TRV - Earnings call transcript Q2 2019 | The Travelers Companies, Inc.

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Operator

Good morning, ladies and gentlemen. Welcome to the Second Quarter 2019 Results Teleconference for Travelers. We ask that you hold all questions until the completion of formal remarks, at which time you'll be given instructions for the question-and-answer session.

As a reminder, this conference is being recorded on July 23, 2019.

At this time, I'd like to turn the conference over to Ms. President Relations. Vice Senior Goldstein, of Investor Abbe Ms. Goldstein, begin. you may

Abbe Goldstein

have much good you results. to this release, morning. you released Travelers webcast Thank supplement Hopefully, our Welcome and financial of XXXX discussion and earlier quarter morning. so presentation press second of all seen our

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

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

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

investors The not Our a future presentation is today performance. statement cautions guarantee and statements. includes of company risks that uncertainties forward-looking forward-looking and involves any

those release may recent and These or statements. under do We results XX-K obligation update statements described any with factors to from earnings of statements expressed a forward-looking most materially differ forward-looking are implied in factors. our in the SEC. forward-looking and due to our Actual press the variety filed XX-Q not undertake

financial measures. available on supplement included section our responses financial in may are Also, some to Reconciliations or website. Investors remarks non-GAAP our we our the in materials press recent questions, in other and release earnings mention

the call turn to I'd Schnitzer. like Alan now, to And over

Alan Schnitzer

managing for the quarter today. thank We execution and over our a strategy continued over is to for return grow we've were for strategic said The and also deliver everyone business solid, morning, on primary time. overall for you to strategy Good equity from time that that Abbe. joining the years use you, said requires of agenda. any return equity we leading successful measure the benefiting us on the results Thank

few achieve has successful laid years execution we've a years over growth billion, established forces to with of growth in in To income The Earned our to of ago, and that priorities. the a strategy in impacting earnings priorities out quarter. consistent that premiums and $X strategy were innovation identified to past X% invested growth this contributed We we to industry. several previously up the adding quarter. in end, the those almost to capabilities key meaningfully context the of change underwriting contributed the profitable

administrative efficiency and also workflow that to general and flat, and while to the technology for improving We've Again, off. important line and investments enhancements this quarter and time undertaking paying and the shared to business. year-to-date, productivity continuing efforts grown make we've we've are in leverage managed about top is a some priority been expenses investments

over X.X%. together that, income a of increase the quarter contributed Core of equity our prior with income increase strong year X% investment per All over prior and performance $X.XX, a $XXX on million, to portfolio, core share return the of diluted year. core was XX% from

terms quarter this ratio combined solid In of XX.X%. of underwriting we delivered margins, a all-in

see over losses quarter. seasonally ratio the quarter. the you the highest reminder, as was the But X are combined As weather a up in prior underlying can of points year expected our second page webcast, on X.X

of context and put environment. including items trends continued and tort underlying to in and impacting favorable lower of losses results, But contributing non-catastrophe I'd of the like items a to the number the a some losses large highlight expense were two increase; leverage. There improved level deterioration in weather

weather had larger which, the the the I'll two, start with of impact.

second breaking But of in total losses what within what non-cat, range losses than that weather were would the worse resulted for cat nearly this Again, For a we catastrophe and so weren't the far for, well consider favorable, while quarter. increase all-in X-point That consider to bucketing. the we the aggregate, year quarter, in weather we weather normal off down, combined in were a losses non-cat losses prior what quarter. normal. the level were ratio we planned the compared consider would underlying

the terms a fourth severity line. injury have Commercial trends last little we expected the of the Auto worse In impacting of tort than in environment, developed Commercial bodily discussed the in quarter we anticipated the liability we year quarter. while general in line the extended than extending coverages, into trends anticipated. this into they we more That the drove other somewhat coverages and those the adjustment And primary of liability excess Auto

auto On heavily of associated and and related. continued Auto the most two losses, over related back be as the places, looking the three with issues coverages the you last in to Commercial expect, losses in the excess underlying are whole also Auto where line, liability manifesting the would in line, Commercial quarters, general

to the The development catch updated the the around environment is and about Also, aggregate inadequate, I'll The general still liability impact Commercial second quarter. us. than unlike the returns the of that The first line, in first both $XX after for quarter of of of and healthier much per consolidated returns where result underlying the up amount underlying this less are about included clearly tort Auto, of run combined $X.XX adjustments also little impact excess same per a earnings view quarter million are added ratio, of tax. the rate primary quarter the note a amounts two-thirds-of-a-point current from which share.

We record excellent billion. Turning in premiums quarter. to $X.X net X% by grew written a to the was topline. Production again once the

positive reflects and portfolio. across levels of premium premium the retention growth renewal change Our high broadly

quality our with accounts, pointed of know speaks the terms books. and confidence the business before, business We're high to industries that we of putting out geographies the I in new on we're well. renewal that As and growing

of cases, renewal rate the X.X%. highest than In sequentially and retention. of our both year-over-year workers' premium levels of compensation. level change renewal In rate Business maintaining while other Insurance, increased and we years, achieved renewal change change since both We product including five each change lines renewal historically high premium in X.X%, of

& Bond our In Surety of Liability. again levels Management record once Liability in production achieved strong retention a in both our new and businesses, domestic Specialty we Management with and leading business business,

premiums new higher Home benefited renewal Insurance, Agency an net in Personal all-time Agency In increases and premium written businesses domestic and from both high our for Automobile business.

continuing persistently environment to terms of meet weather-related pricing tort have continue conditions. seek We in selectively and thoughtfully and surrounding environment, businesses. all our of of uncertainty and the momentum by will return and objectives, interest ongoing in rates, And challenges franchise the our continuing in losses power improved we an leverage to low to including

