TRV Q3 '26

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1. 109:11 ETprepared▼ -0.51%

   “That's a trade we're very willing to make, and it results in an uptick for our expected full-year expense ratio, which we now expect to come in a little below 29% for 2026 and about the”

   Management, 6.4x volume, adj. next 5 min: -0.51% raw vs 0.00% sector

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   high confidence

2. 209:23 ETprepared▼ -0.87%

   “So, Bonded Specialty Insurance delivered terrific profitability and excellent growth in the quarter, while continuing to make strategic investments to further extend our competitive advantages.”

3. 309:02 ETprepared▼ -0.21%

   “or $9.18 per diluted share, generating core return on equity of 22.1%.”

4. 410:02 ETQ&A▼ -0.52%

   “we certainly have our internal benchmarks you know and and our service level objectives you know for example our objective is to close 90 of claims within 30 days after every catastrophe and over the course of a year we we routinely achieve that objective but our our our real objective is to pay what we owe and to pay it quickly and and we”

5. 509:04 ETprepared▲ +0.24%

   “Turning to the top line, we generated net written premiums of $11.5 billion in the quarter.”

1. -0.45%0:00ManagementThank you. Good morning and welcome to Travelers' discussion of our third quarter 2026 results. We released our press release, financial supplement, and webcast presentation earlier this morning. All of these materials can be found on our website at travelers.com under the investor section. Speaking today will be Alan Schnitzer, Chairman and CEO, Dan Fry, CFO, and our three segment presidents, Greg Teslowski of business insurance, Jeff Klank of bond and specialty insurance, and Michael Klein of personal insurance. They will discuss the financial results of our business and the current market environment. They will refer to the webcast presentation as they go through prepared remarks and then we will take your
2. -0.45%0:42Managementquestions. Before I turn the call over to Alan, I'd like to draw your attention to the explanatory note included at the end of the webcast presentation. Our presentation today includes forward-looking statements. The company cautions investors that any forward-looking statement involves risks and uncertainties and is not a guarantee of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described under forward-looking statements in our earnings press release and in our most recent 10Q and 10K filed with the SEC. We do not undertake any obligation to update forward-looking statements. Also, in our remarks or responses to
3. -0.18%1:26Managementquestions, we may mention some known and unknown factors that may be out of the question. To some non-GAAP financial measures. Reconciliations are included in our recent earnings press release, financial supplement, and other materials available in the investor section on our website. And now I'd like to turn the call over to Alan Schnitzer. Thank you, Abby. Good morning, everyone, and thank you for joining us today. We're pleased to report Excellent was another in a run of successful quarters with very strong underwriting performance across all three segments and a record result from our investment portfolio. We also continue to make steady progress on important strategic initiatives that will continue to set us apart. For the quarter, we earned a core income of $1.95 billion,
4. -0.21%2:10Managementor $9.18 per diluted share, generating core return on equity of 22.1%. Over the trailing four quarters, we generated core return on equity of 20. Underwriting income of $1.4 billion pre-tax was driven by strong levels of underlying underwriting income and net favorable prior year reserve development. Profitability was excellent on both the reported and underlying basis. The combined ratio improved to 86.8%, and the underlying combined ratio remained very strong at 84.1%, with all three segments posting strong contributions.
5. -0.21%2:51ManagementTurning to investments, our high-quality investment portfolio continued its trajectory of delivering higher levels of net investment income. After tax net investment income increased by 7.5%, we were able to return $1.8 billion to $908 million, benefiting from strong and reliable returns from our growing fixed income portfolio and a strong result from our non-fixed income portfolio. Our underwriting and investment results, together with our strong balance sheet, enabled us to return $1.8 billion of excess capital to shareholders during the quarter, including $1.5 billion of share repurchases. Just since the beginning of 2025, we have returned $8 billion of capital
6. +0.05%3:36Managementto our non-fixed income portfolio, and we have returned $1.8 billion of share repurchases, retiring 12% of the shares then outstanding in the process. Even after the return of capital, and having made substantial investments in the business, adjusted book value per share at the end of the third quarter was 24% higher than at the beginning of 2025, and 15% higher than a year ago. Turning to the top line, we generated net written premiums of $11.5 billion in the quarter. Renewal in every line other than property, generating net written premiums of $5.9 billion. That's 4% higher than the prior year quarter,
7. +0.24%4:18Managementadjusting for the sale of our Canadian business. Across the board, the triad of renewal premium change, retention, and returns reflects outstanding and deliberate execution. Renewal premium change in this segment was 4.1%, including renewal premium change of 5.4% in our core middle market business, and 7.8% in our small commercial select business. Excluding the property line, renewal premium change in the segment was 7%. Retention, which, as you've heard us say before, is an important indicator of marketplace stability, remained very strong at 86%,
8. +0.24%5:00Managementand was higher or stable in every line. New business of $699 million was up 4% over the prior year quarter. To be growing 4% ex-Canada at such strong returns is a terrific achievement. In bond and specialty insurance, we also delivered terrific growth and strong returns. We grew net written premiums by 12% to $1.2 billion. In our management liability business, renewal premium change improved sequentially to 3.8%, while retention remained steady at an excellent 89%. New business was up 18% over the prior year quarter. In our leading surety business,
9. +0.24%5:44Managementwe grew net written premiums by 21%, reflecting continued strong production across the portfolio. In personal insurance, we generated net written premiums of $4.4 billion, with solid retention in both auto and homeowners, and higher new business and homeowners. You'll hear more shortly from Greg, Jeff, and Michael about our segment results. Before I turn the call over to Dan, I'd like to spend a few minutes on an important focus of our innovation work, defending our customers against legal system abuse. Lawsuit abuse raises costs for everyone, from the businesses and families we insure to every corner of the broader economy.
10. +0.49%6:26ManagementLiability across GL, Umbrella, Auto, and CMP is a significant share of our loss costs. While conditions have been generally consistent with our expectations, the drivers remain active and continue to put upward pressure on liability losses. Our approach is straightforward. Resolve legitimate claims fairly and promptly by paying what we owe. We were early to recognize the change in the litigation loss environment at the end of 2018, and that gave us a head start in investing in technology and developing innovative claim strategies. We believe that gives us a meaningful early mover advantage, and our innovation efforts are now giving us tools we've never had before. Thank you.
