TRV - Earnings call transcript Q3 2020 | The Travelers Companies, Inc.

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Operator

Good morning ladies and gentlemen. Welcome to the third quarter results teleconference for Travelers. We ask that you hold all questions until the completion of formal remarks, at which time you will be given instructions for the question and answer session.

As a reminder, this conference is being recorded on October 20, 2020. At this time, I would like to turn the conference over to Ms Abbe Goldstein, Senior Vice President of Investor Relations. Ms. begin. may you Goldstein,

Abbe Goldstein

morning XXXX to press results. webcast morning. supplement Good our release, discussion third and this earlier quarter We presentation and you. Travelers’ welcome of financial Thank released our

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

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

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

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

to to the turn Alan Now Schnitzer. over like I’d call

Alan Schnitzer

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

income million equity return are $XXX very $X.XX third XX.X%. share, diluted core of to of or on per and quarter core pleased report We

and $X.X earned record Our underwriting underlying an a that improved income bottom from of quarter this result ratio premium resulting underlying X.X to billion line net combined XX.X%. points reflects strong strong

the which personal results XX%, combined in productivity outlook and on all I’ll underlying segments business as underwriting pleased segments to last profitability pre-tax, of insurance, in three our efficiency, customers still benefits business offset hope were continues far results to care for trends. experience to levels focus weather million in improved on and claims number the claim our insurance want with so the XX exceeded our also impacted. under due team expense and acknowledge U.S., caused improved over Profitability of express we of catastrophe solid to rate closing return during underlying for combined ratio times. in the recent a catastrophes. the more claims loss better Core of out that quick recent we’ve expansion losses. and in in challenging the A record with year losses a the ratios or by weather than of want the lower business shared income call for actions for to my included the from met volatility. We’re quarter. insurance, generating average quarter. in objective underwriting margin auto teams specialty underlying for catastrophes our notices XX% our exposure and our result the combined also our note and of have three acknowledge the consistent frequency meaningfully days. to more more a with the of team in risk gratitude been underlying extraordinary the the earned I higher We wildfire us. benefits [indiscernible] management I this In resolution claims In all the personal Of I for XX-year $XXX for a all to PCS above XXX,XXX taking dedicated in taken insurance. elevated so have the bond outcome our the was and strategic manage who these of recovery arising than efficient to those consolidated customers the also made quarter insurance, In want both reflect resulting received quick a years ratio. devastation were environment. a non-catastrophe

to is illustrate reward impacted to about exposure our recent season, by addition treaty aggregate in lower exposure improve years this a five cat California of our wildfires. reduced two property actions than the losses, it was meaningfully and point, costliest which To ago. third the the mitigated In has balance risk areas the our to the wildfires the

tax. Turning high investment our $XXX with investment benefited portfolio, we again to and quarter consistent quality our well generating our after defined this investment philosophy net investment of from income million portfolio

the I top expectations, confident that surrounding business claims that I’ll favorably our remain line, result with front. the uncertainty to consistent Lastly, to we and before share turn continues on so interruption

sequentially of resilient liability than auto homeowners agency and rate In XXXX. quality and a accounts highest level our renewed renewal return economic retention quarter in in all those of X.X%, terms to to and year year written quarter change and including retention points date our premiums X% achieved negative written as for driven it We premiums by business by the result, generating record driven is generate and rate change our specialty we in while We managing top in premium In a renewal and personal In meet of will increased net lines high grew achieved underwriting change rate prior by compensation. retention much X% strong year addition In only its more business change, change business, more year levers continue four change by gains X% believe management than business line to over strong. our to written three in segments. good compared portfolio quarter that was commercial in the accounts agency remains of rate production, higher insurance, objectives. continue our renewal of we economic profitability to X.X%, since for significant the to achieved premiums at an remained businesses, reduction we on increased insurance, modestly In both the businesses, Across renewal business workers’ all homeowners. lines renewal activity. rose rate execute achieving hardship. in strong better domestic higher outlook insurance, record high. while in to In of both net Net strong that exposure change need new results. premium X.X%, to each by agency our retention other our and of of historical the and bond in made progress returns other to improve we’ve renewal

reasons marketplace. For the managing and we been our and the discussed environment, loss important and from Notwithstanding other in our to focus headwinds impacting resources on We the addressing innovate. expect interest our pursuing focused agenda. momentum from industry, to to strategic scale on all note distracted the invest we’ve that successfully the we continue leveraging remain the previously, continued it’s environment to rate through pandemic haven’t

at top make foundation efforts industry-leading be As with to our those on excellence. we’ve extending a results our that continue in progress our industry believe commercial continue successfully every of winners same and to From deliver on the innovating deep before, great our we can of virtually advantage expertise, efficiency. and domain position while of enhancing experiences businesses, providing a said the the aspect advanced we our chain In will in strength, time of while risk improving value expertise productivity analytics. focus digitizing we in

intelligence in to improvement and and accuracy. a we’ve example, the increase agent X.X the efficiency, in solutions small insurance, submissions the personal new both with seen states account and data classification we’ve from burden we which rolled substantial total premiums. one operational that customer third on streamlined AI which experiences. product both. in BOP experience. it as and In Just about our balancing XX% improve a This and point, To uses agent product sophisticated segmentation, in resulted has we’re party commercial in benefits underwriting business the XXXX the artificial launched In eases agent out,

we We rolled quarter. example, reading. a of experience and out the this have redesigned in states completely IntelliDrive the For our nine fourth during distraction in and introduced auto the launch plans states an offering third in telematics quarters additional XX to and second

partners. discipline and and To virtual franchise customer the underwriting our new observing strong digital strong. the our in accelerated up, Also and feedback. in of fourth of distribution have rollout an Customer reflects a the mobile in importance challenging agent a pandemic-driven adoption we’re for a quarter, rolling up out businesses. pandemic environment. customers the claim in and end-to-end performance received analytics, of trend In face claims strong nearly self-service satisfaction and it while organization, we’re of we’re tools, the to a remains and IntelliDrive value XX% our the pleased and culture, underwriting advancing with individuals payout tool rate of increase by service It are We’re agent benefit the the data embracing app. sum enhanced adoption we the that offer

to capitalize well we’re with that, With reopen. of and to I’ll the talented over together All continues workforce, that, on as call our we’re engaged to economy opportunities highly confident Dan. the that turn positioned

