Second Quarter 2021 Net Income per Diluted Share of $3.66 and Return on Equity of 13.0%

Second Quarter 2021 Core Income per Diluted Share of $3.45 and Core Return on Equity of 13.7%

Strong second quarter net income of $934 million and core income of $879 million.
Consolidated combined ratio of 95.3% and underlying combined ratio of 91.4%.
Net investment income of $818 million pre-tax compared to $268 million pre-tax in the prior year quarter.
Net written premiums of $8.135 billion, up 11% compared to the prior year quarter (8% adjusting for the personal automobile premium refunds in the prior year quarter); growth in all three segments.
Total capital returned to shareholders of $625 million, including $401 million of share repurchases.
Book value per share of $116.86, up 10% from June 30, 2020; adjusted book value per share of $103.88, up 13% from June 30, 2020.
Board of Directors declares regular quarterly cash dividend of $0.88 per share.

The Travelers Companies, Inc. today reported net income of $934 million, or $3.66 per diluted share, for the quarter ended June 30, 2021, compared to a net loss of $40 million, or $0.16 per diluted share, in the prior year quarter. Core income in the current quarter was $879 million, or $3.45 per diluted share, compared to a core loss of $50 million, or $0.20 per diluted share, in the prior year quarter. The improvement was due to higher net investment income, lower catastrophe losses, higher net favorable prior year reserve development and a higher underlying underwriting gain (i.e., excluding net prior year reserve development and catastrophe losses). Net realized investment gains in the current quarter were $61 million pre-tax ($47 million after-tax), compared to $13 million pre-tax ($10 million after-tax) in the prior year quarter. Per diluted share amounts benefited from the impact of share repurchases.

Consolidated Highlights

($ in millions, except for per share amounts, and after-tax, except for premiums and revenues)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

Change

2021

2020

Change

Net written premiums

8,135

7,346

15,640

14,692

Total revenues

8,687

7,401

17,000

15,309

Net income (loss)

934

(40

)

1,667

560

198

per diluted share

3.66

(0.16

)

6.53

2.19

198

Core income (loss)

879

(50

)

1,578

626

152

per diluted share

3.45

(0.20

)

6.18

2.44

153

Diluted weighted average shares outstanding

253.1

251.6

253.6

254.7

—

Combined ratio

95.3

103.7

(8.4

)

pts

95.9

99.5

(3.6

)

pts

Underlying combined ratio

91.4

—

pts

90.5

91.3

(0.8

)

pts

Return on equity

13.0

(0.6

)

13.6

pts

11.6

4.3

7.3

pts

Core return on equity

13.7

(0.8

)

14.5

pts

12.4

5.3

7.1

pts

	As of						Change From
	June 30, 2021		December 31, 2020		June 30, 2020		December 31, 2020		June 30, 2020
Book value per share	$	116.86	$	115.68	$	106.42	1	%	10	%
Adjusted book value per share	103.88		99.54		92.01		4	%	13	%
See Glossary of Financial Measures for definitions and the statistical supplement for additional financial data. NM = Not meaningful.

"We are very pleased to report excellent underwriting and investment results, generating second quarter core income of $879 million, or $3.45 per diluted share, and core return on equity of 13.7%," said Alan Schnitzer, Chairman and Chief Executive Officer. "Higher underlying underwriting income and net favorable prior year reserve development, as well as a lower level of catastrophe losses, all contributed to higher core income compared to the prior year quarter. Underlying underwriting income benefited from record net earned premiums and a strong underlying combined ratio of 91.4%. Our high-quality investment portfolio generated net investment income of $682 million after-tax, reflecting very strong returns in our non-fixed income portfolio. These results, together with our strong balance sheet, enabled us to return $625 million of excess capital to shareholders this quarter, including $401 million of share repurchases.

"For the quarter, net written premiums grew 11%, or 8% adjusting for the auto premium refunds in the prior year quarter, with each of our three segments contributing. In Business Insurance, net written premiums grew by 5%, with renewal premium change of 9.5% near an all-time high, driven by continued strong renewal rate change and higher insured exposures reflecting higher levels of U.S. economic activity. At the same time, retention was higher reflecting stability in the pricing environment and we grew new business by 9%. In Bond & Specialty Insurance, net written premiums increased by 16%, driven by record renewal premium change of 12.7% in our management liability business, while retention remained strong. In Personal Insurance, net written premiums increased by 16%, or 8% adjusting for the auto premium refunds in the prior year quarter. Policies in force in both Auto and Homeowners are at record levels driven by continued strong retention and growth in new business.

"Our excellent top and bottom line results this quarter and for the first half of the year demonstrate the continued successful execution of our strategy to grow the top line at attractive returns, as well as the effectiveness of our well-defined and consistent investment philosophy. Our focused innovation agenda has been an important contributor to the growth and profitability we have achieved, and we will continue to relentlessly pursue our priorities of extending our lead in risk expertise, providing great experiences to our customers, distribution partners and employees, and improving productivity and efficiency. With the momentum we have and the best talent in the industry, we are well positioned to continue to create meaningful shareholder value over time."