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

successful deep it up, execution execution and our and our underwriters, agents and sum year-to-date well our relentless industry in over talent deliver time. shareholder with both of continue and relationships of With reflect frontline quarter this brokers, hands the best To and the long-term we remain in value the data the marketplace the analytics every in strategy our our positioned performance leading day. to to

with, over And to Dan. turn it that I'll

Dan Frey

up for X% per million X% quarter you, core $XXX the was year per XX% from up earnings quarter X.X%, X.X%. the share $XXX core in Core was second and Thank and Earnings share prior were million, and from ROE up respectively. Alan. income

was Our down levels the losses but in than last losses, of year's lower from $XXX second quarter, million quarter offset results weather. non-cat catastrophe of include $XXX by pretax of cat more level million higher

second In As limited generally the dollar specified disclosed, around thus threshold our of as is portion where results, what the the previously million. our amount events definition combined we weather were catastrophes losses we $XX have larger weather cat you from of our quarter, our we But ratio. of experienced industry to well exceed losses fell a cat underlying adversely would Alan, expect. range below and combined impacted non-cat heard overall within and again, a

load earnings call, of our losses weather for volume on losses second two weight In level results uptick our surprise. trend explained in weather reasons. the that XXXX terms we growth is expectations were in total Two, and fourth that seasonality recent for no of of we've a bit and our periods the cat our we're that quarter our expectations, dollar Adding little of overall replacing cat business. normal seen results is per our for in cat premium that exposure during a up in terms of in the view would more One an premium. quarter

by the Pretax to a by degree, underlying year decreased ratio down nearly gain, to cats in impacts XX.X% which of $XXX points partially XX%. in two Higher leverage, the the large modest in Also, year adversely quarter quarter. impacted lesser continuing prior development impacted development Net underlying the and a by change challenges favorable losses the $XXX quarter. including mentioned. underwriting combined year from in the environment expense compared was excludes prior combined lower prior impact and favorable losses the in several of pretax, ratio million the reserve weather-related offset by was the as underlying Alan non-cat from items, prior improved million second reserve tort

net PYD In Business favorable Insurance, million. $XX was

unfavorable current net favorability in of general comp from after-tax primarily drove quarter's for the $XXX development and better-than-expected both terms which in million the million the comp, workers' favorability resulted the in run offsetting is the primary of improved in This approximately Commercial coverages liability continuing challenges excess increase losses. about underlying estimated In $XX that highlights, the workers' in Partially impact million. performance environment rate of Auto. $XXX of the represents and tort by nearly

a environmental accident in to Insurance Business quarter Second PYD also prior to years increase reserves million for XXXX. $XX included

in also As additional for New handful the a on smaller quarter the the changes impact, first than PYD second from resulting states, quarter legislative book from extending the impact quarter, last quarter claims. in adoption similar modest legislation York. limitations a of statute The our impact of these follow-up much included a molestation to second was from of

$XX Management PYD which expect was Insurance, million was rate favorable Specialty by modest, applied of million Liability. net book a to in lump third our discount Personal & benefit businesses. the result payouts. updated is week, quarter. Bond and In favorability rate, In injury rate the Insurance, driven bodily small the driven to only the in we Ogden PYD a The as net domestic U.K. sum domestic of by favorable Last was $XX change

income average returns yield from invested Fixed income in increased market NII Net higher complemented in assets $XX million an in investment to the income our after were tax, million income by to broader portfolio higher the by of returns $XXX as on private portfolio. fixed the increase the recovery. due non-fixed prior equity after increased by higher-average amount returns reflected invested tax Higher assets. and year X% the quarter

XXXX, of three lower after-tax approximately year were remainder with fixed ago. our ago, forward to quarter to we a now million NII $XX by and than per Looking have to increase expect months interest $XX million period expectations the updated they for income rate now compared outlook the same

we the retention we of As discussed incur losses, quarters, catastrophe earnings XXXX aggregate for our for above PCS-designated more for billion. treaty last on we events new or reinsurance which an added a providing for million calls $X.X in coverage $X two

reflected the While on written first an the quarters treaty four all impact on was entirely new quarter, in earned basis. impacts the premiums

our the little $X.X the $XXX as underlying towards we've increased For treaty billion a XX, X.X less second accumulated point about ratio Through the of combined expected. by quarter, retention. the June impact than million consolidated

did weather about that much not that of treaty. keep mind elevated weather towards non-cat this activity the you that important think in the quarter, count was non-PCS from it's to events As

renewed the provide Cat cat of the an with generally Treaty The similar July webcast to consistent topic update and pricing. Xst flat reinsurance with attention substantially prior I'll On effective your of program. treaty our reinsurance, our and structure our catastrophe on reinsurance is We the XX page terms Northeast year. of direct

in is flat for year $X.XX billion reset Long was Our of XXXX the attachment season, of to the year-over-year. program while the cat And four-year the term. point was hurricane adjusted Re bond the billion, Point in III cost $X.X the its from annual second total

XX-K. accumulation from that our is reinsurance cat we arising which a multiple also description aggregate covers earlier includes description certain the gen in and occurrences treaties A XXXX in losses today filed property of our our in more of of cat, included coverage, XX-Q, our EXOL which complete

Turning with as decrease or quarter levels tax were capital for $X.X to from Net flows approximately during quarter investment as of June after unrealized increased billion. to the rates billion $X.X capital ended gains the at our $X.X we of after tax billion XX in Operating very liquidity due interest March $X quarter. to XX billion the of again company all the of management. strong better-than-target holding ratios cash and were

excess per higher book X% Adjusted the of year. and at returned share, of year-end comprising was share shareholders. basis gains end a nearly X% On higher than our $XXX dividends we quarter to of quarter, second year-to-date value last $XX.XX to excludes June than over investment $XXX million returned of and shareholders have repurchases this capital which million. $X.X the $XXX and losses, at million net unrealized We XX, billion

discussion for And with that, mic the over of I'll a Insurance. to turn Greg Business

