conditions, what been in risk the which property large RPC, improving to In business, in the our we've book. you of addition improves see

retaining improving meet objectives million. new attractive pricing best pursuing which New to to healthy $XXX very return we towards business our in production reflect our was where our with a opportunities. We're pleased order thoughtful business business, need results, our and balance

XX%. businesses, and the for change, strong Select, retention rate individual consistent remain renewal change while with remained premium past in at quarters, As the renewal both several

the business execution. renewal our X% from reflect point change retention and results with New pleased was with fourth X.X comparable of up renewal business this remained prior the We're rate strong to high year from year point production premium Market, at the quarter. returns in prior and quarter, and Middle X.X%, while the the historically was strategic In X.X XX%.

centers of quarter. Building up the the the across begun of X% from out prior the utilization New in we $XXX roll success business were same premiums from million to on our year several centers business other Commercial Accounts, businesses. the of Middle Market

Commercial the additional with Accounts, underwriters in goal the our with is to for solutions more As partner be for brokers creating more and agents by create capacity active our our marketplace that, field Tom. to in we start the and customers. With up, sum about year Business over strong the marketplace. continue the a feel to Insurance, of To our execution to for I'll great to turn call

Thomas Kunkel

combined growth XX.X%. were ratios Net written another delivered underlying and X%, for both retention business. the & domestic of quarter and pleased combined quarter $XXX premium our an portfolio, up Bond driven quality Liability Considering of high were the our Specialty renewal at by that Segment are in remained premiums Greg. XX% the we X.X%. results. change million Management Thanks, Liability income up high Management the domestic was with strong excellent continued

remain both X% quarter. infrastructure year historically year positioned on and potential New the well and in Surety premiums up were quarters, in capitalize investments. at business high continued from prior and strong increases the prior levels to current public we

turn and to continue execution, profitable discuss Bond and competitive our it now, results growth. I'll Personal Michael leading strong. delivering And ability to were over We marketplace about So Insurance. Specialty great our to feel & advantages returns

Michael Klein

and everyone. start highest a Personal good morning, $XXX $XXX income great total of of first and in solid production. to profitability with quarter Tom, is the XXXX, off Insurance the decade strong you, over improvement in Segment quarterly and Thank was million, an million XXXX. a

XX point results catastrophes, On improvement underlying improved X.X an new and underlying ratio after reserve ratio combined of prior driven even treaty. an combined the points, by points impact was X.X Our lower catastrophe the an development. underwriting favorable basis basis, net reinsurance higher XX.X% from year XX.X%, improved of

pronounced premiums grew X% momentum cat ratio premiums XX.X%, the and higher more from year more where and results. were is X.X written with net combined best top grew the observed impact an exceeding Homeowners other, very of Turning points of year written in Agency of prior X%. underlying compared to the trend, X%, reserve written primarily favorable XX continued benefited The the improvements new ratio prior Agency relative from year written gross a benefit pricing the premiums levels. X% quarter X.X prior The quarter in than the XX.X% impact Automobile better growth Gross to segment. and frequency in combined up quarter, the underlying points demonstrating quarter treaty. to the and line. strong of in continued net reflecting delivered premium impressive earned than due improved including The quarter years. loss result development the Net

solid an Just XX.X%, of lowest the quarter Homeowners impact reflects prior in year results is ratio ratio quarter first increase versus XX other, by year prior XX.X%. treaty. X.X of combined year. On points The the catastrophes. typically than to our driven improved where new the lower primarily the by was very as brief a underlying more and underlying the from combined points of the quarter our auto quarter basis, the a cat combined We're ratio pleased Agency with the first also reminder,

as prior grow year the these as solid results production. business XX% at work primarily change Homeowners retention retention renewal X.X% quarter. rollout with returns in strong at production X% of to and increased that a We're renewal objectives. change line new remained fourth the we successful delivered the Automobile Agency in results and the our quarterly production meet X.X from XX%, Home by of and Agency with Quantum driven other to momentum encouraged well, premium Turning from over at up to new increase continue by business, premium quarter X.X.