Consolidated Results
	Three Months Ended June 30,															Six Months Ended June 30,
($ in millions and pre-tax, unless noted otherwise)	2021					2020					Change					2021					2020					Change
Underwriting gain (loss):	$	324				$	(280	)			$	604				$	541				$	8				$	533
Underwriting gain (loss) includes:
Net favorable prior year reserve development	182					2					180					499					29					470
Catastrophes, net of reinsurance	(475		)			(854		)			379					(1,310		)			(1,187		)			(123		)
Net investment income	818					268					550					1,519					879					640
Other income (expense), including interest expense	(72		)			(86		)			14					(143		)			(167		)			24
Core income (loss) before income taxes	1,070					(98		)			1,168					1,917					720					1,197
Income tax expense (benefit)	191					(48		)			239					339					94					245
Core income (loss)	879					(50		)			929					1,578					626					952
Net realized investment gains (losses) after income taxes	47					10					37					81					(66		)			147
Impact of changes in tax laws and/or tax rates (1)	8					—					8					8					—					8
Net income (loss)	$	934				$	(40	)			$	974				$	1,667				$	560				$	1,107

Combined ratio	95.3			%		103.7			%		(8.4		)		pts	95.9			%		99.5			%		(3.6		)		pts
Impact on combined ratio
Net favorable prior year reserve development	(2.4		)		pts	—				pts	(2.4		)		pts	(3.3		)		pts	(0.2		)		pts	(3.1		)		pts
Catastrophes, net of reinsurance	6.3				pts	12.3				pts	(6.0		)		pts	8.7				pts	8.4				pts	0.3				pts
Underlying combined ratio	91.4			%		91.4			%		—				pts	90.5			%		91.3			%		(0.8		)		pts

Net written premiums
Business Insurance	$	3,980				$	3,777				5			%		$	8,105				$	7,967				2			%
Bond & Specialty Insurance	854					734					16					1,577					1,397					13
Personal Insurance	3,301					2,835					16					5,958					5,328					12
Total	$	8,135				$	7,346				11			%		$	15,640				$	14,692				6			%
(1) Impact is recognized in the accounting period in which the change is enacted

Second Quarter 2021 Results

(All comparisons vs. second quarter 2020, unless noted otherwise)

The Company reported net income of $934 million, compared to a net loss of $40 million in the prior year quarter. Core income of $879 million improved from a core loss of $50 million in the prior year quarter due to higher net investment income, lower catastrophe losses, higher net favorable prior year reserve development and a higher underlying underwriting gain. The underlying underwriting gain benefited from higher business volumes. Net realized investment gains were $61 million pre-tax ($47 million after-tax) compared to $13 million pre-tax ($10 million after-tax) in the prior year quarter.

Combined ratio:

The combined ratio of 95.3% improved 8.4 points due to lower catastrophe losses (6.0 points) and higher net favorable prior year reserve development (2.4 points).

The underlying combined ratio of 91.4% was comparable to the prior year quarter. See below for further details by segment.

Net favorable prior year reserve development occurred in all segments. See below for further details by segment. Catastrophe losses primarily resulted from severe wind and hail storms in several regions of the United States.

Net investment income of $818 million pre-tax ($682 million after-tax) increased from $268 million pre-tax ($251 million after-tax) in the prior year quarter. Income from the non-fixed income investment portfolio was $335 million pre-tax ($265 million after-tax) compared to a loss of $234 million pre-tax ($180 million after-tax) in the prior year quarter. The improvement in income from the non-fixed income investment portfolio was primarily due to positive private equity partnership returns in the current quarter compared to negative private equity partnership returns in the prior year quarter. The loss in the non-fixed income investment portfolio in the prior year quarter was related to the disruption in global financial markets during the first quarter of 2020 associated with COVID-19. Non-fixed income returns are generally reported on a one-quarter lagged basis and directionally follow the broader equity markets. Income from the fixed income investment portfolio decreased from the prior year quarter, primarily due to lower interest rates, partially offset by a higher average level of fixed maturity investments.

Net written premiums of $8.135 billion increased 11%. Adjusting for the premium refunds provided to personal automobile customers in response to COVID-19 and related economic conditions in the prior year quarter, net written premiums increased 8%. See below for further details by segment.

Year-to-Date 2021 Results

(All comparisons vs. year-to-date 2020, unless noted otherwise)

Net income of $1.667 billion increased $1.107 billion due to higher core income and net realized investment gains in the current period compared to net realized investment losses in the prior year period. Core income of $1.578 billion increased by $952 million due to higher net investment income, higher net favorable prior year reserve development and a higher underlying underwriting gain, partially offset by higher catastrophe losses. The underlying underwriting gain benefited from higher business volumes. Net realized investment gains were $105 million pre-tax ($81 million after-tax) compared to net realized investment losses of $85 million pre-tax ($66 million after-tax) in the prior year period.

Combined ratio:

The combined ratio of 95.9% improved 3.6 points due to higher net favorable prior year reserve development (3.1 points) and a lower underlying combined ratio (0.8 points), partially offset by higher catastrophe losses (0.3 points).

The underlying combined ratio of 90.5% improved 0.8 points. See below for further details by segment.

