Industry Overview - The Zacks Property and Casualty Insurance (P&C) industry is expected to benefit from improved pricing, prudent underwriting, and exposure growth despite an increase in catastrophic events [1] - The industry includes companies providing commercial and personal property insurance, casualty insurance products, and services, with premiums being the primary revenue source [3] - The industry is currently facing a decline in pricing after several years of increases, with three interest rate cuts last year and potential further cuts this year [2] Trends and Projections - Global commercial insurance rates fell by 4% in Q2, but personal auto insurance is projected to remain strong, supported by better investment returns and reduced claims [4] - Deloitte estimates gross premiums to grow sixfold to $722 billion by 2030, with China and North America accounting for over two-thirds of the total [4] - Swiss Re predicts premium growth of 5% in 2025 and 4% in 2026 [4] Catastrophe Impact - The industry is vulnerable to catastrophe events, which can negatively impact underwriting profits; the 2025 hurricane season is expected to be above normal with 23 named storms [5] - Global insured losses from natural disasters in the first half of 2025 are estimated to be at least $100 billion [5] - The combined ratio is expected to improve from 2023 to 98.5% in 2025 but may deteriorate to 99% in 2026 [5] Mergers and Acquisitions - Consolidation in the P&C industry is anticipated to continue as companies seek to diversify operations and gain market share [6] Technology Adoption - The industry is increasingly adopting technologies such as blockchain, artificial intelligence, and advanced analytics to enhance operations and reduce costs [8] - Insurtechs are emerging, focusing on the P&C insurance sector, with significant investments in technology expected to improve efficiency [8] Industry Performance - The Zacks Property and Casualty Insurance industry ranks 92, placing it in the top 38% of over 250 Zacks industries, indicating positive near-term prospects [9] - The industry has underperformed compared to its sector and the S&P 500, with a year-to-date increase of 4.7% compared to 9.8% for the sector and 6.9% for the S&P 500 [11] Valuation Metrics - The industry is currently trading at a trailing 12-month price-to-book (P/B) ratio of 1.53X, compared to the S&P 500's 8.5X and the sector's 4.27X [13] Company Highlights - Progressive Corporation is a major auto insurer with a Zacks Rank 2, expected to see 23.4% year-over-year earnings growth in 2025 [17][18] - Berkshire Hathaway, with a Zacks Rank 3, continues to benefit from its diverse operations and is expected to see a 5% increase in earnings for 2026 [21][23] - Chubb Limited, also a Zacks Rank 3, is focusing on middle-market businesses and cyber insurance, with an expected 18.9% growth in earnings for 2026 [25][26] - Travelers Companies, carrying a Zacks Rank 3, is well-positioned for growth with a projected 20.5% increase in earnings for 2026 [29][30] - Allstate, the third-largest P&C insurer, is expected to see earnings growth of 0.1% in 2025 and 22% in 2026, supported by rate increases and strategic acquisitions [32][33]

Market Performance - The US stock market saw significant gains on July 23, with the Dow Jones Industrial Average rising by 507.85 points, or 1.14%, closing at 45010.29 points. The Nasdaq Composite increased by 127.33 points, or 0.61%, closing at 21020.02 points, marking its first close above the 21000-point threshold. The S&P 500 index rose by 49.29 points, or 0.78%, closing at 6358.91 points [1][3][4]. Trade Agreements - President Trump announced a trade agreement between the US and Japan, which has heightened market expectations for further trade agreements before the August 1 tariff deadline. The agreement includes a reduction of the reciprocal tariff rate from 25% to 15% and Japan's commitment to invest $550 billion in the US [2][6][7]. Sector Performance - In the S&P 500, nine out of eleven sectors experienced gains, with the healthcare and industrial sectors leading with increases of 2.03% and 1.75%, respectively. The utilities and consumer staples sectors saw declines of 0.79% and 0.07% [8]. - Major technology stocks mostly rose, with AMD increasing over 3%, and other companies like NVIDIA, Boeing, and TSMC rising over 2%. Financial stocks also saw gains, with Mizuho Financial up over 6% and UBS Group up over 3% [8]. Chinese Stocks - The Nasdaq Golden Dragon China Index rose by 0.75%, with notable increases in stocks such as iQIYI, which rose over 4%, and Tiger Brokers, which increased over 3%. However, some stocks like NIO and Li Auto saw declines of over 1% [9].