Dan Frey

Alan. you Thank

resulted year’s ROE in unfavorable More third in a XX.X%, quarter increases of well and Our underwriting core increase compared core year’s prior million, reported generating was items of core in as the of both core underlying PYD those significantly year as of both the income favorable profit. in to ROE for significant minute. PYD that quarter. X.X% a we primarily third net $XXX from These $XXX income million on last from quarter, this third quarter up

third $XXX of to $XXX year’s million pre-tax million results compared last in Our cat losses quarter quarter. third include

and included Hurricane those The cats was was treaty. wildfires winds in of Laura, by western the pronounced in activity the aggregate the that under cat even quarter’s large States. severe the Storm Midwest recoveries the straight-line United net catastrophe Isaias, several suggest result than in level tempered XOL cat in as numbers more August, quarter This Tropical impacted our increase the

line non-cat with the benefiting Recall results. recognized any that and cat treaty under We year, have in million our in recoveries $XXX $XX the results did pre-tax have under pre-tax the underlying million weather we our full treaty third until last benefiting quarter. not recovery fourth a quarter that

in offset our earned pricing in to on and in which years increase auto and of Of including excludes the underlying to the the strategic from ratio quarter of loss ratio frequency improving quarter combined quarter. our The from expense PYD, aside fourth that excess points over is in treaty recovery two-tenths as figure year-to-date improved a quarter partially comfortable benefited quarter. year’s full of Setting course, The last of this expense ratio to XX% X.X quarter and by XX.X% favorable of a of number and favorable remaining coverage of there related by by loss losses, XX.X%, productivity this third is improved cats means wildfires. variability, reflects approximately points and point underlying is non-cat third focus efficiency. we’re weather no of a COVID-XX third year’s from we impacts year’s with. X.X trends, enter results XX.X% ratio impact last the an The

net offset strong insured in modestly in line increase top continued rate commercial retention to exposures as segments businesses. and resilient premium more the three with proved in Our lower than written X% renewal all be change a

comp to extent, two due personal o about lesser mostly workers’ and by related levels $XX GL million comp For in a $XXX The the losses claims the million specialty a to in COVID-XX workers’ to of consolidated lower pre-tax of COVID in business combined $XX with quarter, driven More activity. and, clients offsetting the to ratio insurance benefit totaled of business those levels by were of lower our liability. management and and auto than non-COVID insurance. economic net bond amounted primarily environment losses points, impact driven million directly underlying predominantly fewer

my in booked IB&R. to ongoing uncertainty quarter, the with we through loses September direct in Consistent a take sitting last that continue is of of in commentary related estimating the COVID Given we’ve net majority still cautious date this environment, to year the impact approach COVID-XX losses.

of underwriting year-to-date results the COVID net other by premium about losses of a $XXX at impact the million point our underwriting in including of related pre-tax half benefits frequency benefited policyholders. to or Looking a than more consolidated items, impact underlying direct ratio, the refunds have combined on little

income reflects investment net the significant income portfolio. However, adverse year-to-date non-fixed our impact on

approximately from reserve million better no in development year business was prior pre-tax driven that million and to development insurance. the PYD. our third by from quarter In asbestos PYD was Setting a in PG&E results of years. as as pre-tax Turning recent expected remainder disclosed, net business insurance is pre-tax personal benefit accident million the than results insurance, About with for net follows. of of In impact includes $XX $XXX in in insurance, of of there unfavorable favorable annual XX% side, previously the the coming insurance, review. to reflected subrogation. development, reflected we In benefit auto $XXX quarter specialty recognized were as personal result PG&E bond

than general higher claim years, several we our in assumptions anticipated. certain our has actuarial macro asbestos improvement do overall This every of indicators, at as and year, paid had persisted level the underlying of slight levels losses we activity analysis. reviewed few we some was there While

group XX that annual or includes total ultimate and Our severity. range view the of resulted of mesothelioma in data new end a that deaths forward. of the asbestos asbestos for our Disease from charge of is losses, the is increases in Centers ultimate of going range. which paid some the indications of updated from an greater emergence last the increase There the for updated Control are the Page Prevention, asbestos terms recent of year’s number losses presentation in view most claims result groups. as webcast a losses This shows as two table, the by not more charge of the all the of that improving in related result low of than actuarial in expectation in to decreased year’s environment our workforce over XXXXs sometime workplace XXXX age in to high asbestos the to the and consistent XXXX, degree prior by of the people can the lines the to been as will nearly risk as nearly but asbestos should late exposed directionally is who X% of deaths in replaced bottom their be actually on you trend was compared decline not younger those as the not smaller exposed get note, the the people, predecessors. to younger the pronounced entered time, mesothelioma see This with in much have same will XXXXs

NII million to out in net our arising assets lag. run-off million. driven reported estate on during second than was quarter the X% by with the the in tax income quarter. to review, Excluding reporting last the increase $XX offset benefited of Favorable the private settlement results comp the down our are of interest million insurance. decline the PG&E year net of tax was in development quarter’s with lag, invested in from Because as investment decreased consistent prior was fixed expect broader to in the levels year an third to After there million non-fixed generally income more reserves Also benefit consistent quarter returns related by insurer us compared to returns, results more we that reserve call. ago. equity where income after the XX impacts year be legacy policies commentary, markets on the and hedge workers’ recovery income tax increased a comments than our higher our from development income prior experienced after Fixed by $XXX in increase prior by our rates, real years and for non-fixed The business ago. quarter of fund the one-quarter fourth issued a partnerships was $XX asbestos in $XX annual by to a our for virtually single book not offset to the liabilities

tax Looking XXXX, current be after and fixed NII ahead our to million to quarter. for $XXX expectation million between income $XXX per is