the performing terms is remaining of sharing To continuing and in of date, by the Our XX to of profitability. year-end, like home to and to and business. launch over pleased initial at on well in in by year which available turn we've X now We're launch. since production Abbe. year. agency smart Quantum of X.X recap, the call track our to to including grow while expanded Insurance customers last Home enhancements the profitably, terms product states back off most discount product in versus is to the marketplace great Personal that, and be both product the well the reception time introduced in states home in With endorsement, states positioned both and are To to invest we're start a this I'll

Abbe Goldstein

Thanks, you. Operator, Q&A. Michael, begin and ready thank we're to

Operator

[Operator Instructions].

Gelb from question Barclays. Your first comes Jay with

Jay Gelb

renewal In Insurance change. domestic rate Business renewal - the

So boost? this accelerated offset an increase? one was at the quarter Auto versus Or think you then it to that's stay of quarter might a to over this and in Commercial potentially change Do you think shifted was comparatively down and has mentioned workers' up with and has time. quarter or rate that We've first gone more onetime from be see level property this due do to how largely the momentum prior the seen in that you good past that, compensation.

Alan Schnitzer

Alan. it's Jay, Yes,

about said to for I push and just or intend for out plot back and we and on and been of And and we about deliberate line prepared we starting if rate the push line go you most recently in remarks rate either renewal RPC, terms our to returns. rate beginning rate. we when were that's sloping think part. you'll talking of started my to the you then If shared in for change very continue see managing rate that an XXXX, upward

section counts help for knows, in we're calling We're leverage we higher a see exposure, of we're months of the the to - the getting as expense it. to well. I both mean, lot so outlook And terms a who in we filed, are and continue forecasting of from the in component if that's of there to out, number. that we've but XX-Q and going this push get There's exposure we that that RPC see behaves Now rate direction. like underneath. from essentially some you'll texture single you nine

Jay Gelb

separate RPCs. direct What's basis number Progressive. Small Great. given a All presence High We've independent Berkshire move perspective to that question right. Commercial. And and direct looking business clearly channel primary on Hathaway of shift could to on Commercial that Small an agent? on Travelers much seen is potential how into a that your then competitors the on like

Gregory Toczydlowski

that the that Small Jay, going Commercial of been to are terms in assumption competitive right preference as has got competitors that and manage as investing marketplace now. we accordingly make way. to of we that effective, seeing to space. We section any And this we're always assessing the very model and a it them and of we channel frictionless marketplace, channel be Greg. of not And that's is shift make a some enter material obviously the we're are believe possible. successful, preference, monitoring, all we've

consumer very ultimately think goes to So going be the positioned well. the future, we're in we wherever

Jay Gelb

Okay. Including direct?

Gregory Toczydlowski

Correct.

Operator

Mike from with Stanley. comes Morgan question Phillips next Your

Michael Phillips

one. at this shot take a I'll

can First, on law New change? you impact Any dollar the give York the chance PYD. on the

Daniel Frey

it's Dan. Mike,

our in want that try that coverage not you would than specific detail which to of on be I I to I be pretty we're half. basis a give. we we about in than involved But Early to a issue think think direction legislation real an to given much get give matter. in more tighter release, was that primarily minds, attributable change close to think to million than Victims the $XXX Act. pretax the We that it's talk at be year-over-year did being going least to particular we Child in expect more the on means PYD, And that, magnitude. over press

Michael Phillips

I No, appreciate Okay. that.

that of PYD, accident 'XX? any the was from On Comp Workers' year

Daniel Frey

a good will you is young my tell Comp, the I on top line. question. That's second. in one year 'XX Of head, a of longtail very a

of not comp a years, and but a Favorability change. making us lot too for of 'XX. that's recent recent little workers' much So accident to a in be movement is some