Greg Toczydlowski

Insurance Thanks, line for illustrate combined million are $XXX income so essentially Dan. pieces the the ratio The quarter. combined we've points higher than the the point includes a page to ratio of XX.X% components. expectations for losses, several our with year-over-year segment quarter There added X The produced moving year to underlying the of quarter. change, were was X.X catastrophe prior of webcast underneath ratio Business XXX.X%. which the combined in and X.X

that The most by the ratio prior I'll item point. non-cat about underlying higher the a which start notable with was was year-over-year. items combined year significant weather, the increased than quarter

Next, that X.X you items of treaty, second are first approximately rate and the related the run is re-estimation QX premium losses. new point we've impact impact two from earned the to X.X the the lower discussed to cat previously, due point the is Auto Commercial XXXX with

the deterioration anticipated. general environment continuing to expectations challenges somewhat than was auto related deterioration from excess Auto as relates our and most into for The included the of further to in you of that coverage's in fourth trends higher Alan. The last losses recent data fourth had quarter the This the the in than degree quarter. revised of tort higher previously extended that modest from experience re-estimation the both further a the liability heard drove Commercial unfavorable loss to primary and showed we adjustments

of point X.X from and point there about run XXXX. adjustments, first rate quarter is these ongoing the about impact catch-up For of X.X of

about driven losses by As management. expense from benefit more for expected. favorable the point disciplined volumes normal year-over-year we X.X higher large and about point we we as items, earned had level a had to domestic second, first, And X.X continued premium returning from

the to we for investing that position this strategic us achieve expense future. while initiatives in Importantly, continue leverage,

the were Now were nature. production to the X% strong for quarter line. timing top by Partially production in the results were some up Net items underlying the written driven year results. premiums that generally prior over offsetting

quarter. treaties quarters. one were timing from For the quarter to of for top example, line we changed the Adjusting of the items, those in first our second the reinsurance trends line recent with

of In production, continued strong second and in we including renewal premium quarter, X.X% their the was the renewal years. given rate up domestic quarter of the This first terms than change points particularly result quarter from more last change five change of X.X level renewal in in points The of from is rate highest both a achieved strong X.X comp. rate year. workers' decreases X.X%

both increases. liability way, While C&P general saw also our well meaningful lines and and to Property Auto continue lines the primary as the as lead Commercial access

as further the said focused addition Last historically that also we remained improving of coverages. this XX%. our and particularly insurance-to-value like same adequacy. in terms terms been sub-limits in quarter, rate achieved these conditions, tightened pricing deductibles, conditions time we Importantly, contributing and high on increases property to price, to at In retention things quarter, and we've

for quarter. liability like of resulting of plus trend of the a about updated from is which was an that by view that losses point, exposure loss overall and on our our Even in trend of domestic loss written pricing after lines, we of the rate excess basis the auto that loss our acts portion view estimate general rate X.X trend re-estimation increased

New to production We're business deliberate million essentially in quarter. a year execution. was and $XXX strong and granular flat very pleased prior with total continued our of results our

other rate As meet all and weather-related environment, you return to available environment, the objectives. the heard some losses pressure uncertainty seek from Alan, use given continue interest from upward levers rate the low around tort we'll continued and our to

individual renewal while XX%. from the select remained quarter, change rate in retention premium at the the businesses, for both ticked change, first strong As up renewal

year in strategic comparable and strong was returns the production in to business We're reflect business results with pleased New these our this prior quarter. the execution.

renewal quarter premium first from was with the last In of X.X% high year, while change X.X%, and from middle than the quarter point of market, X.X historically remained points up a rate renewal XX%. more second retention at

New $XXX million a quarter. of business down premiums strong were from prior year

at our to underwriters auto line. terms price, being in the exposure and and our For disciplined We're execution. conditions to renewal we with most dynamic business to managing selection the improving attribute very risk the comfortable new related part, our prioritizing

in invest positioned grow that our over time. confident are well capabilities continue profitably to strategic to We and we're

statistics Page XX three our shows segments. production of of across all for webcast Travelers' the international markets

Although, the we we're BI with what these international risk more statistics portion include overall execute rate improve Insurance, profitability. to measures the control are selection, continue consistent seeing trends for Business of the other and to than reflect and risk

notable our In which I'd marketplace selectively we've business more this like the been seeing in increase in that. on opportunities quarter. been touch National Property business, had we've to and some new writing a this Lastly, of space,

Importantly, so prices we're familiar with and quoted or conditions them many before, that meet them and standards. our and that written on accounts discipline at are terms writing we we're

to I'll that, over call turn With Tom. the

Tom Kunkel

Segment Specialty combined favorable Greg. net and level excellent Thanks, Bond delivered due ratios an was another results. The $XXX of combined and were a income underlying & quarter year XX.X% of XX% lower to a of million prior decrease million, strong development. respectively. $XX

pleased premium that change XX% a solid at were Liability high X% with historically quality our the X.X%. strong at all a renewal with of remained high higher the domestic Considering portfolio, retention are for the up Net very written growth businesses. across premiums Management we quarter

year record quarter from results prior marketing, various our to reflect These XX% these and grow $XX product up of business quarter. was New strategies a a profitably successful million, the for execution lines. the underwriting

a premiums quarter. Domestic strong were Surety over prior X% year written net very up

Our existing and well returns provide thoughtfully over add time advantages us remains accounts. quality leading selectively portfolio positioned our and continue allow to to competitive to new

results and Bond we to marketplace about results. and & were strong Specialty ability deliver So continue our feel terrific advantages excellent to our competitive execution,