All April, company again liquidity at the our pre-funded so September Turning billion $XXX liquidity of is we company flows Investment temporarily target with very to $X.X and XX that $XXX that were ended Recall of above were in holding we yields XXXX decreased XX-year $X.X tax to the our or $XX.XX for due debt a year-over-year. approximately as up strong. amount. by levels, quarter, of credit increased well better our unrealized quarter billion, year-end cash at capital any dividends. management, the losses, X% $X.X million quarter. quarter of net than million accordingly capital investment elevated November ratios after this debt tax coming target up June issuance, did new quarter from Adjusted with capital holding in XX. level. our was billion after billion as via unrealized the million excludes We during from September and investment shareholders at spreads share, tightened We and during $XXX $X.X the our at XX and to which repurchase shares value quarter third per net gains X% book end, gain returned of not operating

our there approach of choose buy to may there clarity - to we some in change is we is ahead, Looking more in capital coming back management none. shares the continue no buy the state to economy, quarters the may or on until

for the a turn to I’ll business Now discussion insurance. of over call Greg

Greg Toczydlowski

rate net about trends. combined the a to point excess by more ratio the contributed points, favorable by from loss Dan. A development, over underlying quarter, The year-over-year year all the insurance investment a increase contributing underlying income and segment produced net prior for the $XXX increase. earned point of improvement. pandemic than the significant Thanks year XX% of a Business underwriting quarter in prior driven impact half improved of to income of million almost income, two with modest

exposures written prior retention quarter business. offsetting X% As and year than mostly insured new strong top lower with rate levels the high the modestly for of lower were and premiums lower line, net

we resilience pleased are of mentioned, our Alan with line in top the macroeconomic ongoing face very challenges. As of the the

to making rate as change underwriters account to third number while To remained of underneath deliberate with as important. decisions point, points and headline workers’ comp, just We domestic four year, retention granular almost very an a product rate are from at quarter the segmentation increases XX%. lines achieved we about on we meaningful production, this and Turning headline are and the the by basis. in by of the that feel but of X.X%, we’ve retention is account record execution the sale, renewal point except quality improvement rate all as the the at up achieved respect or numbers high and to our execution while our the as and from year focus quarter class continuous Thanks second of good before, good of on class the last ever seen. point of quality data analytics the of I’ve shared

our to submissions disciplined as business business have as core lower middle $XXX in New the attribute year the of of well In X% lower levels market quarter. million risk we decline new as was is selection up, by our business, market. our economic than careful prior a underwriters. We our for taken approach the lower quote quality of view are example, given while ratio activity

rate than due two-thirds points than achieved to the increased than from rate X.X% was our through year and rate up billing the relief about last we accounts down The pandemic in XXXX individual in up of To cancellations third strong environment. market, driven Retention we recent rate program. up, change renewal XX%. deferred more quarter select of prior were challenging quarter, for results policy the consecutive while businesses, points XX% sum quarter. was a which in higher corresponding related XX% to our by quarter the In renewal more on retention renewal periods, X.X%, seventh third X.X a to marking couple of of year. middle by As terrific second our change that underwriting the from positive quarter change execution at feel largely quarter of in was the about increased and X.X% this from remained

our investments. very good the seeing we’re the underwriting making future creating include feel and also distribution benefits We the for from digitizing enhancing customers we’re those the and Those partners, about transaction, the experiences efficiencies. investments for investments and

directly to also reducing For example, distribution partners’ our we’ve recently systems, automatically while the in launched agency pilots management multiple improving data data incorporate the from process friction time substantially quality. and into systems our

that turn term call for as long as ever that, profitable meaningful position Tom. We’re I’ll growth. well confident our over advantages With to competitive the us

Tom Kunkel

income ratio. decrease specialty returns volumes XX% million Thanks a headwinds than delivered a solid and the was the Segment related offset underlying losses and despite quarter of conditions. benefit ratio from Greg. prior and X.X the million, estimated COVID-XX combined combined of Bond underlying driven in year ongoing growth the The increased economic was by higher points of as quarter from $XXX primarily higher COVID-XX. more $XX by

Given the crisis good that activity in to contemplate write, downturn. our financial circumstances we the about feel segment loss during our times and and in the generated products economic elevated We in as severe returns of environment. the we be in quarter. underwriting economic we experienced of the impacted said, this results expect Alan we that the we’re pricing, volatility in in current and these We seeing

elevated combined term. expect be over the the near that this to continue We at around ratio will level underlying

of quarter. driven to liability strategy to production strong where maintaining lower eighth are our needed while continued demonstrate that and for high written renewal we pursue premium retention higher bond our by X.X% domestic improved year quarter, rate remained surety This the prior which impact our project management a historically related portfolio. to reflecting the XX%. COVID-XX These is strong RPC pricing of at than record marks the grew pleased due business, successful Turning to premiums in of business, net growth In management production increased the Retention liability top the rate. driven economic X% quarter procurement quality results execution by high corresponding consecutive offset our on public in by the line, partially demand.

business million, Greg will warranted. primarily from down. reflecting is decreased management $XX environment. rate you to heard Domestic insurance, thoughtful and continue what this risk new results Similar activity quarter our to despite pursue in liability specialty in remain on brought underwriting while resilient by are the bond COVID-XX. elevated challenges up the submissions business where We quote for increases The

to to over We and deliver about returns execution strong be our to feel environment navigate pleased this continue time. strong through with confident challenging continue our and ability

I’ll it turn discuss to Michael to over Now insurance. personal

Michael Klein

Thanks the written everyone. as $XXX million X%, segment personal driven achieving of quarter with Tom, $XXX we million was and impacts profitability good the delivered income morning in premiums In and million, quarter, net of pleased quarter continued our force. in the higher very marketplace reinsurance. domestic in prior are by reserve underwriting and up $XXX policies insurance of insurance of execution by the $XXX an million by for grew year we losses from third have favorable $XXX this partially higher excellent gains underlying prior development, catastrophe the year pre-tax record levels of that offset net million Personal improvement