11. +0.42%7:10ManagementLet me share a few examples. For unrepresented claimants, we've developed a digital tool to help resolve claims promptly and fairly. It's grounded in our simple philosophy of empathy, education, and empowerment, which we've built directly into the experience. In a pilot, more than 80% of the claimants to whom we've offered the tool have engaged with it, and overall results are very encouraging. When a claimant has an attorney, we're using AI to sharpen our research, responses to their demands. It starts with the file. AI gives our claim professionals a faster, deeper command of claim files that can run hundreds of pages. It services key facts and
12. +0.42%7:53Managementissues and helps shapes arguments. That makes our people both more effective and more efficient. Consistent with our longtime practice of maintaining a tight feedback loop between claim and underwriting, which is how we were so early to recognize social inflation in the first place, the technology also feeds granular loss information back to our underwriters. A more accurate view of loss information provides better risk selection, pricing, and claim strategies. We pay what's fair, and when we can't resolve a claim on what we believe is a fair outcome, we're prepared to defend our customers in litigation. We choose our matters
13. +0.16%8:34Managementcarefully, and the outcomes demonstrate that we're effective when we do. Beyond the direct financial impact of our success in litigation, we litigation. Our approach helps set realistic expectations from the start, and that's part of the value proposition we bring to our customers. These are just a few illustrations of a broader proprietary effort that leverages talent, technology, behavioral science, and more. What we're doing now isn't about doing what we've always done a little better. We've developed new and growing capabilities that let us do what simply couldn't be done before. We believe our expertise, capabilities, and approach will help us bend the loss cost curve.
14. -0.03%9:16ManagementAs we continue to invest, we expect this to deliver growing value for our customers and shareholders, building on the benefits we've already seen from some of our initiatives. To wrap it up, our excellent underwriting and investment results through the first nine months of the year reflect our unmatched competitive advantages and the strength of the value proposition we offer to our customers and distribution partners. We are well positioned to close out the year with a positive outcome. We're going to continue to do what we've always done, and that's by investing in the best of our potential. We're going to continue to invest in the best of our potential. We're going to continue to invest in the best of our potential. We're going to continue to invest in the best of our potential. We're going to continue to invest in the best of our potential. That momentum, the advances we are making on our innovation agenda, and the best talent in the industry give us tremendous confidence heading into 2027 and beyond. And with that, I'm pleased to turn the call over to Dan.
15. -0.03%9:55ManagementThank you, Alan. In the third quarter, we once again delivered excellent financial results on a consolidated basis and in each of our three segments. Core income for the quarter of $1.95 billion, marked our sixth consecutive quarter with earnings of more than $1 billion, and brings our trailing 12-month core return on equity to 24.1%. Both the quarter and the trailing 12 months reflect excellent underwriting results coupled with strong investment income. We generated slightly higher net written premiums despite the absence of the Canadian businesses we sold at the beginning of 2026, while delivering excellent combined ratios on both the reported
16. -0.25%10:39Managementand underlying basis. At 84.1%, the underlying combined ratio marked its ninth consecutive quarter below 86%. The combination of strong earned premiums and the excellent underlying combined ratio led to after-tax underlying underwriting income of $1.4 billion, continuing our run of historically strong underlying underwriting results. Our year-to-date after-tax underlying underwriting income of $1.4 billion, which is a lot of money, is a lot of money, and the annual net return of $3.9 billion is virtually identical to last year's record level despite moderating pricing and the sale of our Canadian business, demonstrating the durability
17. -0.51%11:21Managementof our underlying underwriting earnings power. The expense ratio for the third quarter was 28.9%, bringing the year-to-date expense ratio to 29%. Regarding the expense ratio outlook, the continued strength of our consolidated underwriting performance I just described results in variable expenses like profit sharing and contingent commissions coming in higher than planned. That's a trade we're very willing to make, and it results in an uptick for our expected full-year expense ratio, which we now expect to come in a little below 29% for 2026 and about the
18. -0.29%12:00Managementsame for 2027. Catastrophe losses in the quarter were $538 million pre-tax, consisting mainly of tornado hail events in the central state. The rate of loss for the quarter was $538 million, and the year-to-date expense ratio was $3.9 billion. Turning to prior year reserve development, we had total net favorable development of $234 million pre-tax, with favorability in all three segments. In business insurance, the annual asbestos review resulted in a charge of $295 million. Excluding asbestos, business insurance had net favorable PYD of $336 million, with favorability in all three segments. In the year-to-date expense ratio, we had a net favorable development of $295 million pre-tax, with favorability in all three segments. In business
19. -0.29%12:40Managementin every line in bond and specialty net favorable pyd was 95 million dollars pre-tax with favorability and fidelity and surety as well as management liability insurance had net favorable pyd of 98 million dollars pre-tax with favorability in both home and auto turning to investment income for the first time ever after tax net investment income surpassed 900 million dollars for the quarter up seven percent from the prior year quarter fixed maturity nii was again the driver of the increase reflecting both the benefit of higher invested assets and higher average yields
20. +0.08%13:23Managementthrough the first three quarters of 2026 we've grown our investment portfolio by approximately six billion dollars even after having returned a record level of capital to investors through dividends and share repurchases nii in the fourth quarter including earnings from short-term securities is up slightly from the outlook we provided a quarter ago now expecting approximately 875 million dollars after tax in q4 bringing the full year 2026 total to 3.3 billion dollars for 2027 we expect more than 3.6 billion dollars with quarterly figures
21. +0.24%14:05Managementstarting at around 875 million dollars in q1 and growing to around 965 million dollars in q4 new money rates on purchases during the third quarter were roughly 120 basis points above the yield embedded in the portfolio the significant increase in interest rates during the quarter resulted in an increase in our net unrealized investment loss from 2 billion dollars after tax at june 30th to 6.4 billion dollars after tax at september 30th this is a good time to remind you that the unrealized loss in our investment portfolio is interest rate driven
22. +0.24%14:44Managementnot credit quality driven remember the changes in unrealized investment gains and losses do not impact how we manage our investment portfolio we generally hold fixed income investments to maturity the quality of our fixed income portfolio remains very high and the changes in unrealized gains and losses have little or no impact on our cash flows statutory surplus or regulatory capital requirements and of course the same rise in rates that increase the unrealized loss is a tailwind for future results as we reinvest at higher yields it supports higher continued growth in net investment income adjusted book value per share