Michael it Insurance. to And turn to now Personal over I'll discuss

Michael Klein

policies and and grew quarter the revenue good second in and everyone. both performance with in force income, auto Insurance Tom morning Thanks Personal in improved home.

to XXXX relative of for the the quarter $XXX million Segment of quarter second income increased XXXX. second

Our prior X.X quarter, improvement was nearly by for were primarily the driven quarter levels below of points ratio points XXX.X% the year. over X an combined catastrophe that last

The XX.X% underlying increase Treaty of the the X underwriting the in related prior impact automobile pricing non-catastrophe partially was loss up combined from quarter ratio. and new in points by Reinsurance exceeded weather driven by ratio offset a premiums losses trend and on agency net earned year an Catastrophe expense earned to lower

quarter year the better in losses of in overall pleased with that prior seasonally than Weather quarter is second losses. the aggregate we're the and weather terms were our results. the quarter Recall expected highest

top Agency for the and new way leading premiums to with Personal record written business quarter the & of Homeowners the X% Other strong quarter. XX%. -- line, the growth grew renewal net retention new in Turning change with for domestic Insurance premium had

earned XX% results ratio that improvement X.X ratio for development. with pricing lower Agency once lower year loss a from a underlying lower prior and delivered quarter, trends. quarter combined again underlying prior to from benefit period. net benefited exceeded from of the by including The The favorable continued a point year Automobile trend the favorable strong combined offset partially ratio combined losses reserve continued frequency catastrophe

favorable catastrophe lower by combined quarter development, offset lower quarter the net X.X the was Other points partially In XXX.X%, Agency & ratio. a Homeowners and combined second prior year underlying prior losses higher higher reserve -- than to due ratio

driver the as Higher XX.X% non-catastrophe in X.X the year the the compared weather main were to combined losses prior point increase underlying of to ratio quarter.

to While quarter meet our from addition the quarter, weather non-PCS not came a this favorable to PCS significant the did activity in component catastrophe in events relative that events year was weather total threshold. of prior

of from production. at Automobile and remain meet focused the returns with to retention a prior modest year premium book to in this X.X% We at renewal remained increase change to our actions new quarter. objectives. on business quarterly that Turning grow Agency XX% continue solid

first & last The points strong have experienced at Homeowners up from we Other we're another achieved retention X.X the with pricing actions the periods. year address in We from taking loss industry XX%. that quarter. change renewal the delivered Agency reflects to X.X% X the strong quarter and higher of points we and remaining of second recent up premium achieved activity quarter

our tailor the agents be as performing New well Quantum rollout to continues their X.X. business easily driven and ability Home driven of received product and successful pricing by expected to to was up XX% by for customers and sophisticated QHX segmentation is meet needs. the

to in make investments business. the During quarter continue the we

remain For in available the example, complete the is and of we this year. XX of more QHX.X states three and to most later Colombia states in rolled QHX now on-track We remaining District in out the states. rollout

announced several addition initiatives. In we new

plant First, up our in to U.S. the we've better American with to National in partnered while the billing, resulting the environment. us, for million in benefiting trees paperless them a to more encourage customers more all experience with initiative connection enroll efficiency Conservation in for one oldest to Forests, Organization

prevention supplement event firefighters with wildfire. local Wildfire in Systems provide that help to responders services loss the and Second Defense California we're of in working a first other

are grow an gives of of latest deliver added These additional the service is us well layer to value additional investing continue manage also no examples help This customer premium. the new in protection an in initiatives the position profitably and our exposure. while the wildfire us It that eyes California at to to policyholders business. of tool to

the over Abbe. turn back I'll to Now call

Abbe Goldstein

begin ready We're Q&A. you. to Thanks Michael. And thank

Operator

[Operator question Barclays. Gelb Jay from comes from Instructions] Your first

open. is line Your

Jay Gelb

of it deteriorating. I'm in the a questions think underlying good on are XQ explained of shift people environment have I ratio the combined the weather year-over-year. Thanks going tort impact and non-cat of sure to you amount morning. fair in well and really terms

do of the improvement of I over at margin rest could or XXXX, see course point you underlying am of trends given price given improvement, some those think unfolding? pace we are how XXXX the wondering the

Alan Schnitzer

you You the of the for Outlook know, do segment. Jay, an we section margin outlook we XX-Q in the it and by give underlying underwriting

you In it's forward. -- it see that things results where -- non-cat three it's in is it's there in particular continued weather, can So calling really we going would -- we're BI we're expect for where what improvement thinking improved international.

terms in levers you've and of fourth timing is fourth last adjustments, of price that that but will we including over the of all premium quarter relentlessly and we're to the on pull working day a on year things And every got impact have that books lot those earn and quarter impact the put time. conditions and there the auto to margins in profitability manage overall market will and in and we also

Jay Gelb

would so if All then Insurance drag you I imagine from rate -- workers' domestic improvement. impact All might expectations Thanks. or I of That's helpful. continued what comp? is Business was the a right. have rate wondering the excluding benefit And right the in

Alan Schnitzer

be you to but higher, you comp give and and not there prefer for is we don't BI see in continue And we Yes, the is negative probably would negative. clearly Jay clarify that that to the separate workers’ it we for numbers time-to-time. update from rate do thing it's to or which a continued do comp have relevant But to another. when some in RPC But given one it workers' it sensitivity statistic as to we to quarter. intend would and need competitive We and there think now. number to be that

Jay Gelb

helpful. much. very That’s Thanks

Alan Schnitzer

Thank you, Jay.

Operator

from question next Phillips Mike with Your Morgan Stanley. comes

Your line is open.

