TRV - Earnings call transcript Q2 2021 | The Travelers Companies, Inc.

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Operator

Good morning, ladies and gentlemen. Welcome to the Second Quarter Results Power Conference 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 July 20, 2021. At this time, I would like to turn the conference over to Ms. President Relations. Vice Senior Goldstein, of Investor Abby Ms. Goldstein, begin. you may

Abbe Goldstein

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

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

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

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

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

Alan Schnitzer

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

diluted half first of for million investment pleased was and second income XX.X%. for the return share, Core a report quarter the excellent on quarter of total very to $X.XX the underwriting generating are $XXX per results year. We or equity

underwriting all Underlying In terms of losses, higher billion than excellent as prior-year underwriting net contributed core catastrophe favorable premiums the higher quarter development, income earned well level in to $X.X lower results, was of an of X% driven income. reserve record as prior combined underlying underwriting income the by XX.X%. and ratio higher net and of underlying

the underlying were business points premiums Business margins. continued each We meaningful Personal net fundamentals combined strong both the three delivered Specialty and continued In our are Insurance of improved higher segments. and by ratio with Insurance, premiums and earned increases earned in net particularly pleased the X.X of underlying strong Insurance, and

to us past shareholders. million returns reflecting book capital our our adjusted These the enabled over share income investments, strong grow portfolio making and results excess portfolio. value per excellent high generated non-fixed sheet to balance $XXX to for investments year XX% after future significant our important returning by very the of Turning after-tax income net quality with investment investment together on our strong

including of we of million million During shareholders share the quarter, capital returned to $XXX excess repurchases. $XXX

organization the partners, to distribution execution together we and with strong our to Turning customers our by of value the the top-line, offer franchise field excellent terrific combination produced results.

industry's renewal in written of few new Insurance of seen Renewal change record Each premium by rate retention in in renewal highest grew quarter. In our X.X% driven the ticked the growth. reflects after an premium U.S. the business, adjusting net refunds grew XX.X% a for and detail comfortably social the the year of up rate strength to X.X%. In also of a premium the pricing Greg to businesses, prior of and at increased estimated low insurance, interest benefit inflation. pricing change, written quarters Specialty billion, reflect our to liability a headwinds and more change growth improvement in trend, X% segments environment. including commercial industry, change nine loss renewal encouraging retention eye rates retentions growth retention in three the point exposure will share Combination about Inside management business. while as was in continuing in meaningfully Continuing economic remained the strong. pricing pressure a pricing pure ongoing to underneath of near $X.X audit margins it we & will or X% change high view almost to included the change increase strong high premiums Bond driven premiums minutes. by During continue in strong renewal strong which renewal by premiums sign Business XX% of outpace XX%, In activity. and and the which weather we've returns by net quarter clear premium written renewal in. our contributed continues net runs impacting volatility, record top-line X% premium

to time. loss We to outpace expect pricing continue trends some for

driven quarter. growth Insurance, to excellent auto and premiums and Net strong Policies are business. this in-force increased new Personal at was quarter. in written other continued for refunds retention the adjusting X% again by record in Turning prior homeowners in premium the levels after production year both

personal pandemic of and impact been equally time lot the on which this by claim Mandate accompanied and to Perform comes the focused attention frequency of to seems to be auto. a business. We've Transform it While attracting

in X% high. This Personal Insurance bringing quarters force We are six need. over of what give three-pronged our to X% they in other customers strategy results. serve them meet they they very last the count them want a We've where with record from PIP pleased demonstrates the success the ongoing domestic how and to are, to accelerated our growth policies

a Michael profitable share invest deliver we forward provide to to also in detail advanced distribution growth. Going will in and continue will continue segmentation minutes. experiences great more to channel few

half as the this first effectiveness demonstrate continued investment the results attractive year to execution well the and well as grow Our at of consistent for top-line our quarter of successful of philosophy. our the returns, defined bottom and strategy the excellent top line

focused the well and growth to been have we achieved. an has and profitability agenda innovation important executed Our contributor

will our expertise, of lead our and continue priorities to We relentlessly great extending employees customers, productivity improving risk to and and experiences providing efficiency. pursue partners our distribution and

time. the continue to I'm well-positioned With value the to best in turn that, meaningful and pleased are the With shareholder Dan. call to have momentum we industry, the we to over talent over create

Dan Frey

a income million year $XX across of Thank you, in level catastrophe Alan. of significant Core favorable was to income core development compared million the The a more result increased losses, factors of second year business, quarter portfolio, including improvement was our the $XXX prior underwriting and investment the positive prior loss for reserve results non-fixed quarter. the income. lower improved in

to year's second $XXX pre-tax from Cat Our compared quarter. losses $XXX results last million of million second include quarter

on we aggregate about are a This typical still given retention a billion what losses accumulated were below of somewhat second above have the qualifying for quarter's year-to-date have property cash billion high year-to-date income the first each we have consistent $XXX of provides of a level coverage pre-tax ratio assumed our Cat aggregate basis increased what assumed in the losses strong in to higher million year. would premium to the a on level segments above XOL reflecting million million Treaty. of catastrophe $XXX X% first The Underlying earned and underlying of retention a XX.X% aggregate treaty combined prior $XXX of losses underwriting with $X.X losses quarter. toward $X.X On month. of we the quarter, but in

both Business As you'll ratio hear Specialty in Greg, from combined were and ratio Insurance the Bond & and offset an Michael, in by underlying improvements combined Tom the increase Personal Insurance. in in underlying

offset ago than up is auto last customers. quarter to ratio losses pandemic premium increase benefited than as the excess lower year's trend from provided X.X of year's to prior of comparison related expected to auto loss Expense the given second result quarter ratio Insurance XX.X% loss X.X primarily points by last our refunds low we as result very as beneficial the from the ratio last more pandemic. elevated that came the earned quarter The of a pricing unusually auto year's Personal at the due Some year in underlying in points of impact quarter. was of a was personal in personal year loss in low the was XX.X%