The year loss underlying loss experience I’ll driven XX.X%, offset The in ratio in levels. of of relate improvement underlying points, XX quarter of half higher Approximately combined by for losses. continuation combined reflect quarter. favorable the for improved was favorable quarter profitability favorable was non-catastrophe an year results related by ratio XX% underlying the continuing reflects in discuss development. both favorability. ratio. of weather of was frequency prior the to the partially largely quarter the with XX.X approximately in quarter catastrophe combined next. strong XX% first net of improvement XXXX. the points ratio offset prior of favorable remainder re-estimates quarter The to by the Higher XX ratio from a current the improved eight improvement auto in combined bit experience very nearly combined these automobile in of of activity dynamics primarily the Our Agency points detail from the a reserve increase more

as claim fewer a result of the to COVID-XX of light continue We miles observe lower in driven frequency pandemic.

but last of down we increased a COVID-XX response quarter, in driven relative indicates quarter states pre modest third the from rate program the loss filed that favorable IntelliDrive to miles this quarter. experience, be reductions handful during continue to data third to For levels. our continued from In

points and other, ratio continue incorporate to higher agency, weather-related from of offset net by into underwriting analyze X.X development, from of resulting trends We third an In underlying driven quarter increase year higher and catastrophe the current profitability. favorable we was volumes improvement reserve and PG&S and XX.X%, elevated prior business the points losses the pricing combined decisions will recoveries, mostly balance from non-catastrophe homeowners subrogation XX ratio as an the year quarter our losses. of combined partially levels prior in and by

in and the a catastrophe [indiscernible], coast lesser Storm Our events Tropical also quarter. and personal Hurricane a total non-catastrophe were Consistent Isaias, experience Midwest losses quarter a reflects impacted half Dan’s the Laura. by to events. for West earlier, record PCS with the XX catastrophe PCS almost of very with active represented insurance extent wildfires comments the quarter’s

to and elevated to pursuing terms for we continued to to increases have and been and addition as rate some modify response activity. actions loss time, implement In mitigation we in review the loss in property conditions

to have us otherwise incurred we we line. to enabled have returns as losses would improve grow avoid and date reduce the to actions Our or continue

quarterly to agency our Turning strong. production, very were domestic results again

a automobile premium to response remained in retentions XX% increase from activity. increased quarter, returns premium change growth. policies and Renewal and in to Our pricing was was change contributing continue and the quotes XX% to retention property in we other strong favorable force as business. we in as remain high, improving with Agency, new both lower and we growth policies new retention loss year quarter, again the and in growing homeowners on focused moderate were of to remain delivered business business. while our XX% Renewal quarter accelerating up another increased X% pleased very force. year X.X% business Agency with the prior prior new in versus

During we of respond continued partners. to the needs quarter, distribution to and the our customers

the time, T-Mobile At response already foremost, helping to be events our deliver same on to professionals retain claims for capabilities my catastrophe new thanks both we our marketplace. mentioned new and for in number customers. and the and there our tools commitment which quarter. the the partners of are and continued delivering in weather both in us our add me of customers in app, First let key My to Alan and to distribution IntelliDrive significant attract

reaching also to client’s proposal, them our a We phone to the the quote that proposal brokers agents and mobile availability the the interact expanded digital gives their ability terms and Insurance and goal for about quote the After the with of trees with digitally Day Travelers both million our of transaction trees send making in we Earth more planting customers. Forests agent paperless customer seamless of XXX,XXX to XXXX. an plant one our partnership extended by for additional the American billing, enrollment

achieved value. examples that providing the well milestone experience to seek benefiting digital customers the capabilities already schedule, the and ahead develop and they ability while environment. deliver our illustrate and These in have We customers of our partners others our

the very We the pleased of future. I’m efforts in with our investing to far for to our results this deliver while are business performance teams’ continue proud so year and

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

Abbe Goldstein

Q&A. you we’re much. ready Operator, very Thank to start

Operator

Credit from Our Suisse. Zaremski first instructions] of comes from the question Mike line [Operator

is line open. Your

Mike Zaremski

Hey, good morning, thanks.

believe indeed was changed whether too, talk you had talking Thanks the quarter. Greg, the didn’t general about if were maybe can mention been--you’d for quarters. about to been commentary. and BI or loss guys can believe, you additions question, trend. prior I the that First confirm expense if changes reserve you we your at Greg, the of you that liability, case, business--the to when and overall has just in if Alan some I all any talk during that about overall all on segment, view adding Can

Alan Schnitzer

Alan. morning it’s Good Mike,

with activity, for quarter, year putting then frequency. less second talk to it loss the trend favorable loss prior what about Dan start saw of lower think and COVID, generally home, turn me economic development. Let over I’ll related maybe the people losses direct and the In so COVID to staying primarily we aside quarter, to a activity was in levels

amount of us going uncertainty, the There us comment loss that PYD? last to taken see us cautious we’re you a think caused quarter, still you very surprised we’ve heard repeat that favorable were approach us on news. this so you that; heard anything say be why in and fair and quarter Dan, about to trends as we to deteriorating. or is a As that recognizing but don’t didn’t again cautious quarter

Dan Frey

that for think are workers’ of unfavorable business pluses the Sure. in basically about about It XXX, in issued to second, million, Mike, recap lines about comp, a $XXX being of a was that’s more moving from to asbestos, that guy. than portion summary. we it PG&E million XX mention gets net lines, to years $XXX unfavorable a quick through we could net said ago. policies and as the and then BI’s minuses worth you the didn’t favorable That favorability very insurance’s offsets, XXX by activity about then, some so you parts that’s the in And we about those there some the said, other zero. $XX just a driven because the all-in, on to go compared the other other of good settlement, from for and XX% PYD so just million, really of that up million as was account single ended was $XXX are run-off modest I