23. +0.34%15:27Managementwhich excludes net unrealized investment gains and losses was 172.47 at quarter end up nine percent from year end and up 15 from a year ago turning to capital management operating cash flows for the quarter of 3.9 billion dollars per share operating cash flows for the quarter of 3.9 billion dollars operating cash flows for the quarter of 3.9 billion dollars per share operating cash flows for the quarter of 3.9 billion dollars operating cash flows for the quarter of 3.9 billion dollars were again very strong and brought the year-to-date operating cash flow figure to 8 billion dollars also of note for q3 in july we issued 750 million dollars of five-year debt at an attractive rate of 4.95 percent as part of our ordinary capital management maintaining a debt to capital ratio
24. +0.46%16:08Managementin our target range as we continue to grow the business with the theme of capital management we returned 1.8 billion dollars of capital to our shareholders in the quarter with share repurchases of 1.5 billion dollars and dividends of 261 million dollars before i wrap up let me add one comment about the fourth quarter for your modeling purposes effective october 1st we increased the percentage ceded to our cyber reinsurance quota share that will reduce net written premiums by about 165 million dollars in q4 and by about 230 million dollars for the quarter of 3.9 billion dollars for the quarter of 3.9 billion dollars for full year 2027 primarily in the bond and specialty
25. +0.46%16:52Managementsegment we expect the impact on bottom line earnings to be de minimis in both years recapping our results q3 was another quarter of excellent underwriting profitability on both an underlying and as reported basis and another quarter of rising net investment income these strong fundamentals delivered core return on equity of 22.1 percent for the quarter and 24.1% 1% on a trailing 12-month basis, and we continue to be very well positioned to deliver strong results in the future. And now for a discussion of results in business insurance, I'll turn the call over to Greg. Thanks, Dan.
26. +0.33%17:33ManagementBusiness insurance had another very strong quarter, delivering record third-quarter segment income of $1.04 billion and continued solid top-line growth. This quarter's results reflect the continued benefit of strong underwriting results, driven by higher earned premiums and a combined ratio that improved two points to a terrific 90.9%. We're particularly pleased with our underlying combined ratio, which remains strong at 88.9%. Beyond our execution in the marketplace, we're encouraged with the contributions we're seeing from our ongoing strategic investments.
27. -0.14%18:13ManagementFor example, our ongoing advancement of analytical capabilities, including the utilization of sophisticated predictive models, continues to enhance our risk selection and pricing segmentation. The expanded use of external data sources, such as aerial imagery, in combination with our proprietary historical claim data, further equips our front-line underwriters with the insights they need to make better decisions at the point of sale. With that, I'd like to thank all of you for your time. Within property, Analytics have supported our improvements in insured-to-value and deductible adequacy, which has contributed to a stronger and well-positioned book.
28. -0.14%18:55ManagementWe believe these and other strategic investments will be important contributors to our continued success and long-term profitable growth. Turning to the top line, our net written premiums reached a third-quarter record at $5.9 billion, domestic net written premium. We believe this services are important. We hope to continue to create a energy and financial future for all of our members and net written premiums grew 4%. Excluding the property line, domestic net written premiums grew 6%. Net written premiums in national property continue to decline. We remain focused on writing business only where price and terms align with our view of the risk and our return objectives.
29. -0.21%19:34ManagementTurning to production across the segment, rental premium change was 4.1%. Excluding the property line, RPC was 7% and positive in all lines. Retention remained excellent at 86%, a reflection of strong returns and our continued focus on retaining our high quality book of business. New business was strong at $699 million, up 4% from the prior year. We're pleased with these production results in our field's continued execution of our proven segmentation strategies, aligning price and terms with our view of the risk and terms. Price, terms and conditions with environmental trends for each line.
30. +0.02%20:17ManagementAs for the individual businesses, in select, renewal premium change was strong at 7.8%, while retention was steady at 81%. A new business of $139 million was up 3% over the prior year. These results reflect the industry-leading segmentation in our product offerings, including BOP 2.0 and TCAP. On the
31. +0.02%20:58Managementmarket, business growth decreased by 12%, while stereotypical growth was soaring at 12.5%. This saw the creation of the S&P 500rs, the GOD, the man behind the lottery and financial ifier development, and.......... .......... .......... .......... prospecting and quoting new business through renewals. Once again, another terrific quarter for business insurance. We're energized by both the strength of our current execution and the additional capabilities we continue to build, capabilities that we believe will drive our continued success through the remainder of 2026 and beyond. With that, I'll turn the call over to Jeff. Thank you, Greg, and good morning, everyone. We're pleased to report that Bonded
32. +0.02%21:42ManagementSpecialty posted an outstanding quarter on both the top and bottom lines. We generated record segment income of $309 million, driven by strong earned premium and a terrific combined ratio of 77.3%. Turning to the top line, we grew net written premiums by a very strong 12% in the quarter to $1.2 billion. In our high quality domestic management liability business, we drove retention to a very strong 89% while improving renewal premium change by nearly a point sequentially. We are very pleased that we also increased new business by 18% from the prior year quarter. These
33. +0.23%22:25Managementresults reflect terrific execution by our outstanding field organization, leveraging our strategic investments in enhanced pricing segmentation tools and sales effectiveness capabilities. Turning to our market leading surety business, we posted excellent net written premium growth of 21% from the prior year quarter, continuing the recent trend of strong production across our high credit quality portfolio. Our growth this year is primarily attributable to our portfolio of premier contractors that are well positioned to deliver on large public and private infrastructure projects that have driven construction spending.
34. -0.87%23:06ManagementAs well as meaningful contributions from new account relationships, as more customers choose a carrier with exceptional financial strength, market leading value added services, and an unparalleled team. So, Bonded Specialty Insurance delivered terrific profitability and excellent growth in the quarter, while continuing to make strategic investments to further extend our competitive advantages. And with that, I'll turn the call over to Michael. Thanks, Jeff. Good morning, everyone. I'm very pleased to share that Personal Insurance delivered third quarter segment income of $706 million.