Net favorable prior year reserve development occurred in all segments. See below for further details by segment. Catastrophe losses included the second quarter events described above, as well as winter storms and wind storms in several regions of the United States in the first quarter of 2021.

Net investment income of $1.519 billion pre-tax ($1.272 billion after-tax) increased from $879 million pre-tax ($770 million after-tax) in the prior year period. Income from the non-fixed income investment portfolio was $553 million pre-tax ($439 million after-tax) compared to a loss of $146 million pre-tax ($109 million after-tax) in the prior year period. The improvement in income from the non-fixed income investment portfolio was primarily due to positive private equity partnership returns in the current period compared to negative private equity partnership returns in the prior year period. The loss in the non-fixed income investment portfolio in the prior year period was related to the disruption in global financial markets during the first quarter of 2020 associated with COVID-19. Income from the fixed income investment portfolio decreased from the prior year period, primarily due to lower interest rates, partially offset by a higher average level of fixed maturity investments.

Net written premiums of $15.640 billion increased 6%. Adjusting for the premium refunds provided to personal automobile customers in response to COVID-19 and related economic conditions primarily in the second quarter of 2020, net written premiums increased 5%. See below for further details by segment.

Shareholders' Equity

Shareholders' equity of $29.156 billion was comparable to year-end 2020, as lower net unrealized investment gains resulting from higher interest rates, common share repurchases and dividends to shareholders were largely offset by net income of $934 million. Net unrealized investment gains included in shareholders' equity were $4.112 billion pre-tax ($3.239 billion after-tax) compared to $5.175 billion pre-tax ($4.074 billion after-tax) at year-end 2020. Book value per share of $116.86 increased 10% from June 30, 2020 and increased 1% from year-end 2020. Adjusted book value per share of $103.88, which excludes net unrealized investment gains, increased 13% from June 30, 2020 and increased 4% from year-end 2020.

The Company repurchased 2.6 million shares during the second quarter at an average price of $157.18 per share for a total of $401 million. At the end of the quarter, statutory capital and surplus was $22.797 billion, and the ratio of debt-to-capital was 20.0%. The ratio of debt-to-capital excluding after-tax net unrealized investment gains included in shareholders' equity was 22.0%, within the Company's target range of 15% to 25%.

The Board of Directors declared a regular quarterly dividend of $0.88 per share. The dividend is payable on September 30, 2021, to shareholders of record at the close of business on September 10, 2021.


Business Insurance Segment Financial Results
	Three Months Ended June 30,															Six Months Ended June 30,
($ in millions and pre-tax, unless noted otherwise)	2021					2020					Change					2021					2020					Change
Underwriting income (loss):	$	173				$	(273	)			$	446				$	29				$	(372	)			$	401
Underwriting income (loss) includes:
Net favorable prior year reserve development	73					—					73					207					5					202
Catastrophes, net of reinsurance	(149		)			(377		)			228					(655		)			(572		)			(83		)
Net investment income	615					180					435					1,138					633					505
Other income (expense)	(8		)			(6		)			(2		)			(15		)			(22		)			7
Segment income (loss) before income taxes	780					(99		)			879					1,152					239					913
Income tax expense (benefit)	137					(41		)			178					192					8					184
Segment income (loss)	$	643				$	(58	)			$	701				$	960				$	231				$	729

Combined ratio	95.3			%		107.1			%		(11.8		)		pts	99.3			%		104.6			%		(5.3		)		pts
Impact on combined ratio
Net favorable prior year reserve development	(1.9		)		pts	—				pts	(1.9		)		pts	(2.7		)		pts	—				pts	(2.7		)		pts
Catastrophes, net of reinsurance	3.9				pts	10.1				pts	(6.2		)		pts	8.5				pts	7.5				pts	1.0				pts
Underlying combined ratio	93.3			%		97.0			%		(3.7		)		pts	93.5			%		97.1			%		(3.6		)		pts

Net written premiums by market
Domestic
Select Accounts	$	726				$	734				(1		)	%		$	1,455				$	1,533				(5		)	%
Middle Market	2,087					1,960					6					4,471					4,368					2
National Accounts	213					215					(1		)			503					516					(3		)
National Property and Other	647					585					11					1,092					1,013					8
Total Domestic	3,673					3,494					5					7,521					7,430					1
International	307					283					8					584					537					9
Total	$	3,980				$	3,777				5			%		$	8,105				$	7,967				2			%

Second Quarter 2021 Results

(All comparisons vs. second quarter 2020, unless noted otherwise)

Segment income for Business Insurance was $643 million after-tax, compared with a segment loss of $58 million after-tax in the prior year quarter. The improvement was due to higher net investment income, lower catastrophe losses, a higher underlying underwriting gain and net favorable prior year reserve development compared with no net prior year reserve development in the prior year quarter. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

The combined ratio of 95.3% improved 11.8 points due to lower catastrophe losses (6.2 points), a lower underlying combined ratio (3.7 points) and net favorable prior year reserve development compared with no net prior year reserve development in the prior year quarter (1.9 points).

The underlying combined ratio of 93.3% improved by 3.7 points, primarily reflecting earned pricing that exceeded loss cost trends, as well as lower non-catastrophe weather-related losses and a favorable comparison to a modest net charge related to COVID-19 and related economic conditions in the prior year quarter.