Michael Phillips

second. about think of good the - And expense us and run I I the going Insurance, from rate for a Business worth maybe forward mentioned lot Simply Okay. the assessment is state us of sticking a on in the thing Well, the how that much for you the and moving be? you ratio because would Simply if Business help of then, with kind ratio parts good there assessment move expansion I there. way how Q, a that guess, in on don't guess, how it's Business much know parts expansion, state such. a or was a to with expense kind is the

Daniel Frey

first end was ratio things as be saw Dan can could - what There's about expense it's mentioned, the of think change this benefit, year. more we're XX year, would lumpy I with what that that at quarter, the taking improvement And year Last state little from from the into year, gave as We're This the in expense a it's one as last at put XX.X. previously. expected or to not you the bit expect some but I'll you example back to basis of points consistent a quarter expense happy Greg this first bit ratio. the versus in so have broadly of with be had outlook a year, enterprise, which we This high from a think little we again. next. an is XX guess an permanent XX.X. a assessment we level, about quarter, Yes, ratio - about a last as than level. a enterprise in

Alan Schnitzer

just ratio, point - clarification, Mike, be the Okay. Simply just of investment for just expense as wouldn't any clarification. that Business a Mike

Michael Phillips

I something said Q of guess, Business. to. No, was reading to out expansion Simply due was referring what I That's that part I Okay. was your expense G&A in the of

Alan Schnitzer

- G&A, of does. it's expense there's all but go that's ratio, Yes, off-line. G&A take doesn't Insurance - the We it into can G&A

Operator

Greenspan next Your question with Elyse from Fargo. comes Wells

Elyse Greenspan

on question. on of change first some Business wanted My premium to renewal Insurance. the I the follow-up commentary within

positive lines on is for guys the up that some picked for you been I in back, now this are more getting renewal slowdown Auto a and the see Commercial year. time. your So did the price and the quarter. fourth outlook Property we quarter third If know rate, which have go

get what I'm really trying the rest sense you So outlook just XXXX? and to for the conviction raise of sequential your better increase a drove to gave of

Gregory Toczydlowski

Elyse, this is Greg.

all, the as an estimate. First of reminder, a is outlook,

so to And continue that's the also. for domestic to And improvement dealer campaign the forward margin our think, overall, best X% going quarter, in our just terrific that give you we're the at try the a you transparency see you as first a we webcast going much on on said, to we page. pursuing the if where as going look And is around for go can forward going Alan is basis. number and BI, highest number slide

Alan Schnitzer

than that I increases the are Elyse, rate other would add workers' And comp. broad pretty

of on year-over-year, higher accounts, So comp percentage than workers' and increases overall higher for example. all products sequentially other a rate

rational broad-based, the reasonably it's line by we're with returns those lines. relative So product although in getting

Elyse Greenspan

my And second question on Okay. then international. That's great.

of of year? just your the guys how I'm you long initiatives for margin just book look quarters You to give business? time about within underlying color to next outlook you your Can embedded the to will there. drag you And a talk of of on take your I three way within there's certain frame? those that's pointed to taking Insurance did one level point international you're business. the through think assuming work their improve that steps drag to Business margins some mean, from

Alan Schnitzer

going it. Yes, you on that's than work - And an was precisions that. we've we reasonably time. could that more that of - either is want to working first an levels in Elyse, precise focused But normal there got the give And more we're all going of to get exist. doing, efforts We're to - share would probably assumption a you We're we're and or would quarter it. probably doesn't than this to saw there's set give is - on aberration it's take more precision quickly. on probably just the that be we some would be any some more that other a return to what

Elyse Greenspan

Okay. the fourth the of of it losses, first size line year? kind And of would put in in terms of last the then you with quarter quarter

Alan Schnitzer

I stick remarks. with in least that to prepared shared one going think at Greg point the his we're