35. -0.87%23:44ManagementStrong underlying income and favorable prior year reserve development both contributed to this excellent bottom line result. The combined ratio of 83.5% was a terrific result in the quarter. Catastrophe losses were favorable to our plan and continue to benefit from the actions that we've taken to reduce volatility across our portfolio. The underlying combined ratio of 76.7% improved by one point compared to the prior year and continues to demonstrate strong profitability in both automobile and homeowners and other. Net written premiums for the segment were $4.4 billion in the third quarter, as pricing continued to moderate, reflecting strong profitability, while retention remained solid.
36. +0.01%24:29ManagementNew business premium in homeowners was higher year over year, as we thoughtfully deployed property capacity in support of our efforts to improve the performance of our business. We also saw a significant increase in the number of new business premiums in the third quarter. We also saw a significant increase in the number of new business premiums in the third quarter. We also saw a significant increase in the number of new business premiums in the third quarter. The Sensory Scale The Sensory Scale In In In bumpy When When When When In In When When Freddie Caroline Freddie Freddie Freddie flan
37. +0.59%25:09ManagementThe underlying combined ratio was 87.3%, a one-point improvement compared to the prior year. This strong result was driven by continued favorable loss experience across coverages. This quarter's result included about a one-and-a-half point benefit related to the re-estimation of prior quarters in the current year. Looking ahead to the fourth quarter of 2026, it's important to remember that the fourth quarter auto underlying loss ratio has historically been about five to six points above the average for the first three quarters because of winter weather and holiday driving.
38. +0.59%25:45ManagementIn homeowners and other, the third quarter combined ratio was a very strong 80.5%, and the underlying combined ratio of 68% was outstanding and comparable to the prior year. Turning to production, in auto, retention was 80%. In home owners and other, retention of 85% remained strong, while renewal premium change continued to moderate, reflecting strong profitability and replacement costs that are generally not as high as the previous quarter.
39. -0.07%26:30ManagementThis quarter's ROI was generally aligned with insured values. We were pleased that, for the third consecutive quarter, new business premium was higher year over year, driven by our intentional and disciplined efforts to deploy property capacity. We continued to invest in strategic capabilities that will deliver sustainable profitable growth. At the same time, we're executing complementary marketplace actions that include expanding distribution by appointing new agents and actively pursuing book consolidation opportunities. These deliberate efforts combined with our strong agent relationships, portfolio solutions for customers, and industry-leading claim capabilities position us to be the undeniable choice for consumers and an indispensable partner for our agents.
40. +0.01%27:13ManagementTo sum up, this was another great quarter for personal insurance on the bottom line, and we continue to focus on taking a measured, thoughtful approach to profitably growing our business over time. Now I'll turn the call back over to Abby. Thanks, Michael. We're ready to open up for Q&A.
41. +0.01%27:31OperatorWe will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. Please limit yourself to one question and one follow-up question. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question. Your next question comes from the line of Paul Newsom with Piper Sandler. Paul, your line is open. Please go ahead.
42. +2.20%28:19OperatorPaul, your line is open. Please go ahead.
43. +2.20%28:30ManagementWe can come back to Paul. Maybe we'll take the next caller.
44. +2.20%28:36OperatorYour next question comes from the line of Davin Mott-Matten with Evercore ISI. David, your line is open. Please go ahead.
45. +2.20%28:48AnalystHey, thanks. Good morning. Allen, you've discussed, and Dan as well, you guys have discussed the durability of the $5.5 billion of underlying underwriting income. I didn't hear you guys say that again explicitly. And so, you know, it sounds like you guys are definitely on pace for that this year, but I'm wondering how you're thinking about that into next year, just given the moving pieces with the market cycle and where we are.
46. +0.66%29:18ManagementYeah, good morning, David. Thanks for the question. We would absolutely reiterate the underwriting income. And, you know, just to give you a little color behind that, I mean, putting in some historical context, we are a larger, more profitable company than we've been historically. Strong competitive advantages with a strong value proposition. Demonstrated success with innovation and investing. We think AI gives us tremendous opportunity. And as I've been saying, I think if I wrote it for the first time in my 2022 annual letter, we think scale is going to be increasingly important. And so, we think all of that will continue to give us the ability to out-select and out-price.
47. +0.48%30:02ManagementAnd so, that gives us great confidence in the durability of the underlying underwriting income. Yeah, David, it's Dan. The only thing I'd add to that is you shouldn't mean that doesn't mean it's not going to move a little bit one way or the other. The other comment that Alan's made relative to that metric is we don't know if 2027 is going to be a little higher than that, a little lower than that, or flat. But the Zip Code is going to be a little higher than that. So, the Zip Code that we're in now is just a completely different Zip Code than we used to be in, and we don't see any reason that that's likely to change.
48. +0.48%30:35AnalystGot it. Thanks. That's helpful. And then maybe just maybe on the favorable PYD in business insurance. So, it sounds like that was across all lines. So, I'm assuming that that included general liability. Could you just confirm that, maybe talk about which accident years you're seeing that and maybe just how you guys are thinking about the level of IB&R that you guys have been putting up over the last few years?
49. +1.69%31:09ManagementYeah, David. So, we feel great about where the balance sheet is, as we've said now for a couple of years. It was all lines across the board. So, we saw favorability in commercial auto, commercial property, CMP, general liability, workers' comp. None of them were particularly outsized, although in aggregate, a number as big as we talked about on the call is a very good result. So, I would say we continue to be thoughtful about the reserves that we carry on the book, respectful of the long-term loss trends that could come out of the liability or the comp lines. And as things emerge somewhat favorably to what we had provided
50. +1.69%31:51Managementfor in our prior picks, we're getting PYD. But yes, across the board, we're seeing some of the best things that we can do to help our clients, including GEO. Got it. Thank you. Thanks, David.
51. +1.49%32:03OperatorYour next question comes from the line of Gregory Peters with Raymond James. Gregory, your line is open. Please go ahead.