Mike Zaremski

Okay, competitive Alan, your in about that’s in the talked to momentum you continuing expected question I regard is, guess, last My the helpful. remarks, in environment. marketplace. overall prepared

start and in trying shoes, will better excess get BI these pressure, in think continue trends know, trying offset of to for so I chipping for to because hard Maybe guidance. you continued say firm think years. in we when I the at been continue they’re a it enough have expect some combined under to to pressure, or get comfortable with ratios we’re to thank meaningful away to good the our we’re like loss - seems more marketplace the pricing you some income while, do is momentum that offsetting you guys--you in in are the of investment to we a of you comfortable momentum, of on a what haven’t investment get moving Clearly, levels pressure? lot levels guys to if color higher pricing outer just you kind

Alan Schnitzer

us choose rate do we’re at these Well we’re not trends, pretty definitely outlook many our ahead progress the that levels, making of for carefully. the business industry drivers clearly, so loss and but give Mike, matter we broadly, is and you tell are that are are the pricing adequate, for rate is fact just there lines environmental. that the to and going yet written of words I’ll of not clearly

loss weather social are that side, we’ve inflation wildfires the On losses, got away. burning. going got We’ve isn’t

for provide lines on continue returns. some be there outlook lower back are issues of driver environmental environmental--all markets rates so pulling trends positive to that these momentum for capacity interest out, do of - going as pointed the broader longer to in the think are some this are we broader you in will marketplace. a have some that’s We capacity, As

Mike Zaremski

you. Thank

Alan Schnitzer

you. Thank

Operator

Our Autonomous line next of the from comes Research. Tunis Ryan with question

Your line is open.

Ryan Tunis

you’re loss that my like like you’ve sounds to Hey would should of tail you enjoying to which I book correct? COVID to the short above average first think into morning. based, trend, similarly would thanks, question frequency I lines is continue good guess your type the I year, it in be lines, take the mostly that auto loss are benefits thought trend so that commercial mean coming

Dan Frey

Dan. right. it’s That’s Ryan, Yes

in to of our tail think of I cautious last quarter benefit shorter this we and terms of we’re the cautious lines, the recognize As the accident in year. impact quarter, much we’re but to net is current in that There we’ve trying COVID. be of be pretty some assessment trying how said, in

Alan Schnitzer

coverages, mentioned, casualty as the yes of terms you - in that’s But correct.

Ryan Tunis

I that. totally understand

auto type through claims, going were the frequency if commercial to claim seat There type in what’s we’re know yet? the reported be. to Just hold trying is activity what point that’s that, but your coming on--clearly results be could just this frequency benefit on that door, true, looking in from we delays at seeing some of the I not of to guess, at etc., don’t perspective get

Alan Schnitzer

to Yes, on number you that. know, a we’re put reluctant

Frequency it, to does you does. lot it quickly not I we’re - certainly going Ryan. than a know, do more think develop, severity develops but it

it ring, of couldn’t been cautious rings recognize enough phone the it if know of we because the we it, there to leave phone I pretty or some of was not think going that it some assessment. You as but doesn’t in but recognized we’ve the we’re if

Ryan Tunis

headed the other through didn’t, Dan, year but for probably is about kind I you into about reinsuring Then guess just I gone Are the had, quarter that worked and Is about the we’re fourth for we’ve is catalyst aggregate strategy I thinking doing should lower? potentially it. more into aggregate thinking of because treaty, ’XX? guess that follow-up are cats, going top. the year? we about How next maybe the thinking I expect Got guess it be or of you this a cover going to also something kind

Alan Schnitzer

before Dan the think just insert I’ll was work just answers that worked well. you take-- that fine. Ryan, It to do want treaty I Dan, question, so weather that the actually didn’t

Dan Frey

how any Ryan, to do in and as we reinsurance versus an I much think what would we’re for do year. and going of risk price then we’ll make any--going into buy. assessment We’ll decide

that think higher we probably a that business. business a To question how specifically had years pricing buy relative a attachment, again depend and if It the reinsurance growth in because to it. to a in writing treaty, treaty would just I say felt we to next it I’d maybe got how that we can idea We’ve We’ll last the and that But we’re see reflect was that will years. year. we’re your we growing we’re a anything, feel the weather said more the get, out in there the have a go plays that two underwriter, into won’t. little attachment think go environment for naturally point, and summary, lower to again that risk gross going and we’ll to do we’ve transfer we’re we I uncertainty so maybe we ago wouldn’t like and about wanted so. with glad about couple lines glad had we the we the

Alan Schnitzer

and The we would Ryan, I guess acknowledge that felt in to Dan’s ’XX other mentioned the ’XX. to treaty it some right, my prepare that remarks, on factor we I we uncertainty so steps as to bought exactly value wanted get incremental that, thing in view But and that of to we losses, after because get also in we’ve that wildfire is--and add can into taken terms next our of year. risk-reward the balance, that the pretty try substantial would reinsurance I

Ryan Tunis

Thanks.

Alan Schnitzer

Thank you.

Operator

line of Meredith from the Our UBS. next Brian question from comes

line Your open. is

Brian Meredith

workers’ first My about thanks. some maybe guess, commentary I Yes, comp. one, is

line given right rate are, an at that think some on that we component. positive to should that’s now? point where and what line I thoughts interest start But some see rates momentum, see that your important are

Alan Schnitzer

to that? Greg, take you want

Greg Toczydlowski

Yes, bet. Good Brian. you morning,

we a the advantages that’s some longstanding First, on writer the standing now but our bit like largest margins, little going we’re out pressure line, that and and we’ve always and in that we reductions that economic puts right competitive there’s line in got still. why existing through aren’t pricing that U.S. of Sure, it of

claim risk offset sure renewal one Workers’ new comp practices is new piece to them of specifically giving we’re our our to tools medical invest our continue in segmentation make reductions. selection We and those and some portfolio. of around underwriters, and our always management sophistication, our insight just price

in we’re future of the that about and continue you writer, so and more an time, our we than individual good As to we to account portfolio remind monocline feel solution workers’ the all an additions comp, the continue we’ll accounts line. customers write with of to

Brian Meredith

select, was improvement maybe rate That competitive, getting to that less comp in in due the select?