Net favorable prior year reserve development was primarily driven by better than expected loss experience in domestic operations in the workers' compensation product line for multiple accident years, partially offset by an increase in reserves related to run-off operations.

Net written premiums of $3.980 billion increased 5%, reflecting strong renewal premium change and retention, as well as higher new business levels.

Year-to-Date 2021 Results

(All comparisons vs. year-to-date 2020, unless noted otherwise)

Segment income for Business Insurance was $960 million after-tax, an increase of $729 million. Segment income increased due to higher net investment income, a higher underlying underwriting gain and higher net favorable prior year reserve development, partially offset by higher catastrophe losses.

Combined ratio:

The combined ratio of 99.3% improved 5.3 points due to a lower underlying combined ratio (3.6 points) and higher net favorable prior year reserve development (2.7 points), partially offset by higher catastrophe losses (1.0 points).

The underlying combined ratio of 93.5% improved 3.6 points, primarily reflecting earned pricing that exceeded loss cost trends, as well as a favorable comparison to a net charge related to COVID-19 and related economic conditions in the prior year period.

Net favorable prior year reserve development was primarily driven by better than expected loss experience in domestic operations in the workers' compensation product line for multiple accident years and in the commercial property and commercial automobile product lines for recent accident years, partially offset by an increase in claims handling expense reserves related to run-off operations and an increase to environmental reserves.

Net written premiums of $8.105 billion increased 2%. The benefits of continued strong retention and higher renewal rate change were partially offset by lower net written premiums in the workers' compensation product line due to the impact of COVID-19 and related economic conditions on payrolls.


Bond & Specialty Insurance Segment Financial Results
	Three Months Ended June 30,															Six Months Ended June 30,
($ in millions and pre-tax, unless noted otherwise)	2021					2020					Change					2021					2020					Change
Underwriting gain:	$	165				$	40				$	125				$	272				$	132				$	140
Underwriting gain includes:
Net favorable (unfavorable) prior year reserve development	44					(33		)			77					59					(33		)			92
Catastrophes, net of reinsurance	(3		)			(7		)			4					(27		)			(8		)			(19		)
Net investment income	64					42					22					123					97					26
Other income	6					4					2					9					8					1
Segment income before income taxes	235					86					149					404					237					167
Income tax expense	48					14					34					80					43					37
Segment income	$	187				$	72				$	115				$	324				$	194				$	130

Combined ratio	78.1			%		93.8			%		(15.7		)		pts	81.6			%		89.9			%		(8.3		)		pts
Impact on combined ratio
Net favorable (unfavorable) prior year reserve development	(5.7		)		pts	4.7				pts	(10.4		)		pts	(3.9		)		pts	2.4				pts	(6.3		)		pts
Catastrophes, net of reinsurance	0.4				pts	1.0				pts	(0.6		)		pts	1.7				pts	0.6				pts	1.1				pts
Underlying combined ratio	83.4			%		88.1			%		(4.7		)		pts	83.8			%		86.9			%		(3.1		)		pts

Net written premiums
Domestic
Management Liability	$	497				$	438				13			%		$	941				$	839				12			%
Surety	232					220					5					432					435					(1		)
Total Domestic	729					658					11					1,373					1,274					8
International	125					76					64					204					123					66
Total	$	854				$	734				16			%		$	1,577				$	1,397				13			%

Second Quarter 2021 Results

(All comparisons vs. second quarter 2020, unless noted otherwise)

Segment income for Bond & Specialty Insurance was $187 million after-tax, an increase of $115 million. Segment income increased due to net favorable prior year reserve development in the current quarter compared to net unfavorable prior year reserve development in the prior year quarter, a higher underlying underwriting gain and higher net investment income. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

The combined ratio of 78.1% improved 15.7 points due to net favorable prior year reserve development in the current quarter compared to net unfavorable prior year reserve development in the prior year quarter (10.4 points), a lower underlying combined ratio (4.7 points) and lower catastrophe losses (0.6 points).

The underlying combined ratio of 83.4% improved 4.7 points, primarily reflecting earned pricing that exceeded loss cost trends and a lower expense ratio primarily resulting from higher premium volumes.

Net favorable prior year reserve development was primarily driven by better than expected loss experience in the segment' s domestic operations in the fidelity and surety product lines for recent accident years.

Net written premiums of $854 million increased 16%, reflecting strong retention and renewal premium change in management liability.

Year-to-Date 2021 Results

(All comparisons vs. year-to-date 2020, unless noted otherwise)

Segment income for Bond & Specialty Insurance was $324 million after-tax, an increase of $130 million. Segment income increased due to net favorable prior year reserve development in the current year compared to net unfavorable prior year reserve development in the prior year period, a higher underlying underwriting gain and higher net investment income, partially offset by higher catastrophe losses. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

The combined ratio of 81.6% improved 8.3 points due to net favorable prior year reserve development in the current year compared to net unfavorable prior year reserve development in the prior year period (6.3 points) and a lower underlying combined ratio (3.1 points), partially offset by higher catastrophe losses (1.1 points).