52. +1.49%32:11AnalystWell, good morning, everyone. So, I guess kind of building on the last question, but I'd like to see if you could give us some comments on your view of loss cost trend inside business insurance. I guess I'm... looking at it because, you know, I'm watching the renewal rate change premium, you know, slide down. And also, I was intrigued by your comments, Alan, about, you know, the commercial auto liability and the other casualty claims and the pressure you continue to see there.
53. +1.49%32:51AnalystAnd it just kind of brought to my mind, are you foreshadowing another negative step change in sort of how the loss cost trend is moving in those lines?
54. +0.73%33:04ManagementNo, quite the contrary, actually. There's...just looking at the loss environment broadly, I would say it's as we've expected. No surprises at all, whether we're talking about social inflation or anything else. So, no surprises at all in terms of the loss environment.
55. +0.73%33:27AnalystI guess then a pivot. You know, I think... you know, this year...this quarter's new development was the rollout of MUSE. And, you know, obviously there's other tech initiatives that, you know, are spooking the market with their potential to disrupt distribution. Maybe it's mostly focused in personal lines, but there is some crossover into the small and middle market commercial area, too. So, maybe you could just step back and provide us some perspective on your value of your current agency distribution.
56. +0.73%34:00AnalystAnd maybe also give some nuggets on how you are working with these new initiatives, you know, to help get to your objectives.
57. +1.78%34:13ManagementThanks for the question, Greg. Mike, do you want to take that? Sure, I'll take it, Greg, because to your point, MUSE in particular, you know, at least today, is mostly focused in the personal insurance space. Certainly, Greg's team and mine have been collaborating, and he can chime in as well. You know, the first thing I would say just... Yeah, the first thing I would say just broadly about MUSE and AI assistance is it's early days, right? I mean, the actual volume of observable activity is pretty minor. And I think there are a lot of things that could potentially impede the pace and scope of change there. You know, we've got to pay attention to consumer adoption.
58. +1.78%34:56ManagementWe've got to work through technology and data dynamics. There's a variety of legal and regulatory considerations as we deal with these developments and work in this space. And, you know, just to put a point on it, you know, if and when you're engaging with an AI assistant, you've got to confirm a number of things, right? First and foremost, is that AI assistant actually authorized by the consumer that's doing the shopping? Secondly, is the consumer affirming and confirming that the information provided is accurate? And third, and probably most importantly, does the customer actually understand what they're buying?
59. +0.80%35:36ManagementAnd those things aren't sort of particularly transparent and clear as you engage digitally in this space. And those considerations grow in importance with the size and the complexity of the asset or the risk that you're insuring. So, you know, we're engaged in exploring the opportunities and the threats here. We're going to continue to test and learn and make sure that we're prepared to respond. And we've been building digital capabilities across the organization for a really long time. You know, on the commercial side, we've got Simply Business and Zen. In personal insurance, we've got InsureMatch and D2C. And I think we'll be prepared for what's coming.
60. +0.07%36:16ManagementYeah, Greg, I would just add to that that if you look at a continuum of risk from the most complex to the least complex, the stuff that trades digitally is not going to be the same. Right? The stuff that trades digitally today, and I do think it's important to remember that, you know, customers can trade digitally today. But the things that actually trade digitally are way over at the simplest end. It's renters. It's pet. It's, you know, that sort of stuff. You get mildly more complicated. People might use the technology to shop and do some price discovery. But very often, they opt out to talk to a person. And so, you know, unlike a lot of other commerce, you know, there's a lot of risk. Right? And so, you know, there's a lot of risk.
61. +0.07%36:58ManagementBut if you look at digital commerce, where you can imagine, you know, digital trading being more popular in a complicated domain like insurance, so far it hasn't been the case. But to Michael's point, going back, you know, 20 years talking about D2C, we contemplated the world would get more digital. And that's, you know, we didn't invest in D2C because we thought we were going to be a leader in D2C. We invested in D2C 20 years ago. We wanted to make sure we had the capabilities of a digital company. We wanted, certainly we wanted to understand distribution, but we also wanted to understand how to engage with our distribution partners, how to service our customers.
62. -0.15%37:36ManagementAnd then more recently, when we acquired Simply Business and Zen and InsureMatch, that was also with the thought that the world was going to be more digital. So, you know, you can get a sense of our view that we think this is going to be sort of a measured adoption to the extent there is adoption. But wherever it goes, we are very prepared for it.
63. -0.15%37:57OperatorThank you. Your next question comes from the line of Tracy Benjiji with Wolf Research. Tracy, your line is open. Please go ahead.
64. -0.29%38:10AnalystThank you. Good morning. I want to go back to David's reserve development question. Sounds like you built conservative loss picks, so the loss experience might be more favorable to that. I'm just curious how much time needs to pass to assess that. I appreciate your confirmation. The releases came in. I think it's important to have a better understanding of those accident years. I noticed in the 10Q you said that it was more recent here.
65. -0.29%38:40ManagementYeah, Tracy, it's Dan. So I don't know that I would use the word conservative when we came up with our loss picks. I think what we've tried to say is we're making certain that we're leaving a provision for the level of uncertainty that comes out of those long tail lines and more recent changes in development patterns and attorney rep rates and things like that. We had a number of years contribute to the favorability in PYD this year. I think if you just look at the gravity of where most of the reserves and particularly IBNR is, it is naturally going to be in the most recent action here. So I think not a big surprise there.
66. -0.26%39:24ManagementYou shouldn't read that as saying that we've changed our view in terms of whether there still needs to be consideration for the level of uncertainty. I think it's a consideration for and respect for the potential uncertainty in those lines and the health of the IBNR that we continue to maintain. But as quarter after quarter goes by and we've seen things come in a little bit better, we felt it was appropriate to take some reaction here. We certainly have not run to the other side of the boat.
67. -0.26%39:52AnalystOkay, got it. So select renewal premium change improved in the second quarter, but you gave that improvement back in the third quarter. And the slowdown was what? Yeah. I think it was driven mostly by rate rather than exposure. So I'm just curious which quarter was the anomaly and how we should be thinking about the underlying trend from here.