Core Insights - The Travelers Companies reported a core income of $1.5 billion ($6.51 per share) for Q2 2025, with a core return on equity of 18.8% [1] - The company achieved $11.5 billion in net written premiums and returned $809 million in capital to shareholders [1] - A divestiture of its Canadian business for $2.4 billion was announced, reflecting a strategic move to optimize capital allocation [1][4] Underwriting Profitability - Underlying underwriting income increased by 35% to $1.6 billion pretax, driven by a 7% growth in net earned premiums to $10.9 billion [2][3] - All business segments reported underlying combined ratios below or near 90%, with personal insurance at an impressive 79.3% [2] - The overall underlying combined ratio improved by 3 points to 84.7%, indicating enhanced risk selection and disciplined pricing [3] Capital Management - Adjusted book value per share rose to $144.57, a 14% increase year-over-year, with operating cash flows of $2.3 billion [4] - The board authorized $4.3 billion for share repurchases, indicating a commitment to returning value to shareholders [4] - The divestiture of Canadian operations was executed at 1.8 times book value, showcasing aggressive internal capital reallocation [4][5] Investment Income - The investment portfolio's assets exceeded $100 billion, generating $774 million in after-tax net investment income, a 6% increase from the previous year [6] - New money rates were over 100 basis points above the embedded portfolio yield, enhancing earnings visibility for the remainder of 2025 and into 2026 [6][7] Future Outlook - Management projects a full-year expense ratio of 28% to 28.5% for 2025 and anticipates $700 million in additional share repurchases in 2026 from the Canadian divestiture [8] - Expected fixed income net investment income after tax is approximately $770 million for Q3 and $805 million for Q4 [8] - The company plans to relax personal insurance rate and capacity restrictions by the end of 2025, supporting continued premium growth and strong underwriting margins [9]

Core Insights - The Travelers Companies (TRV) reported a second-quarter 2025 core income of $6.51 per share, exceeding the Zacks Consensus Estimate by 83.8% and more than doubling from the previous year [1][9] - Total revenues increased by 6.7% year over year to $12.1 billion, driven by higher premiums and improved net investment income, although it slightly missed the Zacks Consensus Estimate by 0.7% [2][9] - Net written premiums reached a record $11.5 billion, up 4% year over year, surpassing the estimate of $10.9 billion [2] Financial Performance - Net investment income rose by 6% year over year to $942 million, primarily due to growth in average invested assets and higher average yield, although it was below the estimate of $992.8 million [3] - Catastrophe losses were reported at $927 million, significantly lower than the $1.5 billion loss from the same quarter last year [3] - The underwriting profit was $1 billion, a substantial improvement from a loss of $65 million in the prior year, with the consolidated underlying combined ratio improving by 300 basis points to 84.7 [4] Segment Analysis - Business Insurance segment saw net written premiums increase by 5% year over year to approximately $5.8 billion, beating the estimate of $5.4 billion [6] - The combined ratio for Business Insurance improved by 250 basis points to 93.6, benefiting from lower catastrophe losses and higher net favorable prior year reserve development [7] - Bond & Specialty Insurance segment reported net written premiums of $1.1 billion, reflecting a 4% year-over-year increase, with a combined ratio improvement of 740 basis points to 80.3 [10] Shareholder Returns - The company returned $809 million to shareholders in Q2 2025, including $557 million used for share repurchases of 2.1 million shares [14] - A quarterly dividend of $1.10 per share was announced, payable on September 30, 2025, to shareholders of record by September 10, 2025 [14]

Travelers (TRV) reported $12.11 billion in revenue for the quarter ended June 2025, representing a year-over-year increase of 6.7%. EPS of $6.51 for the same period compares to $2.51 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $12.2 billion, representing a surprise of -0.78%. The company delivered an EPS surprise of +83.9%, with the consensus EPS estimate being $3.54.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how th ...