Specialty Comp in development, was million favorable reserve development accident Insurance, by years was PYD. at this Bond prior-year and $XXX loss across favorable driven related property million after In favorable pre-tax Insurance in net $XX to partially Surety and prior Fidelity better million off Business years by Net Insurance net experienced $XX In in accident loss to both income net came one driven losses Workers of & from expected investment Personal recent than $XX of pre-tax years. Turning PYD in reserve of [ph] experienced auto resulting better to recent expected quarter. than improved million by year accident work. multiple strengthening our tax offset reserve favorable in

from in portfolio of down markets year tax. as decline $XXX higher yields. assets quarter particularly in this benefit a invested prior offset in results million with strong slightly the more turned contributing income non-fixed performance were income fixed the our quarter returns equity Consistent was levels Our by reflecting than after the expectations, from

quarter. NII $XXX securities including million $XXX of remainder short-term fixed after-tax the per For and between expect income million XXXX, we earnings of from

management, and liquidity or ratios Turning for at holding to the billion All cash $X.X again company were were than capital operating flows target $X.X we better billion. ended capital strong. of quarter with quarter the approximately our of very levels

unrealized one with to took our webcast March June on X.XX% Treaty a as million highest our terms yields is July $X.X share help and rose the consistent structure reinsurance spreads XX XX-year by in excludes an note basis. conditions pricing X Cat year. portfolio we renewed for bonds growth let $XXX market generally quarter second July and $XX at fund quarter lowest our investment program quarter XX XX% $XXX second representing summary of the direct generally The $X.X our achieving the insurance advantage main of at per quarter to ever declined future our Coming debt back up billion of year-end investment accordingly Cat tightened ever unrealized me We coupon and on at the Northeast favorable $XXX with for for net issued and with Adjusted of XX. repurchases. and that million during XX-year second presentation credit the an value similar to end of increased $XXX.XX from moment, During exposure market XX-year spreads slightly of gains only the and adjusted share back a since was was dividends net X% We've losses billion up raised during to company. substantially our reinsurance to treasury of XX, book which after-tax million year-over-year. as our gain US value a renewals. million and attention and your of in prior in a on second the Slide The capital shareholders returned up issuance

treaty X.X attachment $X.XX which point occurrences Cat today was year Our from earlier reset its reinsurance certain [ph] coverage, term. year-over-year. the Form our Cat in complete flat XX-Q XXXX Cat general XX-K. billion covers cost total multiple annual in we is $X.XX of in hurricane including was aggregate A for an our the the is adjusted the program our arising and from accumulation of to XOL final the included now In billion XXXX of losses while more bond filed the of our property four-year description that season,

about over inflation like Greg, consumer call I'd a of the few price lately. gotten as to lot comments to make turning attention index Before the has a

us type of compared inflation We degree our our social are are hear to type short CPI medical in overall leveraged profitability experiencing strong inflation inflation tail as impact inflation. One relatively is PI severity. to a from say place in less elevated CPI lines. you'll and Notwithstanding as we can Michael,

policy those earn short quickly. tail and for limit of increases the that takes in impact periods we the although reasonably to tail price can period, and over short relatively exposure it lines time However,

Additionally, remember it we have inflation. to hedges mitigate is effects our in business some important that that natural the of

associated And to we've contributes insurance to often as activity is exposure wages higher higher asset exposures. contribute before, inflation economic values, all margins. which higher most stronger and of as improved higher First, discussed with

correlated are Second, would seeing moment, not we're it to rates our the returns the higher at investment as to although portfolio on interest inflation benefit we inflation, increases. extent from

balance establish to uncertainties we when to reserves. for we sheet call a loss our environment and I'm when the of pleased turn discussion reiterate Finally, are Greg conscious rates [ph] Business that over we Insurance. the of our and that, inflation And surrounding it the with

Greg Toczydlowski

financial terrific for and compared great incomes in which execution the net had Segment with Insurance underlying prior marketplace. underwriting primarily loss catastrophe all contributed Higher in results strong a to Business of improvement. pleased the XX.X% underlying the $XX million was three million quarter Dan. year from a quarter second higher with quarter improved quarter. prior favorable Thanks We're reserve of investment losses, lower points $XXX the X.X XXXX, income year the and particularly of income, combined ratio things. by the attributable to year-over-year development, to

cost about exceeding X pricing First, the improvement of trends. loss resulted points from earned

the reported related resulted prior pandemic. reserve comparison Another improvement capital modest weather. the charge in the quarter year we net also to third, the took non-Cat the point to from lower And

favorable while was improvement we year-over-year than weather, quarter. just non-Cat as X.X the the point I've quarter's better of terms assumed about what was mentioned, X.X this about In for result

written up back business including volume. strong Turning to premium X% pre-pandemic renewal year-over-year levels are benefiting both higher to strong that the and top-line, exposure net were levels trending renewal and from new the change rate