Greg Toczydlowski

so structure, a file more in select business select you follow flow to Well, you than look sensitive business, it see of cost market. where file the you middle than rather have more bureau’s exposure where little middle are clearly select the would market level, a the so a more and loss there both the linear at would pricing, you and in recommendations, in it that where individual you than it’s you in market feel experience rate mods middle trend going and of state discretionary to the and at reductions

Brian Meredith

losses? versus then cat of Great, non-cat break weather it Dan. aggregate to The how one much benefit that quick is is just for follow-up this out cover possible quarter,

Dan Frey

actually my it prepared gave in I Brian, remarks. Yes

Brian Meredith

it. sorry, Oh I missed

Dan Frey

to We $XXX total the underlying. was quite cat million went million $XXX to million It’s $XX right. and all went said recovery,

Brian Meredith

that’s and largely you, the Got lines? personal in

Dan Frey

goes different a cat is XX/XX more about like little PI/BI. split XX/XX non-cat two. the split PI/BI. The between is The split The

Brian Meredith

very you. Great, Thank helpful.

Dan Frey

Sure.

Operator

question next Our Fargo. line of comes Elyse from Wells from the Greenspan

is open. line Your

Elyse Greenspan

is Good first morning. also the on question cover. you. My aggregate thank Hi,

expect absence kind quarter? could of Given see that weather, underlying in quarter? the that or the is and ratio think that headwind we just specific the have should this we can of about improvement the you loss think how how you could aggregate, within fourth I cover, we to the guess exhausted non-cat insurance, that some there the is guys about business given a fourth comment from

Dan Frey

as Elyse, about just Brian’s underlying the in question, it’s $XX of quarter. being terms aggregate is is, more than XX was business got you XX% its deal in the I or points million said Dan. The insurance quarter, to so so basis it a to not not the in the of response about non-cat, think big could XX that BI that for impact or on as third

Elyse Greenspan

earlier, so that is of about think that good we also for for guys a type benefit that to rate fourth the improvement and COVID that we run margin could in you BI see Okay, pointed the the if for then out quarter? adjust

Dan Frey

XX. September the I of third of out sure. going that in knows is anybody sure all be the treaty Certainly I’m take you for Well, to as the recovery in quarter. quarter don’t expect fourth COVID think the I’d COVID is contained and cat exactly to recovery, could cease not the the what impact impact

Alan Schnitzer

volatility weather going to what look is Or like.

we from if going offline to questions to modeling margins, Elyse, the we’re trying take think generally can. happy away forecast get helpful, but to extent to that’s I

Elyse Greenspan

think think guide with second you’re least less a you as I then ratio. at of we’re on did thinking--and XX% but run I is you the rate, Dan, kind was and question that, was good said this have expense or making getting guys to should Yes, the guidance, my investments but ratio maybe some as a just good expect in, you guys could by due been you the price pointed is that’s of amount it earning improvement we denominator, internally? expense see counterbalanced that some out and that that in that we

Dan Frey

degree up ends the think we are those to that will get think do the considerations, where I into the would of line be make All that to in what from provide I is that of gives trying a growth, feel we we ratio. going over not generated that in being. go productivity really the come some ratio now. expense said in like bottom it a some we Elyse, or continue whether buck on us optionality additional investments don’t--we’re number to a leverage through that can for bigger we that bang couple expense let the and to are about places as we’ve down was time position we it change the the are to line. was seeking communicate years, the bottom a dramatic right we we’ve But of see the last efficiency what some it road,

Elyse Greenspan

helpful. the for that’s Okay, color. Thanks

Alan Schnitzer

Thanks Elyse.

Operator

Bank Our comes next of of America. Josh from question Shanker the line from

open. line Your is

Josh Shanker

morning unrelated questions. Yes, Two good everybody.

construction the one about and for surety, tell - especially are starts the about it of and terms a we COVID you first business. little can in seeing volume looked us is reasonable whatnot? bottom, bit premium pretty in economy The What

Tom Kunkel

Josh drop-off you up public morning. are bodies public and with if all surety the about Tom, premium. holding good When really and works in receipts side, written of driving is various up our is difficulties the but surety regular the construction the tax decline is it that’s non-construction what surety, think - projects, in non-construction quite This nicely, you that break the funding having

wait because to does have that entities government what might and federal shovel-ready construction, involve stimulus will with any other and states see we certainly the know, You have projects.

Josh Shanker

Is we be finished? already construction? Is begun not there able implication they’re risk have there because a that claims things with issues surety to seeing for start that

Tom Kunkel

They’re two different issues.

their a stopping, slower is certainly depends lean. really manage how on of in their project projects government not sound that and when Then company work as take pride lot that wouldn’t the defaults, We we will to a our differently surety’s or and As think sureties as the contactors’ and portfolio, handle expect different additional far It shrinking authority, unless ongoing as and financial size when see of position stopping. the was is going are in, work far by causing and portfolio stop possible. pursuing they’re this. that we pursuing the ordered economy times I the to contractors throughout how they perform

Alan Schnitzer

the performed and book, Josh, it surety just add same to I’d feel making underwriting in that did knows, the and We on we give construction our that, financial can’t books. underwriting the who decisions pretty commercial today are well that we’re the way through pretty business the who crisis, surety we any to practices about but put people that. the assurances good - book

Tom Kunkel

Yes.