Financial Data and Key Metrics Changes - The company reported core income of $1,500,000,000 or $6.51 per diluted share, with a core return on equity of 18.8% for the quarter, and 17.1% for the trailing twelve months [5][14] - Underwriting income improved with a combined ratio of 90.3%, a nearly 10-point improvement, driven by lower catastrophe losses and favorable prior year reserve development [6][14] - Adjusted book value per share increased by over 14% compared to the previous year, reaching $144.57 [20] Business Line Data and Key Metrics Changes - Business Insurance segment income rose to $813,000,000, up nearly 25% from the prior year, with net written premiums increasing by 5% to $5,800,000,000 [25][30] - Bond and Specialty Insurance generated segment income of $244,000,000 with a combined ratio of 80.3% [31] - Personal Insurance delivered segment income of $534,000,000, with an underlying combined ratio of 79.3%, reflecting significant improvements in underwriting [35][36] Market Data and Key Metrics Changes - Net written premiums grew to $11,500,000,000 in the quarter, with growth across all three segments [9] - Renewal premium change in Business Insurance was strong at 7.7%, with retention rates at 85% [9][27] - In Personal Insurance, renewal premium change was 19.3%, indicating strong pricing actions [39] Company Strategy and Development Direction - The company is committed to disciplined capital allocation and value creation, as evidenced by the sale of its Canadian business for $2,400,000,000 [11][12] - The focus remains on optimizing capital deployment to generate attractive returns and profitable growth [12][14] - The company plans to relax property restrictions by the end of 2025, aiming to balance its portfolio between auto and property [40][106] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the outlook for continued premium growth and attractive underwriting margins, supported by a strong balance sheet [14][20] - The company noted that the overall market conditions remain orderly, with a positive trajectory for investment income [14][20] - Management acknowledged the challenges posed by tort inflation but indicated that pricing strategies are in place to address these issues [58] Other Important Information - The company returned over $800,000,000 of capital to shareholders during the quarter, including $557,000,000 in share repurchases [8][21] - Operating cash flows for the quarter were strong at $2,300,000,000, marking the twenty-first consecutive quarter with cash flows exceeding $1,000,000,000 [21] Q&A Session Summary Question: Insights on Business Insurance pricing and competition - Management noted that while there are some pressures in the national property market, overall pricing remains strong in other lines, with retention indicating market stability [44][48] Question: Future expectations for Personal Lines and premium production - Management indicated that relaxing property restrictions could positively impact both property and auto opportunities, aiming for a balanced portfolio [49][106] Question: Concerns about property market durability - Management expressed confidence in the overall positive landscape and indicated that property outside of national accounts has historically performed differently [52][53] Question: Impact of tariffs on pricing and margins - Management stated that there has been no significant impact from tariffs on their businesses, but they are monitoring the situation [73] Question: Cyber insurance market dynamics - Management highlighted that the cyber insurance market remains competitive, with pricing not fully reflecting the loss environment [108]

Financial Performance - Second quarter 2025 net income per diluted share increased by 185% to $6.53[5] - Second quarter 2025 core income per diluted share increased by 159% to $6.51[5] - Second quarter net income reached $1.509 billion, a 183% increase[5] - Second quarter core income was $1.504 billion, up by 157%[5] - The consolidated combined ratio improved by 9.9 points to 90.3%[5] - Net written premiums increased by 4% to a record $11.543 billion[5] - Book value per share grew by 20%, and adjusted book value per share increased by 14%[5] Investment and Capital - Total capital returned to shareholders was $809 million, including $557 million in share repurchases[5] - The company's debt-to-capital ratio is 19.8%, within the target range of 15%-25%[9, 11] - Total investments reached $98.1 billion, with 94% in fixed income and 6% in non-fixed income[60] Segment Performance - Business Insurance segment income increased by 24% to $813 million[27] - Bond & Specialty Insurance segment income increased by 44% to $244 million[39] - Personal Insurance segment income was $534 million, compared to a loss of $153 million in the prior year quarter[45]