Mike Phillips

Two morning. Thanks. questions. Good

a margin. if it outlook like First line into on expansion XXXX. calls correctly profitability Auto. consistent your for of your I'm decent of am you core I reading there the personal Agency And side levels sounds pretty saw sure

any if So competitive I -- damage like guess, you're was what severity might could the margins with is physical environment year you impacts seeing there? like than now more in you're in looking then concerned competitive it last you're what be consistent and profitability not it talk for the sounds about your rising on sounds

Michael Klein

about Sure, environment in being Mike. Klein. would moderation we I you This as couple on increases a is also rate can it say competitors. talked last competitive the Michael see quarters of our the certainly by filed find we

speaking we're there. rate I with to be the think we're broadly response sending I marketplace that the in think pattern been methods profitability. moderating in And step we've in improved with it's the that to working

of loss upward than over the we trend, improvements couple in on continue quarters pressure auto severity terms in offset personal do see to last frequency. In of more with

can think we're to that balance we and auto more do little our at outlook to trend think fact working the the or view reflects attractive the shift that I growth with long-term margins. in what time over is pricing do and we a bit

outlook. So that's the view on our

and look had trend the the of one had in there there very outlook XXXX seeing some both challenging recognized profitability fourth in throughout loss and XXXX XXXX. to a of in quarter that at we talk the is because terms about the been quarter you'll comparison quarter we The year-over-year fourth we you quarter of as note and quarter of in just strong the we favorable XXXX exception the comparison inside that fourth particular so I'll remind the that you

guide a XXXX. fourth there So was good quarter the of catch-up in

with the the just consistent broadly exception really is So quarter comparison of fourth a which challenge. year-over-year

Mike Phillips

severity details Okay. was development the accident multiple workers were then some trends uptick California getting changing about worse guess, secondly of quarter with comp loss in recently reserve from over years. guess, Great. I anything I was and California. year Thank that? this the from you in you, mentioned to Michael XXXX then, in anything there. competitors and -- some And for there on maybe slightly from first accident talking in Switching XXXX time came comp one up

point you substantial So margin pretty that I do on pressure guess become at in what line? concerned

Dan Frey

in right least XXXX. was significant clarify its of it there out there. the have it that anything be Dan year PYD, of there a take of, called current PYD Frey. first Mike, from and part quarter I'll we'd So on so to if catch-up count the sort at first wouldn't We'd as

better majority the of just those there we now, in you of from a with You XXXX to workers' bid XXXX. but how development prior the to XXXX small prior going have as have the is our favorability see k see chance is some come into because years a were seasoning, piece from years to older continue reserves year long-tail to the of comp to nature

Alan Schnitzer

Mike, its Alan.

On behave loss say of broadly workers' it -- to comp speaking the I'd continues trend well.

Mike Phillips

you very Thank much. Okay.

Alan Schnitzer

Thank you.

Operator

Your next Suisse. from Credit Mike comes with question Zaremski

is line Your open.

Mike Zaremski

morning. questions. good Hey, of Couple

that's to you just want you're as prepared for account Greg. probably in pricing conditions terms clarify well? to into getting whether and believe price taking said of In First, addition disclosure your tightened tightening correct your conditions. I is and If commentary, changes terms

Greg Toczydlowski

Terms and conditions, yield. about property we're we conditions segment. talk of inside portion is our that all the seeing the Yeah. predominantly larger When on and book net business of terms

So some peril improvement. seeing think deductibles, so sub-limits, those deductibles, that's thing where value, of all terms conditions insured we're and

a we changes of the make a as an of point those business. renewal that book block on the cost from on certainly favorable So from impact net has view loss

Alan Schnitzer

you adjusted that number, rate the are in is that's question? Mike somehow whether your asking

Mike Zaremski

disclosure it's If taken rate. account the mathematically into Yeah. within

Alan Schnitzer

but up the right? it pretty could calculation, not So negative to the pure calculation. price into extent would not example be I although if the just went show exposure, for rate some that up on rate mean deductibles would exposure for mathematic, side, It's numbers factor are pure it

Mike Zaremski

the drivers. and say And do years any inflation, litigation I firms believe would momentum inflation helpful. of of one in that's I there’s class momentum And it's the – terms as rates? there gaining over of capital a you underlying asset bunch of and think maybe of follow-up. you couple That's are there causes, been the finance there of couple is last lastly raises on a underlying its Okay. gaining an there's public may lot tort

would If you have any Thanks. thoughts there that helpful? be

Alan Schnitzer

Yeah.

so result up looking it's causal triangles So we're numbers the coming -- what is describing the in for factors of and squaring and environment. with then

amount gets to math and that -- a there's us estimation to here it's So not there fair formula that question answer is no the of necessarily.

describe as I would and a broadly we what say it plaintiffs' bar. in numbers, we're more reflecting more our But aggressive active would

can as we we topic know see that don't as that. numbers an its more factor. money on and that We is finance for about, asset litigation is raised being Now dismiss class. a read own We certainly

I at for referring significant driver least will now we're now, a we what that the that. environment. That mean could this change raised not to being come. at that you one that change in as in but as funds the is could that tort we're least see tell particularly aspect I seeing

standout in that so issue. way -- extent that that get we're it well, And but the by and to as we and would loss PIKs see reflected the as a not seeing our anticipate

Mike Zaremski

you. Thank

Operator

comes with Elyse Your next from Greenspan Wells Fargo. question

Your is line open.

Elyse Greenspan

tie also Commercial is, there good went My back then and saw to increase Auto question first morning. the in guys together in GL increase going and the the I'm I trying quarter. Hi, commensurate to up A; the what that guess PIKs that rate. you

think but about environment like positive So relative bit that when trend because sound pricing higher loss keeps offset you just to outlook much terms trend that's phenomena? obviously, your was you rate to -- do just going forward in a you more rate trend thinking this in if try guys the trend I does versus of we off about up your of going going loss can on bucket to, are driven how inflecting it guess, view of

Alan Schnitzer

Yeah.