The underlying combined ratio of 83.8% improved 3.1 points, primarily reflecting earned pricing that exceeded loss cost trends and a lower expense ratio primarily resulting from higher premium volumes.

Net favorable prior year reserve development was primarily driven by better than expected loss experience in the segment' s domestic operations in the fidelity and surety product lines for recent accident years.

Net written premiums of $1.577 billion increased 13%, driven by the same factors described above for the second quarter of 2021.


Personal Insurance Segment Financial Results
	Three Months Ended June 30,															Six Months Ended June 30,
($ in millions and pre-tax, unless noted otherwise)	2021					2020					Change					2021					2020					Change
Underwriting gain (loss):	$	(14	)			$	(47	)			$	33				$	240				$	248				$	(8	)
Underwriting gain (loss) includes:
Net favorable prior year reserve development	65					35					30					233					57					176
Catastrophes, net of reinsurance	(323		)			(470		)			147					(628		)			(607		)			(21		)
Net investment income	139					46					93					258					149					109
Other income	21					10					11					42					32					10
Segment income before income taxes	146					9					137					540					429					111
Income tax expense (benefit)	25					(1		)			26					105					83					22
Segment income	$	121				$	10				$	111				$	435				$	346				$	89

Combined ratio	99.7			%		101.3			%		(1.6		)		pts	95.1			%		94.5			%		0.6				pts
Impact on combined ratio
Net favorable prior year reserve development	(2.2		)		pts	(1.3		)		pts	(0.9		)		pts	(4.0		)		pts	(1.1		)		pts	(2.9		)		pts
Catastrophes, net of reinsurance	10.9				pts	18.6				pts	(7.7		)		pts	10.8				pts	11.6				pts	(0.8		)		pts
Underlying combined ratio	91.0			%		84.0			%		7.0				pts	88.3			%		84.0			%		4.3				pts

Net written premiums
Domestic
Automobile	$	1,467				$	1,204				22			%		$	2,842				$	2,537				12			%
Homeowners and Other	1,634					1,458					12					2,778					2,475					12
Total Domestic	3,101					2,662					16					5,620					5,012					12
International	200					173					16					338					316					7
Total	$	3,301				$	2,835				16			%		$	5,958				$	5,328				12			%

Second Quarter 2021 Results

(All comparisons vs. second quarter 2020, unless noted otherwise)

Segment income for Personal Insurance was $121 million after-tax, an increase of $111 million. Segment income increased due to lower catastrophe losses, higher net investment income and higher net favorable prior year reserve development, partially offset by a lower underlying underwriting gain. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

The combined ratio of 99.7% improved 1.6 points due to lower catastrophe losses (7.7 points) and higher net favorable prior year reserve development (0.9 points), partially offset by a higher underlying combined ratio (7.0 points).

The underlying combined ratio of 91.0% increased 7.0 points, primarily driven by higher losses in the homeowners and other product line as well as higher losses in the automobile product line due to a comparison to a low level of loss activity (net of premium refunds) in the prior year quarter as a result of the pandemic.

Net favorable prior year reserve development was primarily driven by better than expected loss experience in the segment' s domestic operations in both the automobile and homeowners and other product lines for recent accident years.

Net written premiums of $3.301 billion increased 16%. Adjusting for the premium refunds provided to personal automobile customers in the prior year quarter, net written premiums increased 8%. Domestic Automobile net written premiums increased 22%. Adjusting for the premium refunds, Domestic Automobile net written premiums increased 4%, driven by strong retention and higher levels of new business. Domestic Homeowners and Other net written premiums increased 12%, driven by strong retention, renewal premium change of 8.2% and higher levels of new business.

Year-to-Date 2021 Results

(All comparisons vs. year-to-date 2020, unless noted otherwise)

Segment income for Personal Insurance was $435 million after-tax, an increase of $89 million. Segment income increased due to higher net favorable prior year reserve development and higher net investment income, partially offset by a lower underlying underwriting gain. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

The combined ratio of 95.1% increased 0.6 points due to a higher underlying combined ratio (4.3 points), partially offset by higher net favorable prior year reserve development (2.9 points) and a smaller impact from catastrophe losses (0.8 points).

The underlying combined ratio of 88.3% increased 4.3 points, primarily driven by higher losses in the homeowners and other product line.

Net favorable prior year reserve development was primarily driven by better than expected loss experience in the segment' s domestic operations in both the automobile and homeowners and other product lines for recent accident years.

Net written premiums of $5.958 billion increased 12%. Adjusting for the premium refunds provided to personal automobile customers primarily in the second quarter of 2020, net written premiums increased 8%. Domestic Automobile net written premiums increased 12%. Adjusting for the premium refunds, Domestic Automobile net written premiums increased 4% driven by strong retention and higher levels of new business. Domestic Homeowners and Other net written premiums increased 12%, driven by strong retention, renewal premium change of 7.9% and higher levels of new business.