Core Viewpoint - Travelers Insurance reported a second-quarter revenue of $12.12 billion, representing a year-over-year growth of 7.4% and a core earnings per share of $6.51, significantly exceeding the forecast of $3.60 [1] Financial Performance - The second-quarter revenue reached $12.12 billion, marking a 7.4% increase compared to the previous year [1] - Core earnings per share were reported at $6.51, which is substantially higher than the expected $3.60 [1]

[Part I — Financial Information](index=3&type=section&id=Part%20I%20%E2%80%94%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements, highlighting a significant increase in Q2 2025 net income to $1.51 billion and total assets reaching $138.87 billion [Consolidated Statement of Income](index=3&type=section&id=Consolidated%20Statement%20of%20Income) Net income for Q2 2025 surged to $1.51 billion, driven by a 7.4% revenue increase and a 3.7% decrease in claims and expenses Consolidated Statement of Income Highlights (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | Change | Six Months 2025 | Six Months 2024 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $12,116 | $11,283 | +7.4% | $23,926 | $22,511 | +6.3% | | Premiums | $10,921 | $10,243 | +6.6% | $21,631 | $20,369 | +6.2% | | Net Investment Income | $942 | $885 | +6.4% | $1,872 | $1,731 | +8.1% | | **Total Claims and Expenses** | $10,235 | $10,627 | -3.7% | $21,577 | $20,485 | +5.3% | | Claims and claim adjustment expenses | $6,789 | $7,373 | -7.9% | $14,795 | $14,029 | +5.5% | | **Net Income** | $1,509 | $534 | +182.6% | $1,904 | $1,657 | +14.9% | | **Diluted EPS** | $6.53 | $2.29 | +185.2% | $8.23 | $7.09 | +16.1% | | **Cash Dividends per Share** | $1.10 | $1.05 | +4.8% | $2.15 | $2.05 | +4.9% | [Consolidated Statement of Comprehensive Income (Loss)](index=4&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income%20(Loss)) Comprehensive income for Q2 2025 significantly increased to $1.99 billion, driven by higher net income and a positive swing in OCI Consolidated Comprehensive Income (in millions) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $1,509 | $534 | $1,904 | $1,657 | | Other Comprehensive Income (Loss), net of taxes | $483 | $(279) | $882 | $(939) | | **Comprehensive Income** | **$1,992** | **$255** | **$2,786** | **$718** | [Consolidated Balance Sheet](index=5&type=section&id=Consolidated%20Balance%20Sheet) Total assets grew to $138.87 billion as of June 30, 2025, with shareholders' equity increasing to $29.52 billion Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2025 (Unaudited) | Dec 31, 2024 | | :--- | :--- | :--- | | **Total Investments** | $98,065 | $94,223 | | **Total Assets** | **$138,873** | **$133,189** | | Claims and claim adjustment expense reserves | $66,941 | $64,093 | | **Total Liabilities** | **$109,355** | **$105,325** | | **Total Shareholders' Equity** | **$29,518** | **$27,864** | [Consolidated Statement of Cash Flows](index=8&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) Operating cash flow increased to $3.69 billion for H1 2025, while investing and financing activities used $2.52 billion and $1.24 billion respectively Cash Flow Summary - Six Months Ended June 30 (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $3,694 | $3,135 | | Net Cash Used in Investing Activities | $(2,524) | $(2,180) | | Net Cash Used in Financing Activities | $(1,237) | $(871) | | **Net (Decrease) Increase in Cash** | **$(40)** | **$79** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, segment performance, and contingencies, including a $2.4 billion Canadian business sale and asbestos claims - The company entered into an agreement to sell its Canadian personal insurance business and the majority of its Canadian commercial insurance business to Definity Financial Corporation for approximately **US$2.4 billion**. The sale is expected to close in the first quarter of 2026[26](index=26&type=chunk) Segment Income - Six Months Ended June 30 (in millions) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Business Insurance | $1,496 | $1,420 | | Bond & Specialty Insurance | $464 | $365 | | Personal Insurance | $160 | $67 | | **Total Segment Income** | **$2,120** | **$1,852** | - Gross claims and claim adjustment expense reserves increased by **$2.85 