Josh Shanker

definition volatility non-cat If we see? your XX reasons the and time the from back for up a that don’t Then greater in for PCF terms came catastrophe, a a we know time you of varies useful, volatility I on, greater on your when, to it and gotten margin. where hope philosophical the of difference with Is in that to we have or PCF otherwise wouldn’t are create results variance definition certain in weather the as goes with it years, between Travelers’ and maybe definition course starting seems gets definition, point still question. associated the go to the when risk

Alan Schnitzer

someday get on we’d to Maybe Josh, we thoughts your a it. think that question. the appreciate I about lot, so love offline,

business. defined is as year they that managed what are is Frankly, be an business, reflected an we the to underlying which that day underwriters PCF level day, is talk higher managing business going right internally, about the of about economic gets catastrophe we a it Our they’re manage will, that in be and longer of manage period a a same going in think a which to it’s line by We that line. there as a way issues I the we way get the it from or report we a the as level out right in, some much over the that numbers year issues, make from are in it, define think we railroad. time. externally might thoughtful loss talk we we is run to way the and way but managed be, definitional a to loss it event activity losses we and think approach consistency the time think out, or cat compared to and managing view decision to that whether manage the way to if right obviously the the We the and you cause internally. sort the it in, is layer, of working the get time perspective, addressed to to modeling to ought it’s

Josh Shanker

you. Thank

Alan Schnitzer

you. Thank

Operator

Our next Sandler. from of the Piper Paul Newsome comes from line question

is open. line Your

Paul Newsome

morning. call, business hone you in good was the in Thanks in for for answers. competitive on insurance the could particular. the the environment Hey, hoping I auto

I’d recently, my competitive that like to what it from an where give business business, you’re links is the what are you’re in much insurance a market sense up insurance how competitive We’re I’ll you Those just different environment. seeing today more was know home with you’re materially doing Obviously in home doing my market, so two the doing, you’re follow-up things and a different it pretty the which rate but market than is my hard environment question, clearly was questions. growing the situation. outright is and--and

Alan Schnitzer

Michael?

Michael Klein

Michael Thanks Paul, Klein. it’s

improvement to moderate see key in you from rates seeing On still intensifying a and personal That said, with of the trends it competitive adjustment frankly, part, numbers notwithstanding the term fair pricing, experience it of from auto that it’s of an call consistent market competitors line, it’s COVID it of talked in reflective about. but, headline other and of we and in longer some the think environment. the in for have related the most favorable we auto, some competitors, certainly lines are our frequency perspective I some competition relatively drop, some largely

Again and that ability auto as in our taking prepared states pricing, improving as in environment. at again of to loss in premium my the on our [indiscernible] I got to a in a agree it’s webcast loss, competitive tale as experience. we’re of see and about prices. price the putting sort those of a moderate the I environment, remarks trends. prepared two again, of moderating second pricing match of our to, now, terms right right? question Jumping in industry to script, insurance I home, remarks, in You’ve growth on pleased mentioned loss some with In handful frequency little to PI your - include you personal if look in with pressure decreases keep compete improving experience would auto That’s bit with cities, downward mentioned view does that the intentionally we pace loss you

You’ve talking we’ve got industry been here catastrophes, is about on - a non-weather business losses in as folks still costs there lot are well, property weather, of non-catastrophe but the loss pressure morning what about the upward. this the in talking water

our progress RPC We’re in in pleased with property.

that’s be been we’ve of performance the to look property we improving our we��ve and product at it, We’re market profitability, described while we’ve grow out, continue again objective Home personal X path to on. pleased rolled with the on and is in property that we’ll as and Quantum insurance as as the our

Paul Newsome

auto? the trying is grow I to guess between willingness home ask to is, in link much I the the versus what was how

Michael Klein

I would say portfolio. we look at it as a

our returns. to provide strategy seeking portfolio and, target and and at to partners lines be customers, a is work are we actively so with grow both solutions Our to total provider account again, to

Paul Newsome

it. Appreciate you. thank Great,

Michael Klein

Thanks.

Operator

from from Our Motemaden the of ISI. comes next David question line Evercore

open. is line Your

David Motemaden

thanks. morning. Hi, Good

NII it do Just of there you and can the can ROEs that firm. pricing guide and rate improve you had to ROE expansion after this is enough where interest to environment, actually impact ROE drag question enough offset margin XXX this the margin for a just and get underneath tax to expansion keep on in on you The NII the environment? per stable in think has XXX NII quarter,

Alan Schnitzer

written you here. Yes trend, answer improving well, and versus rate is if yes, loss to the we are from look that think margins at

into getting an whether to on charging we I’m product going the our model, income link the the pricing won’t, rates whether investment so guidance not predict we input investment going not very interest there’s and We’re for we’re price and certainly it. certainly return give will are or direct between so to we’re a but and

David Motemaden

on in Then guess if excess think just of Greg great. could you Okay, rate follow-up just the environment. just current losses I of BI. around you’re what another loss the closed, and gives a you of elaborate over trend you - point courts in bit a given unpredictability that wondering in generally uncertainty trend, confidence rate Thanks. getting excess getting mentioned, loss being I’m environment, in mentioned know, the of the just I you

Alan Schnitzer

different trend Yes, number production so loss earned statistics, bases just That to view versus we’ve rate shared loss there. loss that’s of sort one rate rate look and the of in trend. earned basis, and impact be and we you trend, clear, a before written on was at of see so the point our two

circumstance yes, some know, trend on the in this true to that and data thing enough it’s view favorability. big actual get at point news, in more like You process the not us to a it claim what is coming we’re not got you’ve rate going disruption there’s clarity we’ve seeing the previously, gap some favorable unfavorable clarity a and for losses excess in the more at the usual, there’s a uncertainty trend. resolve, in that time that that. long-term to as is for that reacting It’s and uncertainty Again, to not we that we’re take and but through, little and than shared is X% X%, confidence but where got I in quarter disruption got in perfect we’ve some basis loss but shared in we feel where uncertainty which in some economy we last this into

Operator

the Goldman from Sachs. Our of next question Yaron comes from Kinar line

open. is line Your

Yaron Kinar

morning good everybody. Hi,

frequency loss thinking assuming dynamic? First a it, that hand, how would could picks there I’m if in think question on and around that are benefit dual from of further severity the road. some so, workers’ clearly--or way other increase fair the Is about benefit thinking the you claims; a is ultimately result non-COVID that comp, down with I frequency of that