Financial Supplement and Conference Call

The information in this press release should be read in conjunction with the financial supplement that is available on our website at www.travelers.com. Travelers management will discuss the contents of this release and other relevant topics via webcast at 9 a.m. Eastern (8 a.m. Central) on Tuesday, July 20, 2021. Investors can access the call via webcast at http://investor.travelers.com or by dialing 1.844.895.1976 within the United States and 1.647.689.5389 outside the United States. Prior to the webcast, a slide presentation pertaining to the quarterly earnings will be available on the Company's website.

Following the live event, replays will be available via webcast for one year at http://investor.travelers.com and by telephone for 30 days by dialing 1.800.585.8367 within the United States or 1.416.621.4642 outside the United States. All callers should use conference ID 5555606.

About Travelers

The Travelers Companies, Inc. (NYSE:TRV) is a leading provider of property casualty insurance for auto, home and business. A component of the Dow Jones Industrial Average, Travelers has approximately 30,000 employees and generated revenues of approximately $32 billion in 2020. For more information, visit www.travelers.com.

Travelers may use its website and/or social media outlets, such as Facebook and Twitter, as distribution channels of material Company information. Financial and other important information regarding the Company is routinely accessible through and posted on our website at http://investor.travelers.com, our Facebook page at https://www.facebook.com/travelers and our Twitter account (@Travelers) at https://twitter.com/travelers. In addition, you may automatically receive email alerts and other information about Travelers when you enroll your email address by visiting the Email Notifications section at http://investor.travelers.com.

Travelers is organized into the following reportable business segments:

Business Insurance - Business Insurance offers a broad array of property and casualty insurance and insurance-related services to its customers, primarily in the United States, as well as in Canada, the United Kingdom, the Republic of Ireland and throughout other parts of the world as a corporate member of Lloyd's.

Bond & Specialty Insurance - Bond & Specialty Insurance provides surety, fidelity, management liability, professional liability, and other property and casualty coverages and related risk management services to its customers in the United States and certain specialty insurance products in Canada, the United Kingdom and the Republic of Ireland, as well as Brazil through a joint venture, utilizing various degrees of financially-based underwriting approaches.

Personal Insurance - Personal Insurance writes a broad range of property and casualty insurance covering individuals' personal risks, primarily in the United States, as well as in Canada. The primary products of automobile and homeowners insurance are complemented by a broad suite of related coverages.

* * * * *

Forward-Looking Statements

This press release contains, and management may make, certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. Words such as "may," "will," "should," "likely," "anticipates," "expects," "intends," "plans," "projects," "believes," "views," "estimates" and similar expressions are used to identify these forward-looking statements. These statements include, among other things, the Company's statements about:

the Company's outlook, the impact of trends on its business and its future results of operations and financial condition;
the impact of COVID-19 and related economic conditions;
the impact of legislative or regulatory actions or court decisions taken in response to COVID-19 or otherwise;
share repurchase plans;
future pension plan contributions;
the sufficiency of the Company's asbestos and other reserves;
the impact of emerging claims issues as well as other insurance and non-insurance litigation;
the cost and availability of reinsurance coverage;
catastrophe losses;
the impact of investment, economic and underwriting market conditions, including inflation;
strategic and operational initiatives to improve profitability and competitiveness;
the Company's competitive advantages;
new product offerings;
the impact of new or potential trade regulations imposed by the United States or other nations; and
the impact of developments in the tort environment.

The Company cautions investors that such statements are subject to risks and uncertainties, many of which are difficult to predict and generally beyond the Company's control, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.

Some of the factors that could cause actual results to differ include, but are not limited to, the following:

Insurance-Related Risks

high levels of catastrophe losses;
actual claims may exceed the Company's claims and claim adjustment expense reserves, or the estimated level of claims and claim adjustment expense reserves may increase, including as a result of, among other things, changes in the legal/tort, regulatory and economic environments;
the Company's potential exposure to asbestos and environmental claims and related litigation;
the Company is exposed to, and may face adverse developments involving, mass tort claims; and
the effects of emerging claim and coverage issues on the Company's business are uncertain, and court decisions or legislative changes that take place after the Company issues its policies can result in an unexpected increase in the number of claims.

Financial, Economic and Credit Risks

a period of financial market disruption or an economic downturn;
the Company's investment portfolio is subject to credit and interest rate risk, and may suffer reduced or low returns or material realized or unrealized losses;
the Company is exposed to credit risk related to reinsurance and structured settlements, and reinsurance coverage may not be available to the Company;
the Company is exposed to credit risk in certain of its insurance operations and with respect to certain guarantee or indemnification arrangements that it has with third parties;
a downgrade in the Company's claims-paying and financial strength ratings; and
the Company's insurance subsidiaries may be unable to pay dividends to the Company's holding company in sufficient amounts.

Business and Operational Risks

the impact of COVID-19 and related risks, including with respect to revenues, claims and claim adjustment expenses, general and administrative expenses, investments, inflation, adverse legislative and/or regulatory action, operational disruptions and heightened cyber security risks and foreign currency exchange rate changes;
the intense competition that the Company faces, and the impact of innovation, technological change and changing customer preferences on the insurance industry and the markets in which it operates;
disruptions to the Company's relationships with its independent agents and brokers or the Company's inability to manage effectively a changing distribution landscape;
the Company's efforts to develop new products, expand in targeted markets, improve business processes and workflows or make acquisitions may not be successful and may create enhanced risks;
the Company' s pricing and capital models may provide materially different indications than actual results;
loss of or significant restrictions on the use of particular types of underwriting criteria, such as credit scoring, or other data or methodologies, in the pricing and underwriting of the Company's products; and
the Company is subject to additional risks associated with its business outside the United States.