billion** since year-end 2024, primarily due to catastrophe losses, higher insured exposures, and loss cost trends, partially offset by claim payments and favorable prior year reserve development[71](index=71&type=chunk) - The company repurchased **2.8 million** common shares for **$750 million** in the first six months of 2025. As of June 30, 2025, **$4.29 billion** remained under its share repurchase authorizations[84](index=84&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 and H1 2025 financial results, highlighting a 183% increase in Q2 net income to $1.51 billion and an improved combined ratio of 90.3% Q2 2025 Consolidated Financial Highlights | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $1.51 billion | $0.53 billion | | Diluted EPS | $6.53 | $2.29 | | Combined Ratio | 90.3% | 100.2% | | Catastrophe Losses | $927 million | $1.51 billion | | Net Favorable Prior Year Reserve Development | $315 million | $230 million | | Net Investment Income | $942 million | $885 million | - The company expects after-tax net investment income from its fixed income portfolio to be approximately **$770 million** in Q3 2025 and **$805 million** in Q4 2025, driven by higher reinvestment yields and investment levels[275](index=275&type=chunk) - The company plans to continue returning capital to shareholders through dividends and share repurchases, expecting that over time, this will not exceed net income. The debt-to-total capital ratio (excluding unrealized investment losses) was **19.8%** as of June 30, 2025, within the target range of **15% to 25%**[281](index=281&type=chunk)[303](index=303&type=chunk) [Results of Operations by Segment](index=41&type=section&id=Results%20of%20Operations%20by%20Segment) All three segments contributed to strong performance, with Business Insurance income up 24%, Bond & Specialty up 44%, and Personal Insurance swinging to a $534 million income Segment Income (Loss) - Q2 2025 vs Q2 2024 (in millions) | Segment | Q2 2025 Income | Q2 2024 Income (Loss) | Change (%) | | :--- | :--- | :--- | :--- | | Business Insurance | $813 | $656 | +24% | | Bond & Specialty Insurance | $244 | $170 | +44% | | Personal Insurance | $534 | $(153) | N/A | Combined Ratio by Segment - Q2 2025 vs Q2 2024 | Segment | Q2 2025 Combined Ratio | Q2 2024 Combined Ratio | | :--- | :--- | :--- | | Business Insurance | 93.6% | 96.1% | | Bond & Specialty Insurance | 80.3% | 87.7% | | Personal Insurance | 88.4% | 108.5% | [Asbestos Claims and Litigation](index=52&type=section&id=Asbestos%20Claims%20and%20Litigation) Asbestos claims pose significant uncertainty, with net reserves at $1.24 billion and H1 2025 payments of $103 million - Net asbestos reserves were **$1.24 billion** as of June 30, 2025, and June 30, 2024[237](index=237&type=chunk) Net Asbestos Paid Loss and Loss Adjustment Expenses (in millions) | Period | Amount | | :--- | :--- | | Six Months Ended June 30, 2025 | $103 | | Six Months Ended June 30, 2024 | $135 | - Management highlights significant uncertainties that could impact future asbestos costs, including changes in the legal environment, the number of claims, and the resolution of complex coverage disputes[240](index=240&type=chunk)[244](index=244&type=chunk) [Investment Portfolio](index=54&type=section&id=Investment%20Portfolio) Total invested assets reached $98.07 billion, primarily in high-quality fixed maturity and short-term investments with an 'Aa2' average credit quality - Total invested assets were **$98.07 billion**, with **94%** in fixed maturity and short-term investments[242](index=242&type=chunk) - The fixed maturity portfolio's weighted average credit quality was **'Aa2'**, and below-investment-grade securities represented only **1.2%** of the portfolio[243](index=243&type=chunk) - The municipal bond portfolio, a significant component, totaled **$28.56 billion** and had a high weighted average credit rating of **'Aaa/Aa1'**[246](index=246&type=chunk)[247](index=247&type=chunk) [Liquidity and Capital Resources](index=60&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $3.69 billion in H1 2025 operating cash flow and a debt-to-total capital ratio of 19.8% (excl. unrealized losses) - Holding company liquidity was **$1.97 billion** as of June 30, 2025, exceeding the target of approximately **$1.36 billion**[288](index=288&type=chunk) Capital Returned to Shareholders - H1 2025 (in millions) | Activity | Amount | | :--- | :--- | | Common Share Repurchases | $874 | | Dividends Paid | $490 | Capitalization Summary (in