Underlying production, customers renewal of premium points improving growth X strong outlook renewal but year. almost X.X%, result historically exposure and higher the achieved As for for healthy change rate quarter of the from was reflects up businesses. our and we second RPC, domestic that their trends in X.X% change last

to improved to stability in said, high pricing markets. continue Alan historically retention, our As the speaks pricing to ability of achieve with the

moment both the businesses. middle contributing. and markets with X% a individual I more results those than select more up in discuss in I'll was when business get detail New to

of that We of excess now our significant in loss production been pricing profitability are in improvement very results marketplace generated aggregate pleased with for in these [indiscernible]. some and estimated the has written execution. trend resulting We've our time

in was rate excess quarter trend, well loss over of change of For this renewal little X.X% remains a it sequentially.

context the which to three Let Casualty, is compounding me A substantial rate National attributable two Middle that. of strong comes moderating our provide business of specialty in The recent around years majority these Excess rate a more a little rational of is very inside Property. decrease two after increases in and Market more units. businesses.

were broadly, across seeing rate continue of across we renewal profile. in still sequentially is rate stable rate the double-digit. both concerning of increases our business while distribution So improved the be tempering appropriate lines for widespread down change rate More return was Also to the those Insurance and businesses, are and our increases accounts. Business of

Slide our National we at on Middle demonstrated increases rate in XX, from XX% last accounts businesses in and year's up quarter. the in quarter, second achieved XX% Property renewed second the of As Market that

income and seek Given our continue to rates low persistent pressures fixed loss further margins. we yields, improve to will

across non-rate to continue risk focus all levers We of will the to the and also profile profitability on improve portfolio. our

increased [ph] underwriters in utilizing deductibles, and reinsurance underwriters and continue like terms our transaction. are be business, active by tools continue example, in For conditions of enhancing focus our those management National profitability meaningful improving optimization our Property to our transaction to in all on and levers. Changes terms in supplement

X.X%, select As improved change Exposure regard. the higher for X% an the second in rate into retention is as the come than reflect of execution as quarter with was renewal in the in we're sign of and XX%. certain quarter this which growth our more we're XXXX, These pursue X making progress the for business. over up we than individual they pleased deliberate results while segments business returns was encouraging businesses was points

business XX X.X This is states. our over now fast success BOP industry-leading new state-of-the-art easy includes experience. quarter quoting was a product continued by and segmentation in X% up year prior driven live product new of which Lastly, the the

Middle remained agents' We loss rate excess are at change encouraged and and our XX% both the trend. renewal with both high. X% as historically in change of well new adoption submissions In retention of Renewal policies of new product premium and of up. X.X% are over strong were Market

larger the the the of was quality driven quarter business well year by some in in XX% the flow new as up improvement over accounts success Finally, prior market. as with

As always invest Insurance by quarter up, selection margins BOP around the growth. in disciplined I'll to we with terrific the call To our We're and we that, pleased underlying underwriting. remain had for a Business in and further and business execution continue the risk measures. sum improving all profitable long term the to Tom. turn With over

Tom Kunkel

$XXX developments and Segment and of quarter. million, was volumes. more cost XX.X quarter & pricing favorable ratio. posted Greg. Thanks growth prior loss The X.X reserve higher combined underlying returns by that from prior-year double Bond considerably underlying than income underlying driven significantly year points excellent business as Specialty lower underwriting the improved the quarter, improved trends the prior loss ratio by in a year margin exceeded and over drove

the record an the top-line, with was quarter grew remained solid contributions XX%. all our rate. premium XX.X%, Retention near exceptional by change to record Turning a driven liability, management from net at renewal strong In written businesses. premiums XX% in

New business meaningful rate. increase strong first for grew retention the growth last the strong posted since of first increased second again pricing. X% pandemic and the the including quarterly quarter beginning year, international and time of beginning from also our of since pandemic the new the Surety business with

to successfully Insurance. over economic it I'll and & were Bond manage cycles. through Personal a and of our excellent So Michael turn results now Specialty And this reflect to ability variety business for business

Michael Klein

underwriting the these our benefitting detail quarter million $XXX and offsetting in net discuss from Segment improvements reserve which prior higher investment moment. everyone. lower good and a Insurance income Partially a was second higher favorable up will Personal results. more underlying lower I We're Tom catastrophes, year gain development. million in net quarter, pleased from $XXX morning very was with year Thanks prior of income

X%. combined XX%, during with year from ratio $XXX Net of the written quarter by second of loss that the domestic million ratio modestly X.X for was reflected premium excellent the quarter premiums Recall a with levels. year activity domestic XX.X%. points delivered we of prior quarter about to these grew a net Adjusting pandemic. customers claim automobile in premiums from the XX.X%. improved impact X% which pandemic. to initial points XX%. the provided current Our the impressive quarter underlying very refunds, response to ratio written premium compared homeowners pre-pandemic the months prior another quarter, combined up in refunds an X grew The combined and to reflect year The quarter results benefits automobile XX% although lower prior the up up of lower frequency Automobile of strong

As claim continue closer third and into that the we quarter. trend to expect frequency was pre-pandemic levels would exited quarter, to we the

parts. current strong particularly costs driven used vehicles profitability also increased by collision Our and quarter severity, damage third-party in and physical reflects higher claims primarily of

experience to loss later plan pre-pandemic states we levels, rate as selected we begin this auto filing in balance approaches volumes As to business and profitability. year, increases for continue

take includes ratio of quarter, the to auto. combination we of increased an which favorability due in year less repair in and combined a actions the reflects of expectations, second to this are for non-weather continue future profitably than second quarter was a prior the increases. non-catastrophe severity with prior higher will labor into weather costs increase homeowners line in the six grow active a of time increase quarter over results, to severity losses. underlying saw to quarter. reduction some earn the and were In by catastrophe increase rate combined of our XX.X and The continued frequency Partially year water point losses. it lower The remainder reflects we in positioned point elevated fire X but elevated well other, X/X losses ratio. in offsetting While material and Approximately points XXX.X% was the driven our catastrophe