Technology and Intellectual Property Risks

as a result of cyber attacks or otherwise, the Company may experience difficulties with technology, data and network security or outsourcing relationships;
the Company's dependence on effective information technology systems and on continuing to develop and implement improvements in technology; and
the Company may be unable to protect and enforce its own intellectual property or may be subject to claims for infringing the intellectual property of others.

Regulatory and Compliance Risks

changes in regulation, including higher tax rates; and
the Company' s compliance controls may not be effective.

In addition, the Company's share repurchase plans depend on a variety of factors, including the Company's financial position, earnings, share price, catastrophe losses, maintaining capital levels commensurate with the Company's desired ratings from independent rating agencies, changes in levels of written premiums, funding of the Company's qualified pension plan, capital requirements of the Company's operating subsidiaries, legal requirements, regulatory constraints, other investment opportunities (including mergers and acquisitions and related financings), market conditions and other factors, including the ongoing level of uncertainty related to COVID-19.

Our forward-looking statements speak only as of the date of this press release or as of the date they are made, and we undertake no obligation to update forward-looking statements. For a more detailed discussion of these factors, see the information under the captions "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Forward Looking Statements" in the quarterly report on Form 10-Q filed with the Securities and Exchange Commission (SEC) on July 20, 2021, and in our most recent annual report on Form 10-K filed with the SEC on February 11, 2021, in each case as updated by our periodic filings with the SEC.

*****

GLOSSARY OF FINANCIAL MEASURES AND RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

The following measures are used by the Company's management to evaluate financial performance against historical results, to establish performance targets on a consolidated basis and for other reasons as discussed below. In some cases, these measures are considered non-GAAP financial measures under applicable SEC rules because they are not displayed as separate line items in the consolidated financial statements or are not required to be disclosed in the notes to financial statements or, in some cases, include or exclude certain items not ordinarily included or excluded in the most comparable GAAP financial measure. Reconciliations of these measures to the most comparable GAAP measures also follow.

In the opinion of the Company's management, a discussion of these measures provides investors, financial analysts, rating agencies and other financial statement users with a better understanding of the significant factors that comprise the Company's periodic results of operations and how management evaluates the Company's financial performance.

Some of these measures exclude net realized investment gains (losses), net of tax, and/or net unrealized investment gains (losses), net of tax, included in shareholders' equity, which can be significantly impacted by both discretionary and other economic factors and are not necessarily indicative of operating trends.

Other companies may calculate these measures differently, and, therefore, their measures may not be comparable to those used by the Company's management.

RECONCILIATION OF NET INCOME TO CORE INCOME AND CERTAIN OTHER NON-GAAP MEASURES

Core income (loss) is consolidated net income (loss) excluding the after-tax impact of net realized investment gains (losses), discontinued operations, the effect of a change in tax laws and tax rates at enactment, and cumulative effect of changes in accounting principles when applicable. Segment income (loss) is determined in the same manner as core income (loss) on a segment basis. Management uses segment income (loss) to analyze each segment's performance and as a tool in making business decisions. Financial statement users also consider core income (loss) when analyzing the results and trends of insurance companies. Core income (loss) per share is core income (loss) on a per common share basis.


Reconciliation of Net Income (Loss) to Core Income (Loss) less Preferred Dividends

	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions, after-tax)	2021			2020			2021			2020
Net income (loss)	$	934		$	(40	)	$	1,667		$	560
Less: Net realized investment (gains) losses	(47		)	(10		)	(81		)	66
Impact of changes in tax laws and/or tax rates (1)	(8		)	—			(8		)	—
Core income (loss)	$	879		$	(50	)	$	1,578		$	626
(1) Impact is recognized in the accounting period in which the change is enacted

	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions, pre-tax)	2021			2020			2021			2020
Net income (loss)	$	1,131		$	(85	)	$	2,022		$	635
Less: Net realized investment (gains) losses	(61		)	(13		)	(105		)	85
Core income (loss)	$	1,070		$	(98	)	$	1,917		$	720