Operator

Research. from comes Ryan question next with Autonomous Tunis Your

Ryan Tunis

for just for a I better-than-expected is into on Alan, point about the year you're acceleration the margins? to factoring thinking rate, more some way outlook it. discussion you're at question your are it the we where My you've is Or this responding seeing where whole it, guess, losses rate. where around the need elevated as And been taking rate you you're you're just this

a to able So broadly, type rate broadly consistent essentially year? of keep just be this is to on the or things certainly you better need

Alan Schnitzer

understand you we perspective outlook, question, yes on and The some we're by some is I in I the you when segment if think - getting exposure. perspective we're your we Ryan, and rate as the on give you account, answer does outlook. of we to give both. in give that does terms to margin can the outlook what outlook going and as achieve for - we margin in tell rate the take best into the And

Ryan Tunis

- this But for has margins materially rate it the the despite guess we're quarter. outlook that I doesn't changed better better the seeing seem

better - Or be - the I about it's call? was we talked needed? when thinking do reconcile are you just, at going to mean, feel the to than about what quarter margins are exactly just I in how Was guess, here what XX? So fourth trying you did XXXX you

Alan Schnitzer

good about the of Yes, we pricing. the feel XX, to and great about Yes, both. feel X overall we points again,

back - and - look you of historical actually over X RPC you at by point about into when back if and price If go and standards a look fact never you look decade end particularly over pretty negative. It's done, that you'd 'XX think go total the what 'XX, say you and surprises. 'XX went and good rate have at in

negative, So it back moving before went started it up.

returns. a about results normalize if take the weather, for Ryan, and prior about if good achieving, good the get and we feel So we're year in you we good you you development result. pretty quarter, and feel what

be a good results. other because things that we a you what happened, some were And than less so probably get printed we'd bit good little pretty there but

we're look our we more So today to that windshield and time. they're work mid-teens the disappointing. of we as achieving say returns at a basis over there's But objective terms in the of generating think consolidated we on out the future, don't do into look

more work do. not six. to we're And the disappointed pushing. not so the disappointed we're with we're to There's And with going keep XX,

Operator

question next Brian UBS. with comes from Your Meredith

Brian Meredith

couple A you. questions here for of

that? underlying First one, is it outlook Auto. on I why is Personal year just I'm you're for because auto. for what margins that seeing looks noticed severities, elevated rest Is your factoring? of some curious the kind the of the deterioration you're

Michael Klein

the auto do Sure, with seasonality Brian, consistent it's to Michael due we it's Klein. has the actually year a No, with for gave not the in business. It's to that. pretty lot and outlook full actually

auto rolling worse year the the would when year, quarter prior a that the versus than be is the we're in and full now, year gave So of outlook this prior we in months. the we better for first said second first reflection just at half the looking the off. half. And the And X than the just likely months really experience X

Brian Meredith

any issues or with not anything? seeing you're severity So

Michael Klein

I industry, they when at have to continue When towards damage, in things you're bit underneath vehicles vehicles say see SUVs. and continue severity, a same of a physical rising, see been but heavier to - you we would that, of little in you seeing shift repair the you costs look some the be look

and higher repair improvements vehicle. in due the technology see more in technology costs You to

with sort part again, quarter the to those of trends and think an outlook for and good The So consistent that expected full that in quarter persisting. we in of than result are the comments, a to offset But, better really is was referred - we frequency news and in just had the this be has we is that severity continued the produced that to we outlook year. dropping the our and QX. that off is

Brian Meredith

action And law charts, going the Act. when think Or And - other York the of reserve change legislative York? the that you. worse? kind get of possible on law about on you basis this there because you about Is business Got kind then are to Childs and the back of in thinking New development charts national Victim to that New could a spreads states? in it it is basically

Daniel Frey

so Dan. it's Brian,

near based actuarially to other on change So an New from that in ready So is similar to states Jersey to it's that the be We're we what the an the accordingly perspective of be and and and New discussed anywhere are states assessment issue have the of in law looks be a keeping we're that a New number a recognized go only, would standards ongoing not of as are there clear, of to this setting sort we on one right? enact, an reaction those. to more that the would of accounting would go-forward for an keeping The on. is. we just quarter states in be made eye But reserves York what aware magnitude term other legislation nearest eye We've New that number states expect on possible potentially basis close York. If a first are react. react Jersey.