response We factor cost into monitor and increases trend loss will to continue our pricing continue to decisions. and them to to and in underwriting changes trends, see inflation great actively these

in-force another automobile remaining production, domestic XX% excellent by a retention up Domestic quarterly premium, Home strong increasing X.X%, premium new increased was XX% successful at to and XX%, retention reflective of XX%, homeowners to policies quarter and with renewal increase business new grew grew the Quantum delivered business to change force X%. activity with other ongoing strong growth in slightly X.X. and and of increased Policies of along average X%. in Turning quote rollout

structure reflecting growth and are homeowners As both Alan to to our history, our effort both rating and record in improve modular X.X auto levels, are homeowners we Actually, give to to has telematics, as and seamlessly continually across what us perform long-term designed launched Personal policies it Quantum us a to they Auto levels. insurance policies our deliver ongoing new and such we history mentioned, vehicle customers When introduce our with Insurance. performance. product variables in-force in-force at transform This auto pricing across need segmentation. enabled at record and allowing prior

improves Regarding which we've our driving telematics, to fully offering, IntelliDrive seen experience, distracted match generation increase by XX% take-up second driving mobile and rates to of launch ability the redesigned features price behavior. since monitors our for a

Our while auto X.X in policies to our is and combined of in in-force, growth offerings. solutions total now consistent Quantum very value over auto product continue available Home our distributors customers states, and well providing for generating aligns XX in property momentum see account and goal The customers. with

customers distribution are. meet PI strategy where our allows multichannel Our they to us

of a existing well. success continue As to result of new products, perform our relationships our the

order Additionally, also digital customers serve we've we be they to seen In more to are demand investing growth. our meaningfully for to contributing capabilities. which want our agent is how appointments, served, in

in the customer digitize XXX,XXX app app, MyTravelers this customers to launch we the earlier it the over with year. advancements journey With since our already downloading continue mobile

that in distribution invest what to profitable they they they them meet where Going are, growth. solutions to working them partners with how serve deliver forward, and we need, our while give customers will continue want

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

Abbe Goldstein

Thanks, Michael.

to for Alan back up open for it to we call a Before I'd over Q&A, like the moment. turn

Alan Schnitzer

Thanks, Abbe.

partner we last morning in turn friend, impact acknowledge to Q&A. thank retiring before Tom want our piece a and leader to to it September as our and and will is, one Surety be we I profound. of very Liability businesses bittersweet XX-year successful at has business the been of Management career after and spectacular this Kunkel Travelers As have as

team with excellence our succeed Liability currently results that I'm years, organization and leadership throughout from his years. In & Travelers. addition of candidate many pleased financial many care, our fostered of to and over Tom. culture to reasons Bond Head will extends Travelers Jeff a the Tom Klenk, take exceptional of and proven reins a Tom's so business Specialty and member delivering It's has team community one the perfect why leadership been Jeff of XX and He's Management Tom. the for a leader more up than throughout

our in your Jeff from call. all that, going to with earnings we're questions. Tom, professionally. quarter and hear happy we're And miss You'll personally you take October to on third

Operator

you. Michael Thank our Morgan Stanley. from question first We Instructions] [Operator go have ahead. Phillips the Please line of from

Michael Phillips

your the I that little kind confirm kind first, of question now? driving might to longer than bit of But it? be pronged severity -- not you driving benefit lasting more the that your around you frequency that Michael, starting Maybe peers. pre-pandemic some you on that's and comments of back business a Maybe but the want to is it's if till have of said some seemed and towards it why not Is rate? of more to issue that. good centered I I that morning maybe come in of levels, comment, can the a to little the guess guess, need I more it timing Thank you more driving for preferred. frequency rate is the kind A now, question expect some take there, timing increases frequency rate, frequency what's not mix drill to auto you, begin couple file rate, year. you'll for you it your your think is, severity? really to and continue, rate year Thank that's of in what's some of and everybody. of you. why later personal and end, the for wait the in why driving or later on then need if So of a And what's

Michael Klein

Michael. the filing speak. putting of We're the Sure, and question. Insurance Thanks function in packages is for timing just we with together, State a process. conversations really the Really, Departments actively engaged as

that the that the total in used value total XX%. guy particularly us where we're to average I a are good case of seeing particular, pre-pandemic out you function So bit to right? frequency filed of It's in of is of pretty on and is towards it's there, my up -- of frequency to That the You've significantly. total just question pressure on I about question one injury just get again up because loss the get upward little not losses, pressure with to on process of we putting working approved. and about up impacts of severity regulators got more rate news a think waiting we a is cost that's and the example rate. severity, get But the increases vehicles quarter repair And recovery for severity comments and your returning being a in quarter example out more offsetting total coming it. levels car of I give an seen physical flagged pressure, prices the the and net-net also seeing severity some can There's all pressures quick while upward that's salvage the cash there, damage vehicle. about

to and frequency to really So answer drivers. the on we're both question your responding severity

Michael Phillips

your good, to mean, quarter, I XXXX the, XXXX, expect Does it than second rather sooner XQ of than helpful like were Mike a a something is pretty XQ maybe you'd I'm you up on in but sorry, than better process, still later. that's follow more still margins sounds and Okay, timing, just today that. rather say If you the the do better change. things

have -- margins industry from you to the still good some better So much profit guys, level anybody with here. expect of you maybe state say, really do and the of still a pushback at

back pushback the still? push pretty rate might I much to So you that get on, you rate, don't be there returns but might from bit decent some a be to ability expect get want given on of know how a that