68. +0.35%40:14ManagementTracy, this is Greg. Yeah, I did share with you last quarter that, you know, depending on what filing state by state get approved quarter to quarter, you can have some variation. And, of course, you have separate accounts that are coming up for renewals in each quarter. So, you know, I wouldn't say one quarter was an aberration more than the other. But I think there is a little bit of variation in that. And so I think that's something that we need to be looking at every day. We look at that business in terms of, you know, what the returns are in that business and what the pricing and new business needs to be. And that's how we execute. Okay. Thank you.
69. +0.35%40:48OperatorYour next question comes from the line of Katie Sackeys with Autonomous Research. Katie, your line is open.
70. +0.35%40:56ManagementPlease go ahead. Good morning. It's a question for me. I just kind of wanted to get your thoughts here on the business insurance segment. I think premium growth results, I think pro forma, ex property, quite a strong result there this quarter. If I think about where RPC has trended this year and might continue to trend going forward, as well as Greg's prepared remarks on underwriting discipline, how are you guys thinking about growth momentum as you start looking at 2027 MBI? Okay. Good morning. I don't think we're going to give outlook on the top line.
71. -0.02%41:35ManagementOther than to say we feel great about the execution and the growth we put on the books this quarter, and we feel like we've got all the capabilities and value proposition to continue to be successful executing in the market. So we feel great about next year, and we're optimistic, short of indicating a trend or giving a number. That's fair. Thank you.
72. +0.28%42:02OperatorThank you. Your next question comes from the line of Josh Schoen. Hi. Josh Schoen, Schenker with Bank of America. Josh, your line is open. Please go ahead.
73. +0.28%42:16AnalystYeah. Thank you very much for taking my question. The margins are fantastic, and I'm sure that you'd like to get every piece of business that fits your underwriting appetite. But the growth across a lot of lines is flattish or not moving very much. As you innovate with all these opportunities in technology and artificial intelligence, and you're able to save money, to what extent do you think that's going to be a good thing? To what extent is the goal to pass those savings on to the customers to make your value proposition more attractive to your competitors in terms of price action? Do you see an opportunity for you to outgrow your competitors by cutting costs with no impact on your margins?
74. +0.28%42:57ManagementYeah, Josh, I do think that there will be an opportunity for us to do that. We know that we are generating operating leverage. And just to give you a little bit of color into that, so there's some things that we know and we have a lot of confidence in. So let me give you a couple of examples. Our cost per unit of software development, much improved. Our labor costs associated with first notice of loss, down. Our cost to service of policy has come down. There are just some areas where we know, and that goes into operating leverage. There are other areas where attribution is important. But attribution is a little more difficult.
75. +0.59%43:42ManagementSo, for example, we're very confident we're giving our underwriters better insights. And, you know, you can look at the excellent underwriting result, but it's hard to draw a very straight line from the improved insights we're giving the underwriters and exactly that outcome. So it's a little bit harder to see that. But taking a step back, the combination of the ways that we can deploy the operating leverage and the benefits that we can't, you know, we can't do that. Right. Right. And the things we can't quantify are embedded in the results that we have. And if we decide that we want to redeploy some of those into pricing without compromising our return objectives, we'll do that.
76. +0.30%44:20AnalystWell, do you have a confidence if we look five years out, you will be taking a greater share of your agents' business overall, a higher percentage of their footprint, I guess, than you have right now?
77. +0.30%44:34ManagementJosh, it's really hard to look five years out, I think, in any business. But, you know, we've said for a long time that. That we think there are meaningful benefits of scale, including the ability to invest at the level that we're investing. And, you know, I think, you know, the early benefits, you know, come through expenses and the loss ratio. So we'll see it in margins. And over time, that's going to translate into growth. So I do think that travelers will be a consolidator of premium.
78. +0.37%45:05AnalystOkay. Thank you for the answers. Appreciate it. Thank you.
79. +0.37%45:12OperatorYour next question comes from the line of Mike Zaremski with BMO. Mike, your line is open. Please go ahead.
80. +0.37%45:20AnalystThanks. Good morning. I'm in commercial lines. I don't believe there was any kind of color on RRC rate change drivers this quarter. If you would be willing to kind of just unpack whether there's any particular line or lines that kind of are driving that, you know, that are going to be in commercial lines. Great. are driving the downwards trend line. Thanks.
81. +0.37%45:47ManagementYeah. Mike, good morning, and thanks for the question. Let me just step back and just make a few observations about the overall pricing environment. If there's one word over the top to describe it, I would say it's stable. I'm not going to get into what RPC did by every single line, but just for example, the sequential change in RPC and property was small. It was very small. Now, we're not prepared to call a bottom. Certainly, you couldn't call a bottom off one data point, and who knows what's going to happen 90 days from now, but we were very pleased to see a very, very small change there. The sequential movement in RPC in the liability lines, and now I'm talking about GL and umbrella, was also modest.
82. +0.78%46:30ManagementSo all in all, pretty orderly, and we talk all the time about the fact that we execute one account at a time. We're looking at the next account and deciding whether or not we're going to be able to do that. We want it in the portfolio and at what price, and it's also just a reflection of the returns by line. If you look at by line pricing, retention, and return, it's a perfectly rational picture across the board. It's just the execution couldn't be better.
83. +0.77%47:04AnalystGot it. Thanks, Alan. And my follow-up, just going back to a lot of the good color you've given on kind of traveler's innovation, on the claims front and underwriting front, and I think, Alan, you talked specifically about expecting to bend the loss curve, I believe, in casualty. If I juxtapose that with IV&R levels currently in the long-tail casualty line, specifically commercial auto and commercial casualty non-comp, is it fair to say that the current IV&R levels are not as good as the current IV&R levels? I don't think so. I don't think so. I don't think so. I don't think so. I don't think so. I don't think so. I don't think so. I don't think so. I don't think so. I don't think so. I don't think so. I think it's kind of higher than the company's long-term targets,
84. +0.77%47:46Analystand if you do bend the loss curve trend, the IV&R levels would kind of mean revert over many years lower. Thanks.