Operator

Suisse. Your next comes Zaremski question Mike with Crédit from

Michael Zaremski

Follow-up to personal lines. on Brian's question

it on be get then little to and and switching of So like results moving also competitive naturally to north seems industry-wide comment other industry-wide outperform does be the personal to trend lines, just you seem basis and there. side environment auto are to homeowner's feels continued to you underlying deteriorating be if there pricing Maybe the an And can results that on trend. tougher? expect

that product a - whether can feel two know I are going forward? So you bundled more whether growing those start talk mostly personal for there? conflicting shop. guys to And you Maybe those trends you guys can you lines

Michael Klein

will segment. the We're Again, pleased the it's And positioning Mike. two of there. really Klein. components of think certainly the with Michael segment, with right? start sort I I Sure,

in a of premium terrific terms the growing policies growing to start had the segment, the year are We total in the segment segment. in and really

pieces, look competitive If compete auto day. certainly, market the every you we environment, in that the at

for as data, be continues you had see think, - XX-month increases level at rolling is down increase I think the than filed the industry industry a and is X%. the the look rate rate period that the file for period proxy in in aggregate, lower you to the filings to aggregate the that now The below of competitive for industry I competitiveness industry rate for use rate filings if you and in past.

for in proxy an just outlook. additional competitive And the environment auto. could that a So be the maybe on comment

a While combined our the months, next outlook still a return. the for X than is higher X it's ratio months target in prior

that. seeking strategies we're moderating point, distribution do to marketing, that auto line. your retention, to in business, executing We're execution that, demonstrate production new as results and the I said, I with pricing the think, consistent grow to on strong marketplace view. So improvements all And is in

home On side, year underlying treaty. deterioration the explained the by quarter of again, first the in most of from last the is

most so it. that's of And

is That have that There there's and very underlying you there. underlying of is why we forward. some combined ratio some we're talked If for water a results and balance loss of focusing consistent ratio property why in two I But, our on the combined part treaty that actually see outlook long-run we as which on activity, we're sort about volatility the outlook, which we're those year-on-year. very going average combined it's in nonweather period-to-period think other of portfolio you mostly I for the because go And again, still pleased the history, again, in rising from improving better RPC compare home. said, to the auto remove the ratio away with impact property the with on. underlying RPC conversely the performance path put described, outlook better an the to when you outlook and get auto. is of quarterization And basis just the of property the year from together, then of the pressure you

Michael Zaremski

less increases. Got quarter-over-quarter more follow-up workers' insights Auto or negative? on pricing, improved commercial the did and it. But was pricing. Property Thanks that is comp see for I helpful. on in Commercial the the wondering pricing driving commentary on I It's getting the One outlook.

Gregory Toczydlowski

we Mike, and line this going Greg. offensive workers' we the share of marketplace. Yes, how it on price really because such in an compete is an is the individual aren't just dynamic to and comp

have pretty and workers' there's in and We been the has evident been in market. that comp I've very reductions past there the it's good in shared, results loss

really X%, ex at workers' So individual if we'd we higher you aren't forward. lines to than be comp, product look and disclose RPC going the at clearly going our that,

Operator

Larry from Your Greenberg comes Janney next Montgomery. with question

Lawrence Greenberg

answered again, with pricing up on it, you I if written loss premium is For auto But written Michael, And keeping trend? apologize. auto. -

Michael Klein

we're say continue if I RPC, outlook at on know margin auto expand again, certainly, on margins. basis target but to And business, basis. keeping of spoke on good returns. up feel written don't but we loss the is expansion. would an I specifically continuing about And produce both that, didn't to to trend, margins to expand speak specifically X the I with a points we earned to written I for

Lawrence Greenberg

jumps was know it on anything quarter. changing Great. I quite the But Specialty, front? Is around then there. that & this And modest a PYD Bond bit in there