Michael Klein

that I Yes, it's a what process described that experience -- that regulators thing conversation due think I pointing the to is Michael, that was part that about with that historical pandemic. a think great out a also extraordinary really experience the it's really it is is event is I observation has the of been. part But and of favorable the

experience we're trend. states weight experience quarters about in state. so versus and in We've our in rate And by the talked that take varies them of And views country. did reductions prospective conversations the fact point over also, prior with historical how about XX state-by-state we across starting to varies

those historically. is And initially if of some could in some that we see we didn't certainly looking rate rate places the state take than of back, where to conversation a which the are so increase we're file a different maybe

great So observation in we're speak. and really of as that again, all we engaging part process that

Michael Phillips

I it. much Michael, you Okay, details. very thank appreciate the for

Operator

is from Ryan next of the Autonomous line Tunis The from you. Thank question Research.

open. line Your is

Ryan Tunis

morning. Good me? guys you Can hear thanks. Hey,

Alan Schnitzer

Yes.

Ryan Tunis

phone. so to office the the getting about Sorry that, just today, used old got back to

or think back think what to of about you're seeing just geographic Michael, the some kind that seeing preferred I trying you're loss is most? auto, elevated mean, trend, standard? to on the wanted personal of when it more keep at I where looking So it the variables the we you're it of most is versus Where like come loss to more about? are kind

Alan Schnitzer

the Ryan office. Yes, morning. good and great back question, to Welcome

driving indices. close in it, We things pre-pandemic by by areas to are return are levels, across the activity We and at data country are seeing there of most geographies. a broadly driving But to look seeing places at to state geography. a speaking, like We normal return some than others. variations again look closer

quarters, comment and continue of We also to is past seen is has there to the quarter, look about at the levels. that put my commuting of part that's our part different started there as and all we've which months monitor but to you quarter, benefits have frequency past, about and And and we wanes when we've frequency, trends exited the the saw versus been about historically, the returning a benefits of still clean non-commuting second miles you the miles. than comment frequency pre-pandemic throughout over as today miles wane together, talked we mix few

Ryan Tunis

the follow And I one my is Got home up it. side. guess

we've on home a is the price loss since we ratio should XX. factors clearly elevated. ratio bit that's somewhat loss much down something of moving the of on think alleviating type attritional home, come above in But XQ, putting the how quite of So That's loss like lumber, or on putting is seen terms timber forward mid home? that on an ratio was the of pressure about the

Alan Schnitzer

Sure. It's say I a great would a question things. couple Ryan.

about remarks losses particularly, non-weather and that of of severity frequency did and talk some and driving water in First, underlying deterioration. frequency my I and fire severity

we're property finish quick your clearly, did come make severity the the question. and just though So take lumber prices we I in seeing, of observations uptick talking item, frequency the auto step as and a a not answer back are in just back and a see a couple and are to item then about we would and quarter both.

with total business. to If ratio, ran you basis, quarter, segment a when long-term averages look take is, back step in underlying consistent and the basis. term Auto and it's average. long ratio And at very the And at overall quarter, the combined the look average for those in run not still a surprisingly an this points an underlying it below and the property the X ratio both long call you it, combined combined the above an on in on X

sort property, what second talking here. remind of you ratio I'd gives in you property, also combined the bit we is the ratio, we're an quarter. that little So about magnitude highest that order year the a see of the the of in of just combined

So you second materials. the into sort a severity pressure and But the saw put of quarter labor said, of context. we the quarter got to that was on combination

labor followed are materials. lumber there. Double-digit at is And when roofing we by materials So in really in single-digit to cost the property in the in loss there. certainly by increase mix, increase followed plus increases there. is contents, High in it's labor low double-digit XX% look our in

of in lumber and even volatility component come severity answer your short prices costs. relatively think to that's frequency is small But the I if still question a down, attritional the even back office see So in do period-to-period if property. loss we

really run quarter some in history. property at that's driving look relative property, rate is why to renewal long part the back, those step focus continue the and change of pressures. of drive you where So, premium again, to our that to the and was to we're of the end gave I view of And take in at day, we we address a

Ryan Tunis

helpful. Thank really you. That's

Operator

one David Please Motemaden the from next The is from you. Evercore ISI. go ahead. line Thank of

David Motemaden

the morning. wanted follow-up on Good to auto bit side. more thanks. Hi, I a on just the just

you're lived just how be sustainable? Michael, I'm that or witnessing I maybe, transitory balancing about the view wondering, but obviously taking short versus thinking these could severity in what guess, be not rate is are and that severity you rate, more might you're increases maybe are taking So increases

Michael Klein

talked a it's Yes, severity fact a talked we've take great pretty prices. trend about of time, consistently long we've as we view our when question. we over about that, trend run certainly, the that set And

starting you, point? see a auto Now, if factor are our say I in of uptick inflation we there's in that is damage costs, frequency severity, not, we'll or materials is think we is, seeing a is the I a we've that's cost to frequency question of severity I'd How basis. the and you lot much apart need your and if towards transitory experience we continue starting is on physical best the to elevated, key cost, assessment this the point or the rate opinions elevated estimate that's trending what think around we because for as into question. is level varying And, pre-pandemic anomaly? in loss seen point an in elevated seeing experience our you're the we're quarter an again, that Or training broke and and your starting off is factor that continuing. go forward

Alan Schnitzer

add weather inflation We're out that, Yes, to liability. let the looking me over is on view of inflation, transitory. our duration the weather just certainly

cetera, So short that's et relatively inflation, impacting line. about we're again tail cars, your talking type lumber, used what CPI

long can see case. claim comes And we it that react because So reasonably forecast activity pretty in quickly short tail, and in to we it don't to quickly. pretty it's we term the really quickly, have