85. +0.77%47:55ManagementMike, it's Dan. I'll try that. Look, I think one thing that's happened, especially if you want to look at the components of reserves between case and IV&R now versus three years ago or five years ago or ten years ago, I don't think we're ever, literally ever going to go back to the levels that we saw ten years ago because attorney reparated. higher that lengthens the tail more claims come in later so and that's really a point that that we made a few years ago in 2024 you know when we started talking about an uncertainty provision to allow for the possibility that those trends would continue and so when Alan referenced earlier in his comments you know pressure on the lost cost which somebody else asked about
86. +0.50%48:36Managementthat just means lost costs continue to go up but they are not going up by any more than we anticipated and we anticipated in our picks so I think the component of our ultimate loss picks is perfectly logical given the current development patterns if in fact the actions that we're taking in our claim organization translate into a better outcome than for sure there's going to be some IBNR that we ultimately don't need but we are not projecting that as we sit here today
87. +0.57%49:11Operatorthank you your next question comes from the line of Elise Grenspan with Wells Fargo Elise your line is open please go ahead
88. +0.57%49:26Analysthi thanks good morning my first question is on the expense ratio guide I think you guys said right you know a little under 29 this year and then guided to the same level next year understanding right this year it's a little higher than expected on variable comp but you know as we think about next year or some you know improvements around AI may be being offset by other things that you expect you know 27 to be more or less stable with where you're now expecting 26
89. +0.37%50:03Managementyeah it's Dan so but the expense ratio is as we say all the time you know we'll decide what we want the expense ratio to be and then and then dial into that number a big component of that is what do we think we need the expense ratio to be on 27 right now as far as you're concerned that does that speak to should it be in order to have a competitive position in the marketplace? And so we're pretty copacetic with where that is right now. As you mentioned, and as I said, keep in mind that pretty much the largest component of the expense ratio is commissions, which includes the contingent commission and the profit sharing. And so we're in a very strong position from a margin perspective.
90. +0.37%50:41ManagementI don't expect that to reverse itself in the near term. So about where we are is pretty good
91. +0.37%50:48Analystwith us for right now. Thanks. And then my second question is on the business insurance underlying loss ratio. That went up by about 50 basis points from last Q3. You guys didn't call it anything in the prepared remarks, so maybe there was nothing that significant, but was there non-CAT weather or anything else you would describe as the drivers of the year-over-year change there?
92. +0.66%51:14ManagementYeah, at least, Dan. So I think you're right in the first place, not a very big change and nothing in particular to call out. It's a great number, and it moved by about a half a point year-over-year, which could have easily moved a half a point the other way. A bunch of stuff in there, as there always is, the impact of pricing, product mix. There are changes in non-CAT property losses. There's base year changes. There's the impact of strategic investments we're making, as Greg mentioned in his remarks again. But none of those things were particularly noteworthy to score.
93. +0.66%51:47AnalystThank you.
94. +0.66%51:51OperatorYour next question comes from the line of Andrew Clyderman with TD Cohen. Andrew, your line is open. Please go ahead.
95. +0.57%52:01AnalystHey. Thank you. Good morning. I'm looking at slide seven of your presentation, and it just really strikes me how strong net investment income improves year after year. So the question is, is that now finally – and your combines are fantastic – is that going to start to weigh into your pricing? How are you thinking about net investment income with respect to pricing?
96. +0.57%52:35ManagementAndrew, good morning. We do have a link between income and our insurance pricing. It's, of course, part of the model. Just a couple of things to think about though. The portfolio turns over relatively slowly, so it takes a while to earn in. And as the risk-free rate goes up, our hurdle returns go up. So you sort of have to put all that into the blender to figure out what
97. +0.60%53:02Analystthe impact is. Got it. Personal lines. So we saw renewal premium change go down 0.6% in auto. HIF was down 3% in auto, down 4% in homeowners. Could you talk a little bit about the competitive landscape in personal lines? And with all this competition, how are you defending the fort? How are you going to keep HIF up rather than down? Sure, Andrew. It's Michael. I mean, I think
98. +0.60%53:42Managementthe comments that I made in my prepared remarks are really key to what we're doing there. And you know, I think it's a really important thing to do. I think it's a really important thing to do. You know, to be clear, you know, we're definitely not, you know, one to chase premium growth at all costs in any given short period of time, right? Our objective is to profitably grow this business over time. We do that by matching price to risk. And so you see that activity in the RPC numbers that you're looking at, right? In the third quarter of this year, we took about 10 rate decreases in auto. Again, still in that same low single-digit range that we've been talking about, but as we monitor our performance and look at lost costs, we adjust pricing. So that's certainly
99. +0.66%54:24Managementa lever that we pull. We continue to make strategic investments in products and services and capabilities that make sure that we have the products and services our customers want to buy and our agents want to sell. And then we do quite a bit around distribution management, making sure that we've got the agents appointed that we need and that we are taking advantage of opportunities to solve problems for them. When I talk about book consolidation opportunities as an example, that's when we're working with an agent or a broker who's having issues with another carrier, and we talk to them about bringing that business over to travelers. So there are a number of things that we're doing from an appetite, pricing, and distribution management standpoint, both to,
100. +0.68%55:09Managementyou know, defend the fort, to use your words, but also to play offense to make sure that we're leveraging the capabilities we have to profitably grow the business over the long term.
101. +0.68%55:17AnalystVery interesting. Thank you. Thank you. Thank you. That's really helpful.
102. +0.68%55:21OperatorThanks. Your next question comes from the line of Yarin Kinnar with Mizuho. Yarin, your line is open. Please go ahead.
103. +0.68%55:32AnalystThank you. Good morning. I wanted to start maybe with cyber insurance. Just given, you know, Hugging Face, AI agents, maybe more hacking activity and capabilities, is this the line of business that is a viable business line for the private market? Do you need maybe more government support? Or more systemic intervention here? How are you thinking about that?
104. +0.68%55:58ManagementGood morning, Yaron. This is Jeff. You know, as consistently highlighted by the Travelers Business Risk Index, cyber is one of the most important topics that our customers are facing. It's a dynamic exposure, and it has been, and there's no question that the advanced AI models are adding to that dynamic. I'd remind you when you think about our portfolio, it's heavily weighted toward the middle market, Main Street businesses. We've always been focused on limits management. If you look inside our book of business, a substantial majority of our limits are at $1 million or less. Those accounts that are above that are predominantly at $5 million or less, and that's before you take into account any reinsurance that we have in place.