Thomas Kunkel

Tom, Larry. This is

be Bond can of & in it Specialty the So that lumpy. it PYD little the is nature a

If as over account in to can Surety course, initial down, to we've at you that see we, really the for continuing business losses years, our accurately some And year were come loss good our tried look PIKs. you our had returns. of

So results majority the be of year. that in hopefully that would shown calendar the first

there's best All Management as bit those we for that what our So year that of an that said, I year in recognize some less And is in headroom seen move time as in PIK. of maybe areas we think that initial look you've little Liability initial stuff been to a can. businesses things loss over too up. improved to

underlying other explain would no So great I think, than that dynamics other that that.

Operator

question next comes KBW. Your from with Meyer Shields

Meyer Shields

specialty? Insurance. you're dynamics what what a standard Going we the pricing between Is within Business seeing lines difference back and call versus to there

Alan Schnitzer

Yes, Greg, we're that? at. want looking sort of to you take

Gregory Toczydlowski

Yes. Meyers, E&S? specialties referencing are you like

Meyer Shields

Yes.

Gregory Toczydlowski

in Yes. property I predominantly business E&S from a mean mean so much much on perspective. I depends product that more your mix. the we're

given us for last seen pressures some the over property years. be catastrophic on the would yes, answer the we've of So two

Meyer Shields

mid-November. Greg. does Okay. seen the least pretty And decline How - before is long reflected U.S. it mostly is at for from We've in treasury, think a I pricing? then broadly more take rates this question significant in in interest the that

Daniel Frey

Meyer, it's Dan.

number minus move up we one in things right last plus quarter that over sort down, and seen but go into do or that consider the treasury more X.X, or it's X of per pricing we'll So been X.X price. factors. We've the what's X.X a the determining the or not of hundred process quarters. of XX-year of X as It's than the

dramatic get trying a think It does hasn't point. what need So dramatic generate we're the at into that's it generate eventually had to we to for returns price that of clearly, impact baked we impact. a not component return, but this a because

Alan Schnitzer

then on separately bifurcated really also we add periodically on the risk a reflect we return. overall the about to supports the rates the flow capital that that, sheet bit. think balance think - adjust Yes, return that we reflects little portfolio We and and I'd the that market that and the about

Operator

Josh Shanker Bank. comes from with next Deutsche Your question

Joshua Shanker

margin else not everyone reading drive non-cat it's improvement of what on different before. I you're year. remainder that the Despite really the the was think too getting and from rates I will losses said cessation improvement large Am weather was it I of for it's reading as that outlook correctly? the and

Alan Schnitzer

level. yes, looking large at losses a normal to more Business that's returning right. you're It's If Insurance,

Joshua Shanker

are so guess, And say that we harmony can your with right cost pricing closed I now, approximation trend loss the in view? and is

Alan Schnitzer

we're probably than that's On a on would an right bit I basis, better earned that. little written about say doing basis.

Joshua Shanker

reflections sort just as of business well? same homeowner's And the the Okay. on

Michael Klein

north. I business, RPC we're this to homeowner's working on say would Josh, move is Michael. the Yes,

we're we're not close. but there basis quite yet, So written a on

Operator

Buckingham next comes Your with Research. from Amit question Kumar

Amit Kumar

quick I guess follow-up two questions.

letter, get of curious through flowing business net the on talk does The expense that about first improvement the about of talked question to and eventual in somewhere goes your you ratio, XX-Q to? Is the And XX% maybe sort reallocated savings business an that BI. ratio. centers was back if these discussion or can I do where In out you expense else?