So, of view we you to achieve pricing we on loss Elyse Outlook certainly the we our RPC rate perspective models of the our need everything adequacy rate And XX-Q. did and section objectives. know goes into for our what give outlook trend about and some our view return in

We've that to there you book through a to in basis. come regulatory are process put then to filings it our does put got I lag on on there's to a earn there it's it got models we've will the a the see got extent it, say that in in. got

there the time price So lag on the gets the -- the books. a is and recognition is of goes into put market these and between trends

it worse. way is just before the Auto it's got recent term longer trends. And what quarter I trends So we're be seeing in we think of some the long a of these a will large that at of saw of seeing Commercial Commercial trends was saying degree, reflective some now Auto, that we're inadequate pricing reflective in an return although of to

Elyse Greenspan

that's so did Commercial Commercial said one Business second is quarter. the basis within but XX then being GL going quarters ago increase you about my about guys one $XX PIKs portion, two guys million increase know Auto your are forward buckets and there being I Okay. And points then two question, you PIKs the the Insurance. Auto fourth in

sense, of quarter? trying you in not a -- has conservatism to you that just maybe it's to point to I’m So PIKs the been instead this one why increase chose and addressed loss a half point current that your now guys the get that have

Alan Schnitzer

Yeah. at high or missed Elyse our isn't objective low.

price an always on We're it curve. based objective of We Our an interest an losses come the product with and right. to to rate estimate is of up losses. get estimate trying

And objective always right price. our the is to get so

got just we on is weighed that. think us that data. get so this lot experts of We've our and management And a objective terrific of through actuaries through input top got we've right. to help And it

place. at tell we stick this the we're can the we based a right we in we everything experience on that swung But got on see is and we think done tell the it. can And PIKs boy you, can't. it in So our you we No, based we data. big

Elyse Greenspan

much. Thank you Okay. very

Alan Schnitzer

Thank you.

Operator

from Your next with Point Moazami question Compass comes Research. Bijan

open. Your line is

Bijan Moazami

guys everyone. up going guess business. I understand you year the something or this particular, all picked else? premium Auto it for In in taking volume great it morning little was on fair you what's a Good of question. want last year my I amount and to bit more a Thank was Commercial

that subsection is it up severity broad-based? to pick the And is of located? related a BI Commercial is in it Auto Or or this geographically big

Greg Toczydlowski

Auto Commercial we Greg. dynamic an is in predominant can in written you change see the the The This across X% portfolio. premium. is Yes, net quarter, as RPC had Hi. underneath broad that

seeing that the challenges is believe industry Commercial also. we Auto We're the clearly

a it. So isn't RPC, the It's it why hence across of and achieving so we've segment broadly been broad a dynamic reason really the book.

Bijan Moazami

regarding this there? reserve is on your million then, And pre-XXXX all assume $XX and what's you. Thank chart for environmental going liability, I

Daniel Frey

Dan. I seen in than year it's over in all am certainly we environmental older It XXXX, Hey years pre-XXXX. last action -- it goes what that several as continuation have years. the far really a back It's sure not of the as

number an is of claims see old, in simply that that The expect improving quarter do would improved quite We Because our we prior a in of PIK. come we in. reaction have runoff. it to environment it's that do have is degree the things the terms anticipated here this not in

about stuff. to mostly as right think old you're So very this

it expected. You're time of as the think quite hasn't about previously improving these down it in right terms generally slowing we volume slowed to things had of to over the just that degree

Bijan Moazami

Thank you.

Operator

Ryan next Tunis question Research. comes from Autonomous Your with

line open. is Your

Ryan Tunis

thanks. rate Hey is to to increase for maybe wrote I renewal had feel just the first get versus second do question of I'm how of And just mix guess sequentially. morning. the you a number that Good trying the premium My that quarter with on the in the much first.

noticed guessing in where comp that rate there rate the was property, is but or more better getting not I'm Because there I the is lot X.X%. obviously less you're workers' a

the kind or of for point in increase XXX tease that basis So out of -- is control there to just the X.X% impact versus sequentially? mix the anyway

Greg Toczydlowski

pride Comp to again. distributions. with pricing every Greg our the is this materially. wasn't local off very partnership And obviously we Ryan, month our in granular ourselves Yeah. execution

are it can't really it best our with there the And in but partnering do loss accounts dynamic up coming So on that depends was the for really the came that a renewal. comp experience exposures that's up, we that them. drive that was say associated with and them,

Ryan Tunis

the comp barometer of exposure of exposure of kind what as the seeing in you're comp fair is increase workers' a use And increase all BI good for it to too? in

Alan Schnitzer

But I'm data. necessarily. factor not a disclose at there's that is looking rate that big the necessarily. we mix don't here comp Not instinct the And No. level, My overall for Ryan, driving change. but not

Ryan Tunis

And Alan was was helpful. on rates. interest follow-up then That's my particularly Okay.

yield First, haven't the thinking second I'm price-to-book versus seen company? in And just the stocks is some valuation like new trading, then at what of the curious quite where this trade buybacks time. money about it for today I all,

to very we're are. I And about in business structural And I levels extent this to low to always guess you've a rates. returns rates of know, back wherever interest Alan talked linked certain being interest

back into appetite the your the I'm has So half changed of buybacks curious at looking all? year for

Alan Schnitzer

invest we me can do every for let back business to that in generate think in I'll yields. it Bill the the that of Ryan, start generate if of return the Yeah. to buyback. capital objective new see money then terms dollar buybacks, wants first when and for But comment a on And it. with we our we is

give what to to do. expect going put back alternative don't bond to we're And is our investors. income fixed that's can, we we when And to that us And investors our think it portfolio.

by dividends diluted large As share. value we and per book the it's between less and buybacks solution buybacks, think, is to preferred

stock. And to capital. We're that. so the we're not trading we'll in do continue And rightsizing

value we Of course we trading the stock intrinsic wouldn't be buying back don't. at above thought stock. and We was

or tactical. a on depending when last XX is stock to strategy not trading. capital. -- XX from it's we So, And the this is And the over We're value. time-to-time shareholder deliver rightsizing it's where really this years get question

as before stock of question worth at come a like a million I we just something a not least point before since of concern. bought maybe price has out, per concern And this or $XX so think back And a share. average as an 'XX at $XX share $XX would and I or

we've So stock we shareholder that's Bill, and that thoughtfully the create comment philosophy. no new do in pretty you a created want -- feel back our change way on good value to bought in money?