105. +0.69%56:42ManagementAnd cyber has always been one of our most heavily reinsured lines of business. And then the last thing I'd share with you is that we've really invested heavily in risk control capabilities, including our acquisition of Corvus a few years ago that we've shared with you. We're not just assessing these accounts on the front end as we put them into the portfolio. We've got ongoing risk control capabilities to help them manage the risk. And so I think we are investing to address the exposure in partnership with our customers in many ways. Yaron, to the extent that was a public policy question and question about whether we need a government to be able to do this, I'm wondering if you have any questions regarding that, and perhaps if you have any questions related to that.
106. +0.75%57:27ManagementYaron, I feel like this is a lot of conversation. I think this is a lot of conversation. I think this is a lot of discussion. It's a lot of action, and I think it's a lot of conversation.
107. +0.75%57:31AnalystBut I think that we've talked about the need for a government backstop. I don't really know. I mean there's active conversations about that now, and we'll see how that plays out. Okay. And then going back to business insurance, so obviously I see a little bit of noise quarter over quarter, but if I look at the year to date numbers, they're flat, right, on the combined ratio or the loss ratio. Is that kind of a fair way of thinking about where the company is today and what the expectations would be? I'm going to go back to the last question. quarter. But if I look at the year-to-date numbers, they're flat, right, on the combined ratio, the loss ratio. Is that kind of a fair way of thinking about where the company is today and
108. +0.75%57:53Managementwhat the expectations would be going forward? We should start with the noise comment. I mean, these are spectacular numbers. And so there really is no noise in them. There are, as always, a bunch of puts and takes. Some things are favorable. Some things are going the other way. But this is a spectacular number. And I think, you know, to the earlier comment on top line, we're not going to give guidance on, you know, combined ratio expectations in any of the segments, you know, other than to reiterate, like, the profitability of the business is really strong. We're generating all-time high levels of underlying underwriting income, and we think
109. +0.61%58:35Analystthat's got some staying power. Okay. And just to be clear, I did not mean noise, right? I meant puts and takes to your...
110. +0.61%58:43ManagementThank you for the clarification. Yeah.
111. +0.61%58:47OperatorWe have time for one last question, and that question comes from the line of Matthew Heinerman with Citi. Matthew, your line is open. Please go ahead.
112. +0.10%59:01AnalystHey, good morning. I guess a question I had was just we're seeing more at an industry level scrutiny of just claim settlement practices in general. There's some litigation, Oklahoma, and the community obviously has been active. I'm just curious. I know that your claims practices are unique to your company, and the industry isn't necessarily representative of you. But I'm curious just how you would frame the risk from continued scrutiny on practices. Just from a regulatory perspective, I have diminution of value in the back of my head as kind of, I don't know if it's
113. +0.10%59:44Analystthe right analog, but something similar. I don't know if it's the right analog, but something similar where claims practices were scrutinized and you saw some changes on the back of it, both in terms of coverage and how companies operated.
114. +0.10%59:53ManagementYeah. Matt, let me just start. And you referenced our practices. I should just say there have been a couple of articles recently about this. One, we weren't in at all, and the other, we were profiled as pretty favorable. So I just want to distinguish that from what's... You want to talk about closing up days and the things that could impact that, Michael? Yeah, sure. I mean, I think, again, those couple articles really focused on ... Yeah. Yeah. Closed without pay percentages across carriers. To Alan's point in that first article, we looked favorable. That said, comparing closed without pay percentages across carriers is very fragile. The definition of claims, when they're established, why they're established, what causes them to be
115. -0.12%60:37Managementpaid with and without, or closed with and without payment vary from one insurer to the next just from a definitional standpoint. But you can have a claim filed and have the loss be below the deductible, for example. As a reason that that claim gets closed without payment. And then I guess your broader question about seeing these cases in Oklahoma and other places against other carriers for their claim handling practices, just reinforcing Alan's comment, I mean, we have well established claim handling practices. They're grounded in the philosophy to pay what we owe to deliver exceptional customer experience and do that as efficiently and effectively as possible. And I would say our claim handling practices, for example, we think are very important and that's very important to us.
116. -0.43%61:20Managementhandling and our claim organization is the best in the business we're proud of it we hear from our agents and brokers that it's one of the reasons they are proud to represent and sell travelers so I think we've really got a strong foundation on in that in that space Matt with all with all that said let me try to answer your question we are we are very active as a company and just you know an effort to be an honest broker out there in state capitals and with insurance commissioners and with the media and and and our trade association is very active in the same places making sure that we're educating people and and and people understand you know the good work this industry does the billions of dollars that we do pay out the speed with which we pay it out the risk
117. -0.52%62:05Managementcontrol services that we provide so we are we are very attentive to to this as a topic of interest and we are very engaged in speaking to it
118. -0.52%62:15AnalystI appreciate it I appreciate that if I could sneak one last in mindful of time is just is it fair to say then when you think about creating uh benchmarks for measuring the performance of your claims organization and how you organize it that that's an internal an internal effort rather than relying on third parties to to shape
119. -0.52%62:38Managementum practices and targets Etc not I'm not exactly sure the question but we mean we certainly have our internal benchmarks you know and and our service level objectives you know for example our objective is to close 90 of claims within 30 days after every catastrophe and over the course of a year we we routinely achieve that objective but our our our real objective is to pay what we owe and to pay it quickly and and we
120. -0.46%63:07Analystare we are very disciplined about that yeah that's fair I'm sorry I I butchered the question I I really meant um the source of some of the the litigation at least is use of third-party consultants shaping policies and procedures and uh and other incentives within the organization and that seems contrary to at least my historical recollection and experience with with your company
121. -0.46%63:31Managementyeah you know we we and others you know endeavor to use the data that we have about the good work we do to to rebut some of the data others are using to try to make the other case I I think this industry is highly responsible and and and disciplined and and we use the data that we have
122. -0.46%63:49Operatorto make that case appreciate it thank you thank you we have reached the end of our call I will now turn the call back to Abby Goldstein for closing remarks thanks very much for joining us today as
123. -0.09%64:05Managementalways if there's any follow-up please reach out to investor relations and have a good day
124. -0.09%64:11Operatorthis concludes today's call thank you for attending you may now disconnect