Alan Schnitzer

virtually priority In the claim and Amit, thanks in Productivity strategic efficiency each question. of is businesses. a for entire everything we across a place the ordination do. that

we're want as And reinvest bottom objectives. going we of dollars that. the want and line time that with decide over so contributes shareholder also that opportunity. we objectives for good that to Greg's enhanced to it them that we centers the savings look and to brokers can business It and making customers contributes operating generate that experiences specifically we reallocate all or an compromising to can return We business think at serving drive And fall our is, ratio. whatever and into there providing if it we'll sure efficiency Or we The value. as leverage let before, pricing strategic the fit. said put to really we're some to can we we'll frankly, productivity operating we're what initiatives the or it doing achieving - see so need take we leverage goes that are you'll us the We strategic those and other without in we see as to to else, point. for expense anywhere to

say that you've us lot leverage I that flexibility. but operating about enhanced to us So is heard know a having what's important

Amit Kumar

on auto. you personal here the But answered that question the and switching we I question, only frequency of for questions trajectory do on you loss to where Michael, what you sort cost opine the Now severity? answered from trend. that you is on see other can maybe I saw had several gears know

Michael Klein

is The It is the and bounce would say quarter-to-quarter of remains in sort severity we when Michael. generally relatively it fact, short our sort of what our expectation. severity about talking little is long-term around we see look that And answer Amit. trend, I on frequency at a separately, bit Sure, side long-term consistent. fluctuations

on like pressure reflects those. severity statistics see But severity assessment see and cost we parts around things. liability you again, feel in industry long-term those So and that our the

pricing result think in for And better to and we on of in both quarters frequency or being we industry how first had sort in On now the the do keeping than in. about by underlying earning something trend see eye our better-than-expected of a about row we I driven quarter. assumption it, thinking frequency number side, quarter expected of again, a it's and and talked inclusive the excess the factor a in coming we're an of

Amit Kumar

at is probably historical a this And is sense trend it that - - with historical continue the does or get as low, line good you a frequency gets? that as do that

Michael Klein

great I question. think it's a

secular a trend about auto, as sort see if to trying long-term the we're you returning frequency decline longer-term think figure that and what in on you in frequency lot driving not. commentary could of people things safety take features around we're out that's point look - been of discussion of downward and one of a to piece a the bit that and be marketplace vehicles. at it the There's or in I and to a other is places in

the to a like right. for I number have think that Things could point still road the less the as braking on it folks cars Safety in impact it. have is Institute Insurance that than emergency the have automatic important like ones features of fleet, to point most out of that penetration the X% the low relatively the Highway

that employment in again, of addition miles-driven long-term the I So to on some and about. think shift factors trend the watching but we're talked those the things a still is in are is out frequency there we've other journey whether

Operator

Your Goldman next Yaron Sachs. from question comes with Kinar

Yaron Kinar

stab prior I this question, Insurance. at talk losses from Elyse first large it, year? you in it How a think nonweather about Can the quarter? compared is My to Business the impact took the

Alan Schnitzer

that you're Beyond is to international, referring - the what Yaron?

Yaron Kinar

large Well, year, international. talked not referring I necessarily losses, to just you about think last nonweather losses,

Alan Schnitzer

in been say. large loss activity relatively the Yes, would BI domestic flat, I has

Gregory Toczydlowski

X.X was relative you comments than will non-cat here quarter XXXX. my I the a to good of point little guide gave be first weather in more the

Yaron Kinar

another weather it XXXX, I basis sounds XX large, it really... I basis talk couldn't about you Right, right. points roughly, think other and XX of mean so in points of non-cat so or like

Alan Schnitzer

about probably a we'd than of little slicing a heading like little I we're we're Yes, probably through - four. you're And thinner too. the towards two impact talking bone slicing think also bit most the the was bit quarters bone

that and to be And primarily so flat back through the think improvement commentary my answer say you'll us was relatively go your I quarter at QX look from if to you two was last QX. But going in four. quarters hear

Yaron Kinar

That's conditions, where Greg Can examples taking also addition Okay. in terms few And that of the actions to some think I a improving and large maybe then in pricing helpful. property. they're you'd give and conditions and or improving? you said terms how are