	Twelve Months Ended December 31,
($ in millions, after-tax)		2020			2019			2018			2017			2016			2015			2014			2013			2012			2011			2010			2009			2008		2007			2006			2005
Net income	$	2,697		$	2,622		$	2,523		$	2,056		$	3,014		$	3,439		$	3,692		$	3,673		$	2,473		$	1,426		$	3,216		$	3,622		$	2,924	$	4,601		$	4,208		$	1,622
Less: Loss from discontinued operations		—			—			—			—			—			—			—			—			—			—			—			—			—		—			—			(439	)
Income from continuing operations		2,697			2,622			2,523			2,056			3,014			3,439			3,692			3,673			2,473			1,426			3,216			3,622			2,924		4,601			4,208			2,061
Adjustments:
Net realized investment (gains) losses		(11	)		(85	)		(93	)		(142	)		(47	)		(2	)		(51	)		(106	)		(32	)		(36	)		(173	)		(22	)		271		(101	)		(8	)		(35	)
Impact of changes in tax laws and/or tax rates (1) (2)		—			—			—			129			—			—			—			—			—			—			—			—			—		—			—			—
Core income		2,686			2,537			2,430			2,043			2,967			3,437			3,641			3,567			2,441			1,390			3,043			3,600			3,195		4,500			4,200			2,026
Less: Preferred dividends		—			—			—			—			—			—			—			—			—			1			3			3			4		4			5			6
Core income, less preferred dividends	$	2,686		$	2,537		$	2,430		$	2,043		$	2,967		$	3,437		$	3,641		$	3,567		$	2,441		$	1,389		$	3,040		$	3,597		$	3,191	$	4,496		$	4,195		$	2,020
(1) Impact is recognized in the accounting period in which the change is enacted (2) Tax Cuts and Jobs Act of 2017 (TCJA)


Reconciliation of Net Income (Loss) per Share to Core Income (Loss) per Share on a Basic and Diluted Basis
	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Basic income (loss) per share
Net income (loss)	$	3.70		$	(0.16	)	$	6.58		$	2.19
Adjustments:
Net realized investment (gains) losses, after-tax	(0.19		)	(0.04		)	(0.32		)	0.26
Impact of changes in tax laws and/or tax rates (1)	(0.03		)	—			(0.03		)	—
Core income (loss)	$	3.48		$	(0.20	)	$	6.23		$	2.45
Diluted income (loss) per share
Net income (loss)	$	3.66		$	(0.16	)	$	6.53		$	2.19
Adjustments:
Net realized investment (gains) losses, after-tax	(0.18		)	(0.04		)	(0.32		)	0.25
Impact of changes in tax laws and/or tax rates (1)	(0.03		)	—			(0.03		)	—
Core income (loss)	$	3.45		$	(0.20	)	$	6.18		$	2.44
(1) Impact is recognized in the accounting period in which the change is enacted


Reconciliation of Segment Income (Loss) to Total Core Income (Loss)

	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions, after-tax)	2021			2020			2021			2020
Business Insurance	$	643		$	(58	)	$	960		$	231
Bond & Specialty Insurance	187			72			324			194
Personal Insurance	121			10			435			346
Total segment income	951			24			1,719			771
Interest Expense and Other	(72		)	(74		)	(141		)	(145		)
Total core income (loss)	$	879		$	(50	)	$	1,578		$	626

RECONCILIATION OF SHAREHOLDERS' EQUITY TO ADJUSTED SHAREHOLDERS' EQUITY AND CALCULATION OF RETURN ON EQUITY AND CORE RETURN ON EQUITY

Adjusted shareholders' equity is shareholders' equity excluding net unrealized investment gains (losses), net of tax, included in shareholders' equity, net realized investment gains (losses), net of tax, for the period presented, the effect of a change in tax laws and tax rates at enactment (excluding the portion related to net unrealized investment gains (losses)), preferred stock and discontinued operations.


Reconciliation of Shareholders' Equity to Adjusted Shareholders' Equity

	As of June 30,
($ in millions)	2021			2020
Shareholders' equity	$	29,156		$	26,943
Adjustments:
Net unrealized investment gains, net of tax, included in shareholders' equity	(3,239		)	(3,646		)
Net realized investment (gains) losses, net of tax	(81		)	66
Impact of changes in tax laws and/or tax rates (1)	(8		)	—
Adjusted shareholders' equity	$	25,828		$	23,363
(1) Impact is recognized in the accounting period in which the change is enacted

	As of December 31,
($ in millions)		2020			2019			2018			2017			2016			2015			2014			2013			2012			2011			2010			2009			2008			2007			2006			2005
Shareholders' equity	$	29,201		$	25,943		$	22,894		$	23,731		$	23,221		$	23,598		$	24,836		$	24,796		$	25,405		$	24,477		$	25,475		$	27,415		$	25,319		$	26,616		$	25,135		$	22,303
Adjustments:
Net unrealized investment (gains) losses, net of tax, included in shareholders' equity		(4,074	)		(2,246	)		113			(1,112	)		(730	)		(1,289	)		(1,966	)		(1,322	)		(3,103	)		(2,871	)		(1,859	)		(1,856	)		146			(620	)		(453	)		(327	)
Net realized investment (gains) losses, net of tax		(11	)		(85	)		(93	)		(142	)		(47	)		(2	)		(51	)		(106	)		(32	)		(36	)		(173	)		(22	)		271			(101	)		(8	)		(35	)
Impact of changes in tax laws and/or tax rates (1) (2)		—			—			—			287			—			—			—			—			—			—			—			—			—			—			—			—
Preferred stock		—			—			—			—			—			—			—			—			—			—			(68	)		(79	)		(89	)		(112	)		(129	)		(153	)
Loss from discontinued operations		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			439
Adjusted shareholders' equity	$	25,116		$	23,612		$	22,914		$	22,764		$	22,444		$	22,307		$	22,819		$	23,368		$	22,270		$	21,570