Bill Heyman

think lowest range there new were of the book what was money about slipped was and and quarter this at relationship it's terms second We we the in probably obviously quarter, in X% between at that yields. Ryan of It of ended reinvesting money X.XX%. yields in but the point yield quarter money bottom Yeah. And quarter we quarter comfortably yields second the last mature were new in terms now. fourth new more running the money in and in in We rates the above cycle. below yields, so, between of off. that obviously, were the and above less year first the but

We and so making sales us profitability at random, in changes. We the and assets changed act basis, the at do the buying, the higher run tax to than excess market, look And can certain I in make at daily basis that. gap it it what the We a it's also over especially curve is products. can running of areas do on we look we're tell measure look that of also we in of measure we're points we at the which and and you mix periods. is some the XX look as To we reform sales, off. where gap spreads.

Alan Schnitzer

NII this the the outlook prepared the the in Ryan outlook that's And of and shared his in year XX-Q. was effect for in remarks everything Dan that section built of net

that that So would all in number. be reflected

Ryan Tunis

you. Thank

Alan Schnitzer

you. Thank

Operator

next Your question Shields from comes KBW. Meyer with

Your line is open.

Meyer Shields

me, good morning. Pardon

on workers' reserve showed year So perfect P compensation releases in I on the question comparison, Schedule release. guess It's full of workers' $XXX but quick million-or-so compensation. XXXX a for

incrementally better that pace because picking seems loss of So the was conservative I is more like is wondering PIKs trends? and it or up observed

Dan Frey

all reserve wouldn't the doing prior every time in it going Dan. go data development to we're year PIKs. that is comes in in say to conservative do quarter loss what which favorably of say, workers' the comp. relative expectations previous It's as had PIKs. Clearly, set we more Hi. I moved would we're we've in simply always the we I through over

see unwinding most do prior we have prior is reflect recent simply things in PIKs. anyway another favorably the quarter's conservatism some data our views. What than worth those them come don't in in think this the of this I more embedded and would things what in We increase where take have is quarter in of PIK. you in

Meyer Shields

Auto lines, catastrophes Okay. year-over-year reserve and development. I When personal actually take a we Is the Michael. total Thanks. and the That's international? And if the -- Agency saw XXX Personal we excluding that this point Is it from out for direct-to-consumer the guess and on seems then basis is international like in that ratio Homeowners quarter basis, remainder, mix? helpful. loss about

Michael Klein

similar past sort impacted and you're challenging game the We've a to plan we obviously there book, experience the this about is in work in international auto, -- about but disclosed and the say, Canada improve I disclosed got segment, a talking heard broadly We're the would you've which delta. been Ontario by industry Canada we the environment. we components of about. quarters, and predominantly it's So talk the but talked has being underperforming. that that, others trends to --

I increase will we've Ontario seven earlier this say approved the year. on rate got point a positive by note,

We actions, a have speak. we're the there. drag the distribution that and another rate delta And increase primarily the international. from But underwriting there is some on through management yeah, really file to with and as regulators we working performance improve

Meyer Shields

Okay. Excellent. Thanks so much.

Operator

Yaron Your with Sachs. comes from next Goldman question Kinar

is open. Your line

Yaron Kinar

morning. Good Thank you.

Going rate the was over moved of trends couple quarter you in achieving at inflection excess of trends that improvement currently in to loss excess guess, Considering the have think fact of the least, what trends? quarters said in rate so terms last I Insurance, of I the a basis. that up Business point it's in loss on written

Alan Schnitzer

all of the of a is estimation quarters Exactly ago was a going There now one we it's quarters bit to back or bit -- here they few fly. a was about that's said what of Yaron, point when for a inflection hard little looking our little were couple Yeah. a at is it. probably and pick. the close the other, We're said, quarter-to-date trend. one way lot on on of it. written behind pick that view, It trend. talking We've to ahead based new a hard in

where we are heard of on and loss return expanding can we trend like and today not rate, rate are it's taking tell remarks, we Where that even account prepared our in into We just feel today it's Greg we're you say exposure. margins. basis, a as updated view his you

Yaron Kinar

of is non-cat I stop quantum -- written strategy in homeowners, the growth that's a the the there. severe the product wrinkle expected? as of helpful. to to matter turn That's and in-home. if And quantum deterioration a this net then, quarter just face weather and thrown and And product or Okay. growth kind comes Is we is so performing strong the the it to premiums of in ratio want loss

Michael Klein

would as answer say frequency, stages loss that's non-cat is short still this is expected we in monitor and And yes, credible experience your is as than miss data I product on the the and weather as experience the Sure, explained we Home the X.X but this question performing variance. this at performing by product. particular actually to there the underlying more really the is Quantum in expected in most the is early loss quarter Michael. is the

while more a experience just that of talking this broadly we take some a non-weather underlying significant step back and non-weather a that talk gone quarter, everybody have And of impact just water-related. I profitability weather-related, it water about been to it's away. property some pressure that of loss remind you bit homeowners in of will on wasn't mean doesn't about and sort

price in challenges. non-weather bit And for in again, of weather-related a so about water-related that's about really less some change behind and the underlying my comments order But to continuing homeowners those drive we think it's product little to profitability address of itself.