Michael Klein

Yes. Great Alan. point,

David Motemaden

your Got on sort that, That of just makes it. sort of for non a Alan behind in maybe could sense, I process that's Fidelis. the on helpful. investment thinking and offering the and the admitted hoping maybe thought there? maybe was And elaborate you own around aspirations then question

Alan Schnitzer

in in, Yes, of which We've in thanks. Thanks got to have interested interest any for interest question. that this, it amount a as well. we're fair I'm thrilled

Let put in bit context. little of me just a it

terms fact that us. you not didn't As investment it disclose can a for from the we material infer is

just as we of But progress a even something has So interested management said that, geographies we're could expertise E&S and activities, think non-admitted I having gives strategic provide us niche, us that that and that's when a and in this to that, we that lot important background And think capability. that innovative underweight into said, as things in we're time a we've successful about the well. team not a we're space. teach window said some in with. start investment And, long for

it a for is really about So learning us. exercise

David Motemaden

Got you. it. Thank

Alan Schnitzer

you. Thank

Operator

the next from Jimmy Morgan. from is of The you. Thank Bhullar one JP line

Jamminder Bhullar

Hi, good morning.

pricing? the in a would an So begin up. things you're think expectation terms just of have then I follow sort first, are Workers that? what Comp turn market in I And you a to seeing seeing of there's that been question on

Greg Toczydlowski

is the around some of payrolls, been hit morning, We clearly favorable cetera. and we there's wages, quarters Comp around. back bottom that then Yes and Workers et to Comp Good this Workers a thought Greg. were to activity bank the couple going continues bounce pandemic, with frequency

As to negative in terms anomalous loss with factor and going I we are bureaus if they're in an be into cost think the they the the coming around work ratemaking. That's they will their XXXX. how key of that to less recommendations, year, continue treat or overall

book So every see we hit of quarter, We didn't were overall positive business, quarter. on the slightly do a rate quite in but improvement it negative number. we the

Jamminder Bhullar

of reopening inflation? little affect and social incorporating with And in your loss ratio the does assuming, bit toward we high few inflation past assume costs you the been pickup on start sort through of loss And have then sort should of we have been inflation fix should of courts, and in see to social a that social continued you how your that quarters? a

Dan Frey

one. that take I'll Dan, is, it Jimmy, Hi

that inflation even we losses was of trend the it off social of view elevated elevated that has nowhere, level saw, going that the to gone losses going to pre-pandemic and higher call loss of persist. of that that persist are level have and We taken the level

a it's So make backlog the courts loss given are as civil to be question whether in-person virtual having cases to is for assumed of over some reopening see going that's a much and Priority assess past the to or and closed be while the reserves. we still cases, assess is criminal we've courts discussions I jurisdictions year. in in for continue some what jurisdictions. before our to work of picks And through think our going we been

it's we be answer. know the think before a to So I going while

consistently there's we think environment in answer I view uncertainty a think and year reflected were of taking our ever social trends is short But reserves. inflation numbers. in said our view to as as pretty and that uncertainty, last the we there's loss is, question that that's cautious the in strong and because we

Jamminder Bhullar

this Alan just investment wasn't the should from we large lastly, that and your noted any you on on year? share then Okay, I the disclose plans should means there that impact investment, fact that a didn't that be price buyback the Fidelis think for assume it

Alan Schnitzer

capital going our part and by of not definition, management to almost - position. overall a impact not strategy, going to our capital it’s have on be of sort that's Jimmy meaningful it's

Jamminder Bhullar

you. Thank

Operator

America. go line from Please next the The ahead. of of is you. one from Thank Shanker Bank Josh

Joshua Shanker

everyone. I Yes, on questions to more. talk lot a just there's I morning, been of auto, good have know personal but one want about, I

in best terms -- this the have of XXXX. since for guys in been policies new month seen You growth that back has you

the price pandemic, you've because post in of adequate price on firmly in you price leave? the came they a a won't that expected risk pandemic put Given good customers there that but return, who and be might frequency to is

Michael Klein

the a Yes, improvement said, pricing some levels our price we other been retention to, alleviates can growth than there's you few past when some has of including auto expansions. risk slight pressure I I point on elevated to growth our prices. a you that We've seen with we've our lot of always point distribution Michael, close to a over of that as of auto. are That quote and some growth that It It’s we've certainly you Josh. things of start months, comfortable we a and increase in feel the in suppose there's of activity, books. the of key driver putting that growth, business on some been IntelliDrive, drivers mentioned of as lot driver PC But a probably of that. that flat. just can essentially drivers are maintained there rate there's

Dan Frey

to Josh, on want just Hey comment Dan, it's that.

having timeframe. understanding consistent of the in not We environment. auto auto I've back recent and over book pricing in XXXX, time to I in done we think a appetite, in discount we've take appetite did last job and that shrink in terrific significant years did terms XXXX the a our pointed

Joshua Shanker

lot experiencing loss good courts. a of that we XQ losses you and basis interest point the overall? topic, between an Can the occur during experience? more cost with convergence still sort whether because the that didn't pandemic the of right below now model unrelated and cost reopening actual whatnot. trends assume but point, you're you of incurred on talk court I Is about for loss prepare and Good far in narrowing model nature an that are seeing

Michael Klein

to question, or level of losses losses? you you mean I ultimate Josh, in the the make relative the sure loss incurred ratio trend understand To the mean,