Alan Schnitzer

that due we that. so there Yes, there possibility, frequency, is down to the the about when some about the favorability think as but we increased contemplate non-COVID we related contemplate we trends possibility. certainly profitability of access when healthcare, really could a in longer be a do do It’s product, and and contemplate we to think severity delayed term road some

Yaron Kinar

already into is is And that picks XXXX reflected in or thinking the about be that you and you’ll as beyond? something that move

Dan Frey

basis. to a I’d say goes being to time on consider both, of couple think the net the view our the continue COVID, about that that in we Dan. of we’ve as and made go-forward product comment a impact It’s cautious about which we’ll

Yaron Kinar

I now been the are Then Got and in the auto inflation courts vocal difficult being tell, Alan, With seeing today? you to to shut starting all trends, in you’ve particularly years. you couple down, it. reopen, is firm, COVID-related know change trend just any it or last commercial noise the given too social about the

Alan Schnitzer

the us anything to quarter was which guess in and said a again to was, temporary can we We times, I’d we how Nothing phenomenon, that I the saw us extent anything didn’t deterioration favorable. question. is favorable I that’s share deteriorating. was what guess caused think a it’s so that trends, those caused answer I there any that I to in few the think as what believe see is

Dan Frey

that has that losses our seen is social of away, certainly and probably don’t related gone levels the same At elevated social inflation that time, the we’ve inflation to think long-term persist. sort we so Yes. expectation of

Yaron Kinar

Got it. Thank you for the answers.

Alan Schnitzer

Thank you.

Operator

Jimmy next comes Our Bhullar JP from of question the from line Morgan.

line Your open. is

Jimmy Bhullar

good Hi, morning.

had it’s Are are on pricing or - that, just where question the a workers’ in obviously headed? comp you line declining. what views you of I any First, in on stability that’s signs seeing been

Alan Schnitzer

of at are or be near-ish to pricing said not last we term quarters, but our happen, the is date data, expect relatively that the it’s in now Whether we point. near bureaus, we which at think quarter would would the turn look back term sure, that impossible Jimmy, would for outlook. pick coming think, repeat the positive. to and look we rating our to data really an going inflection but come then quarter, that when in I’d somewhere out I that’s what coming near we or It’s to exact negative, we

Jimmy Bhullar

then what’s prices price risk, the versus are decent reinsurance. going you’ll mentioned It you given of sort going markets and a reinsurance seems price amount. on versus on on last of like in reinsurance indications the views versus your initial Okay, risk Any year? up evaluate obviously

Alan Schnitzer

the in even extent buy fact pricing less that less underwriting, going up than certainly up than depending more, probably factors I that’s think on market driving that and we on our buy little pricing to relative expect reliant reinsurance frankly that’s persist. and that risk generally - could that’s we the reinsurance, we go benefit line relates guess so others, us could industry, of see the the to Yes, times, the in we going keep reinsurance could reinsurance the our--many said primary as To buy gross going the a little up, in is pricing’s we a many are, I basis reward like and to We we’re one us. it the of we’ve we compared pricing purchase. a on relatively would we a less we and that we to thing and as many is underwriter. to it, our intend less We a to add do. buy

Jimmy Bhullar

watching back just some things then stock what of start lastly, determine and Okay, you’re to buying again? to the that are whether

Dan Frey

had we could of didn’t to I we restarting think lot to the economic just be Jimmy, the things which so there’s going quarter, it going still and still quarter, as impact there’s right quickly we’re we’re that all still. quickly to control, a time the little a the is under to overall buybacks. uncertainty there environment a be that, brought in here just economic downturn, and very in to choosing depth a here are going top through cases Clearly of be of be are be second dip today, how duration economy, cautious right, line our COVID going so so both uncertainty, what’s how even on operating, third reopen, cat loss top like feel active to sit the

Jimmy Bhullar

thanks. Okay,

Alan Schnitzer

Thank you.

Operator

further have question. one We for time

from Our line Shields final the of will question from today come KBW. Meyer

is open. Your line

Meyer Shields

thanks. Great,

about taking I Was and sure it - picks to taken in benefit knowing to. in and were frequency light that of quarter? for uncertainty, sort of reviews loss the a talked was think had you Dan there only I before accident for of reserve recognizing the approach that - apologize year view not how you similar a conservative

Dan Frey

will The quarter. that of I’m a we I understand it’s sure the during the year in Meyer, result question. Dan. be the accident not the reserves picks quite loss made current

Meyer Shields

correctly, of had way that there our through wondering period that made overall work are we an the conservatism and whether an impact understand so on is and developing because as ramifications, reviewing as Right, with conservatism I’m I selections reserves economic prior you unusual fact the well. to the things differently if COVID regard

Dan Frey

wouldn’t so. I think Yes,

think in closed we settlements around comment as I we’re on that disruption some patterns favorability being basis. long-term down, a that few data the in and we’re the being impact see that a the courts taking but of Alan not minutes a the development made ago just assuming

Meyer Shields

A or think indicated tax on up? should if we about rates How quickly. helpful. can, on follow-up second if on go pricing corporate equity impact that’s really the return I Okay,

Alan Schnitzer

so models. other Taxes flows in it like input the are an expense, and statement, any the income through

Dan Frey

gets will like with needs so would a Yes, think it our experience said we But input into impact the be broadly, and forward. be wouldn’t field for a we’ll the our bunch times, many environment more that we’ve section the impact just pricing. got that pricing feel factored and level expertise, going as playing Obviously I be fine. Alan of to sure, it our would things do us, of what if one an risk just into it economy

Meyer Shields

fantastic. you much. Okay, Thank so

Alan Schnitzer

Meyer. Thanks

Operator

I back Goldstein closing call would to now like to turn the Abbe remarks. for

Abbe Goldstein

please joining out free morning, has everybody have Thanks. good all you follow-up, reach Thank this day. Investor Relations. if you as a to for us feel Hope much always, any and very to

Operator

Ladies and today’s you Thank call. concludes gentlemen, participating. for conference this

disconnect. now You may

The Travelers Companies, Inc. (TRV) 20 Oct 202020 Q3 Earnings call transcript