Yaron Kinar

it. Got much. you very Thank

Michael Klein

Thank you.

Operator

from Kumar comes Amit Your question Research. with next Buckingham

open. Your line is

Amit Kumar

follow-ups Thanks climate. the on Maybe two total quick and good morning.

else Commercial spread it what leaves a is The nature trend the will going confidence bar across other give open it guess is it? have of question chasing first which us bit should more to that on not guess inherent what line basis? the I more Is Or on, segments. I Auto plaintiffs' so deeper adverse I

Alan Schnitzer

we do thematically across we liability Amit, see quarters this said prior have in I think lines. that

of But this So auto is CMP and the reason said we -- whether also losses. a see said have bit degree little whether and by it's in we it there's those or think quarter, that it's this Auto fourth into a underlying is high the personal severity homogeneity went product we've a but the injury the dynamic we Commercial I in or reason to bodily broadly. -- driven

a dependent terms we But thematically we in litigate. that going anyway do see said to again, more attractiveness Slip bit lot this PIKs. complicated to little business of fall model, it's bars and plaintiffs' so it's on to a of and and that dependent there in for loss claims. And of other the as to the where as circumstances is more into highly are past, we've in account taking facts -- be all just our or and compared example,

for Commercial a it's the Auto far, so part Just been dynamic. most

Amit Kumar

Got it.

we adverse my at The of the then I sort pass us margin the second give we or deteriorate climate, thought is, you I only here what at is mean, -- stabilizes slide? point your all confidence process it of think question the not on an this inflection back? further lived how and lines point? if inflection that have Thanks. Or continue total are this look and do should and us question about think that trend is or to through guidance deteriorate swing here does

Alan Schnitzer

hearing. we remarks as prepared Amit, Greg consequence did for our in increase say a that what PIKs his did BI loss of we're

is think higher and So higher. was we the that here are starting rate -- point the inflation we from

we've do we of taken think question, prior a of to something We're trying done different. answer this? or said have Having my otherwise right. be so not we're to conservative. it all get think care in said we I As to that, trying We would aggressive

our estimates or yield go loss Our into pricing. losses

it and the pencil And that we done. very and important estimate so our it's sharpen put what that's best on we've

and and I'm you've I is you estimates insurance underlying whether track our years right can change. the it's is Commercial that loss over the in we're And or And happens, in good job over it's analytics, back number reacting and and Auto to in we've that. back to the think or unfortunate look whether pretty our Auto done loss, other the business, got our And it in Personal record we've you going it right when right done sure some the a and if think react we things. time that And you this all this in are to but of experience and think data, it. that's we the all issues, business right expertise to can it's right of look see business hope --

Amit Kumar

looking and good future. for. the I much answer so Thank for luck got you was I the

Alan Schnitzer

Thanks, Amit.

Operator

comes UBS. question Your Meredith next with from Brian

Your open. is line

Brian Meredith

Thanks, Yes. just here. curious I'm Alan.

to little down to little of we kind just to of retentions, starting -- deteriorate middle be XXXX. bit? in in terms it are market, expect more new forward situation. continue dig more here to right Looking like on your business maybe and conditions? to Greg, to back a But year-over-year, is a of of we doesn't bit business extreme at retention start that bit like should pricing start the heels kind you deterioration in guys happen an now going see Maybe seems challenging kind new little

Greg Toczydlowski

this is Brian, Greg. Hey

in when that with been business. different active, give the shared the business do the and strategic active First, a math, really use marketplace. them looking past executing in we've you on you really you're the initiatives to period year from all up we'll more in down in prior our to strong capacity free and The we've be word in environments underwriters those the based

on conditions have Right that active importantly, price right and sure terms you product. what addressing the the making right the and said most really do adequate now, is we

business on And in the so, question the business. of and think of lot right try also. margins now those the to retention, a our underwriters do capacity it's while think to we have of retention there work high-quality with terms possible on the distributors to on business everything improve book margins business keep book that really levels up been using and the And of your we our a to we improving

Alan Schnitzer

different to very terms like rate adequacy where would were returns. XXXX was terms out environment of we and point a in of I in

a point of difficult the not in it's there's a different draw sure comparison. cycle Every I'm lot to is comparison. So, and

Brian Meredith

non-admitted Got are us you, carrier. here. admitted? those seeing... guys I but surplus you're as differentiation quickly you just do seeing in then, know you. what far Can through an happening markets non-admitted What as you give you're question And got versus QX, second between in a line have two excess you any

Greg Toczydlowski

larger of Sure. this been of the states also an see We in has Brian, view. the Yes industry some a from statistics there Greg of is some where point uptick again. non-admitted

One solution, non-admitted business. business conditions which book a reminder, we a of business And exposure have as you in think two our areas we where of non-admitted the a less business. is property complex that field then across can Just our able need this that's really it offerings product use to smaller do our because, business our we as not we part way. north also write think, address But a of what terms market, been we big we've real product do And and you certainly to has said, in got and portfolio that. strategy. to and customized modular product

we've portfolio So, been with comfortable mix. that

Brian Meredith

Great. Thank you.

Operator

time back to the remarks. like have turn Abbe questions. completed I allotted We over call would Goldstein now closing for for the to

Abbe Goldstein

for joining everyone this Thanks us morning.

As get good day. follow-up, a to always, feel Investor if any in please and you have touch Relations free have with

Operator

conference concludes call. today's This

disconnect. now may You

The Travelers Companies, Inc. (TRV) 23 Jul 192019 Q2 Earnings call transcript