Joshua Shanker

is other that you through assume come claims your that delay. huge because have with and still persist? that, you I But of mean, protections? your that's assume because X%, but X%. turns loss the cost Are it line wasn't X%, experience the closer pandemic, business, reserves you, pandemic coming in of conditions haven't of the courts line reasons, for we in model are just me backload every loss Or during that a

Michael Klein

to Yes, closer the I latter. think

I example, for we IBNR. the example, earlier So gun have, here ultimate that, We the the be think And to paid quite court reopening, low a maybe COVID, I recognized for majority were to incur think and losses backlog we in the still are again, the still from to sitting going ratios. it's on through we on question before while of jumping see. work have, people

ultimate. of a good, normal reserves, are loss And So how our cautious going loss it's we still data and terms picks to itself we view long to terms in expecting take long we our line of again, even longer periods took assumptions to development though in looked get more in said as with our with previously, the of trend. term

Joshua Shanker

Thank All the right, want well keep I'll But very later. don't to I dig much. in you bit up line. little a

Michael Klein

Thanks Josh.

Operator

is one next go Barclays. The Tracy from you. ahead. Thank Please from

Tracy Benguigui

should businesses less that Travelers your I at is leveraged CPI is Are CPI indices Thank measure is long lesser that mentioned memory for you have if to Dan, other there a for you claims better at, tail look overall nuanced muscle measure lines? for that type be formal inflation? we looking role there more indicators are macroeconomic you. my inflation.

Alan Schnitzer

data Let on and and analyzing very forecast And by from that in start We're trying Dan granular to basis. miss. not trying fill costs. do a parties. or forecasts inflation that can I Tom we own generally, Kunkel whatever We're CPI third loss to do And forecast actually our we incorporating

for example. not Comp, inflation, we're at Workers forecasting looking We're components. take medical So,

doing And that losses. contribute So durable those that medical prices, actual costs, think our equipment, prescription to cetera. lost niche same we're the in et drug

hard, So part by granular sources. you we a that can't we single party it and data give own look I our to to index mean, number by go in we're if reference very it's on obviously, third or at squaring because say, it's and index, this a hard doing combining and triangles basis,

Tracy Benguigui

not to Okay, that you're we focused so respect factor if on? looking be inflation, nuance that with at, those super is the should CPI indicator worry does all

Alan Schnitzer

at or loss about, costs nothing inflation nothing about there's there's No, that's all. worrying us

very, a degree, but, and react good inflation, many to that where short balance think sheet. the lines. we as pretty into that was the to it's contrast And quickly saw leverage it we although years of we it the way issue to us I as much very for we longer see to ago, seeing few can it And for personal profitability will that say a very emphasis consequences term that quickly. a the and here compared because we there's takes on on nearly saw the not line. in is conversation the fact, which I In very social an are quickly. And And us, little is bit say

the relatively not can for as and quickly. it So there's in risk pay we much reserves,

us at nothing actually in environment there's the or So, term ones. at about inflation moment term lines short the concern that's to long all of

Tracy Benguigui

great. Okay,

Just where follow-up on sidecar I'm compete what just this one wondering panel? it's on your Fidelis this if see reinsurers where you so reinsurer, partnership your could also like potentially a can look own premiums, platform could

Alan Schnitzer

is. opportunities. them out. and That's for is with we'll being, to knows, it And, the but compatible. is What that's It time as Who but laid They've management at this. it really just great and presented there will team. is to over time the not it all the really maybe there knows, more really collaborate we've very not for learn really It's time the Certainly There, is being, they that to a just we've time way be and are a a record. cultures the simple. got track it. we moment, interesting pretty fantastic as we've do contemplated It's model. way business interesting business the the Who really for wanted us being. it. very It's

Tracy Benguigui

for my questions. Thank you taking

Alan Schnitzer

Thanks, Tracy.

Operator

from is from one Greenspan Fargo. next The Elyse you. Thank Wells

Elyse Greenspan

for in Good of business But Hi, million was reinsurance said, earmarked your growth. just we of quarter, issued the features the and investment away are I about and weren't just Through stance guys as morning. you want like you is there to investment $XXX it think Fidelis on as you've get guess just a reinsurance then in sense well. on M&A, guys because of debt thanks. changed, from reinsurance. first question unique my the Obviously, interested Alan, this years, I deals.

to, trying is is that you potential into capital So I'm just growth? are M&A organic tying more for business that or earmarked

Alan Schnitzer

Fidelis Let Dan to ask and start with on me raise. comment capital the I'll

thinking that's in are management They've it tools, of Fidelis very interesting limited reinsurance, writes remains we some signals but of a four reward. So any and their there's writer their the the happens this primarily that of primary of of all shift one being and business. about got that business about so powerful really that risk form are case focused just with reinsurance, really nothing with just are reinsurance in risk in just that, powerful aspects on reinsurance it, their at our pillars There some interest business.

of will reinsurance where be of so, significant own bit we out complimentary And I something to our us, portfolio. there's to for and hasn't in learn it's And for terms our I us you the write been potential managing expected little cap focus point any why do a core don't to business.

So we've a for business. Boiler got example, Re

in So it's change very for It's focus. there's think what it's not But completely to part and it, us. small us we no to not a this of strategic very, very, we something to that us respect, foreign do alarming learn. in

Dan Frey

we the wouldn't capital much question, the have that growth urgency regarding coincidental if maintain It's came Elyse, really when of or Fidelis timing things our issue small we're go transcripts, need into M&A And And all and top-line or lack about, capital management think eight it the debt together. way capital, change quarters these to anyways, necessitated in with. to ratio that comfortable around of back investment have up urgency eventually would debt-to-capital talking ago, you the I of to the more enough six, with or the philosophy at was no were around just in keep in even the again, we M&A.