Gregory Toczydlowski

the in catastrophic Sure. and some there's Yes, an with risk years, typically more sharing marketplace comes off coming and terms in conditions. been for those obviously opportunity that two dislocation just

constantly So business shifting fixed said, basis. we're percentage account-by-account we to look you flood geographic certainly and at. but can component exposed our that National the of a sublimits in areas about deductible more something earthquake, that's think from all on looking at With on Property the

those at there the risk/reward of right looking account property there's generalization we achieve that. if So to in the about segment And accounts. again, and a are, that's and at and we have an time some each then is like looking risk-sharing now opportune go

Operator

Blair. Your with next question from William Jeff Schmitt comes

Jeffrey Schmitt

litigation losses about you're large market amounts. an Umbrella mainly Is that higher Heard your uptick settlement in to the Question jury there's that higher book. seeing in there, the due environment something at all? awards,

Alan Schnitzer

Umbrella. from let's away - me Let stay

just respond inflation social more to me broadly. Let

oversimplification. - probably So social this I about But inflation an buckets. probably I is three in think,

activity of certainly, been federal and jury say think about From legal last and I'd plaintiff I I level, a legal at I about probably couple the perspective, think decisions, balance on awards. years, think about the decision's over improvement. that's

would the say you more speaking plaintiff more bit a say bar look jury I I volatile, a activity. If plaintiff's unpredictable. And activity, it at broadly plaintiff when comes have a to would aggressive we little more little awards, bit seen

those least cases so think on Generally, Umbrella Auto when that Management of lot speaking the end Liability, is we've GL, where and the so but when when into Now about been large terms It's end smaller last are a end broadly those of you quarter think you in coverages charge everybody already that C&P seen more there's have of larger at side represented get litigation. about reasonably We big liability we those was the you driver litigation. you when about active really in example. for certainly into get for of of where far Commercial always a think the the example, activity. took

Jeffrey Schmitt

Yes, and I a that been Auto than up hearing obviously it's it's mean to tick you're sounds lines already? I it more or like spreading guess, Umbrella. starting bit I acute more they're in was curious I I broad-based in guess, Commercial mean other little saying is

Alan Schnitzer

Street business. mean I write you we're No. business got types of seeing we put I identifying mean about And could and it's The net of right. mix too, National Main do do Market certainly Street by company it. a but, we to out, from Travelers, side are think business - a we're based you're Property lines large, on Main phenomenon company vary on for market the Middle the have Accounts we business, company remember, you when risk. National liability public most a a part. Management business. Liability you middle obviously mean to I The

be mixed for difference So others. to it could us relative a

Jeffrey Schmitt

- on state-specific? that points after a the basis up this the speak remainder XXX new to basis treaty. for about one is this quick lot looking Is industry? I this is XXX all homes? at water the up you're Can to looks Is much more? now popping seeing? one of of to points, being cat pretty underlying that just that mean, half related this And is why nonweather that ratio last year, be you older up losses loss the book But homeowner's that

Michael Klein

Sure, Jeff.

nonweather therefore, about the - loss the continue sort floor, the other nonweather little the with pressure. water treaty we've so more then would less consistent type these we've you're the to a impacts impacts up and And as diced I premise see are We've question we, second underneath starting Just with around that of what of I age it that dimensions. type we've those first by by some see there of home, in consistently looked But to the at are home. again, by we tend past floor, what the of say little of across of most in we sort we've I seen talked than mentioned of And sliced estimating water and is do underlying. a would construction. stay by commentary at looked losses bit geography,

point it which address is we to been a to, increase not to strategy thing seek there's why So has to our price.

trend. view continued our the be there. that reflect continued Again, a expected quarter some and some to pricing So on strategy the address pressure pressure it. underlying But in have the we there does built

So our that's take it. on

Operator

questions presenters. will the further I this no back call are now at There over turn time. the to

Abbe Goldstein

touch morning for have with everyone, as this Investor and directly questions always, good day. you any a joining Relations follow-up if Thanks, in please and Great. thanks. get Have

Operator

This concludes call. conference today's

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