Elyse Greenspan

noticed Okay, in And growth question second on then Insurance, quantify within line premiums quarter, well. would on, have benefited exposure business that thought accounts exposure impact quarter, declined but your then can you the and that guys select as I within the that my I in the had Business premium the thanks.

Dan Frey

the exposure, So sort way to, to Dan. there's I'm guess I the of that positive to written to at degree it's a premiums reconciliation degree renewed, temptation the the Alan resist renewed renewed rate, Elyse that that Having do positive there's the try measure going means more. same want…? apply that that's at applicable accounts the that just have much that to. said that, that that to would accounts do it's would you that the it of

Alan Schnitzer

bit We've that we've been little more I focused Yes, that just the business. mean, of color shared a on with on very improving profitability select. you

certainly so, pursuing improvement conditions production some that And a for customer, more when top-line some because base in period comparing in will and marketplace, and have the And for in around pandemic of business, a billing has you but been the activity, in you terms that a also margin very sort. bit bit an impact just little we've of activity. have during the to so a I cancellation back to the normal little of rates some little with drag tell of also that's suspended and the now Elyse. and that our to play we thoughtful back and ability that flexibility Select

Elyse Greenspan

thanks the Okay, color. for

Operator

one next from UBS. Meredith The you. Thank is from Brian

Brian Meredith

of thanks. asked. have them Yes, Most been

kind couple your of last you years Just bit of what little of kind I'm to wildfires Coast. West the kind you've a over of up about are here in exposure to Maybe can talk been manage curious, doing kicking wildfires? the

Michael Klein

and Brian, this I'll exposure wildfire but our across to business, we're with the certainly Insurance. managing is Michael start Personal Sure,

is lot that but continuation managing we've chime anything I of common the in really the across I can it. commercial conversation miss way in Greg having you It the we've the side. been think terms a if of place, a with been of on the are line actions

about lot in California. particular, the California, exposes us context of more the a parallel that in across in certainly then I think, West, parallel states just but we've a the talked is wildfires,

California. we've development Wildfire you in addition Defense to with would to is, extended in specific one apply Colorado So to I our to agreement point XXXX Systems

market is of update in sort progress extending in in just now we the partnership successfully West, on maybe we've in So that addition the product. an margin prevention new state got policies California, we on in we're additional to product, which which our new California to launch that converting helpful. And the risk got of think then across an XXXX, the

product the wildfire approved pricing, new segmentation, eligibility, think state. as think rate X.X% think last got on increase respect So the level, new rate an new month, in additional Property And to exposure. just we

are you about And to rate the conditions. again, management, polling level segmentation those to lot modeling, those applying California in through exposure but and and continue terms work can we again, to non-renewal another terms activity, across a do we're think continue they the manage specific the eligibility as comments, as our lifting of moratoriums west. So our subject more we expire, broadly through way of the of

Brian Meredith

a follow up guess, quick here. I Thanks.

of pricing line? one the area the Just of kind continue in in curious, have kind quickest. commercial your can that talk you really seeing That's moderate thought market bit dynamics we're you I really that to what lines, some growth are strong property a about little the

Alan Schnitzer

double-digits many still but get I children in had but saw Yes, Excess that where that amount gave we plus property REIT have, what's really that why, poster primary growth growth. of that's somewhat, and some of Casualty And the the two certainly were And RPC and exhibit lines but as are over for those you specialty two that National our is growth. supplement that's couple we last years, have across you we as said, underneath driving Property momentum line. X% of been moderating, the

Brian Meredith

Great. Thank you.

Operator

you. Thank

Shields time have that KBW. from will and one Meyer question be from We for more

line Your open. is

Meyer Shields

in personal just on obviously for me can on? question month-by-month fitting so trajectory can Great, the you going of much frequency we quarter last -- One you assess talk well, so about last second the what's in. thank auto,

Alan Schnitzer

Meyer, know I don't going if give to quarter. a inside specifically I'm you more the numbers

stand what pandemic said, quarter which you frequency that we'll think pre is, exited let we the was closer I to as levels.

as quarter. it the into sort know think I pre-pandemic been and left levels again, of we it coming had approached running, the where quarter You

Meyer Shields

should I When we accounts, Greg. the the XXXX on first RPC could about Okay, for of change. estimates look presentation you big in this it seems outside the XQ, X.X. was I then fair the as is When thought the a RPC? guess That about like talk enough. how showed from you reported we at Select X.X%. for And and inherent the the quarter process, think actually up

Alan Schnitzer

what Yes, of Meyer both of first the estimate just developed believe an points. of is And force those going the about quarters, you both remind the fourth said, quarter that's up, you, look like quarter to I'll and growth. as terms exposure current the in X we

economy, the sometimes your models up you always we're and keep a really V and that that's in with adroit when So estimating don't change happening. have impact that quick

period. basically So the we shorten model

try moving moving in were So three-month change changed a six-month us little to a moved marketplace. the average gives we a average, bit that the keep if with think using up And to to that we development.

the forward, So front that. we underneath think going we'll of was methodology but that that basically be in

Meyer Shields

That's perfect. you. thank needed, we exactly Okay, what

Operator

are this Abbe please at continue. questions Thank time. further Ms. Goldstein, you. no There

Abbe Goldstein

if much. this touch any appreciate us and joining good Investor as day very and everyone's and in I with follow-up time for are questions always, you get morning, everyone. there Thank Relations

Operator

participating. for you Thank call. conference today’s concludes This

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The Travelers Companies, Inc. (TRV) 20 Jul 212021 Q2 Earnings call transcript