millions) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Debt | $8,034 | $8,033 | | Total Shareholders' Equity | $29,518 | $27,864 | | **Total Capitalization** | **$37,552** | **$35,897** | | Debt-to-total capital ratio | 21.4% | 22.4% | | Debt-to-total capital ratio (excl. unrealized losses) | 19.8% | 20.3% | [Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk disclosures were reported compared to the 2024 Annual Report - There have been no material changes to the Company's disclosures about market risk as presented in the 2024 Annual Report[326](index=326&type=chunk) [Controls and Procedures](index=65&type=section&id=Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[327](index=327&type=chunk) - No changes occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[328](index=328&type=chunk) [Part II — Other Information](index=66&type=section&id=Part%20II%20%E2%80%94%20Other%20Information) [Legal Proceedings](index=67&type=section&id=Item%201.%20Legal%20Proceedings) Information on legal proceedings, primarily asbestos claims and other litigation, is incorporated by reference from Note 14 - Information regarding legal proceedings is detailed in Note 14 of the notes to the unaudited consolidated financial statements[331](index=331&type=chunk) [Risk Factors](index=67&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K were reported - There have been no material changes to the risk factors disclosed in the Company's 2024 Annual Report[332](index=332&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=67&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 1.85 million shares for $500 million in Q2 2025, with $4.29 billion remaining for future repurchases Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | Approx. Value Remaining (in millions) | | :--- | :--- | :--- | :--- | :--- | | April 2025 | 252,153 | $260.34 | 248,200 | $4,725 | | May 2025 | 1,074,323 | $272.48 | 873,200 | $4,487 | | June 2025 | 734,327 | $270.45 | 731,280 | $4,290 | | **Total** | **2,060,803** | **$270.27** | **1,852,680** | **$4,290** | - The Board of Directors approved a **$5.0 billion** increase to the share repurchase authorization on April 19, 2023. The authorizations do not have a stated expiration date[336](index=336&type=chunk) [Other Information](index=68&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q2 2025 - During the three months ended June 30, 2025, no company directors or officers adopted, terminated, or modified a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement[340](index=340&type=chunk) [Exhibits](index=68&type=section&id=Item%206.%20Exhibits) Exhibits filed include the Amended and Restated 2023 Stock Incentive Plan, Director Compensation Program, and CEO/CFO certifications - Exhibits filed include the Amended and Restated 2023 Stock Incentive Plan, the Current Director Compensation Program, and CEO/CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act[341](index=341&type=chunk)

[Consolidated Results](index=2&type=section&id=Consolidated%20Results) [Financial Highlights](index=2&type=section&id=Financial%20Highlights) The company reported strong growth in the second quarter and year-to-date 2025, with significant increases in net income, core income, and earnings per share compared to the prior year, alongside healthy growth in total equity and book value per share, and continued share repurchases and dividend payments Q2 2025 and YTD 2025 Financial Highlights (in millions) | Metric | Q2 2025 | Q2 2024 | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $1,509 | $534 | $1,904 | $1,657 | | Diluted EPS | $6.53 | $2.29 | $8.23 | $7.09 | | Core Income | $1,504 | $585 | $1,947 | $1,681 | | Diluted Core EPS | $6.51 | $2.51 | $8.42 | $7.20 | | Return on Equity | 20.9% | 8.6% | 13.4% | 13.3% | | Book Value per Share | $131.11 | $109.08 | $131.11 | $109.08 | | Adjusted Book Value per Share | $144.57 | $126.52 | $144.57 | $126.52 | - Total assets grew to **$138.9 billion** at the end of Q2 2025 from **$129.3 billion** a year prior[3](index=3&type=chunk) - The company repurchased **1.8 million shares** at a cost of **$500 million** in Q2 2025 and has repurchased **2.8 million shares** for **$750 million** year-to-date[3](index=3&type=chunk) [Reconciliation to Net Income and Earnings Per Share](index=3&type=section&id=Reconciliation%20to%20Net%20Income%20and%20Earnings%20Per%20Share) This section reconciles GAAP Net Income to the non-GAAP measure of Core Income by adjusting for after-tax net realized investment gains or losses, showing that for Q2 2025, Net Income of $1,509 million was adjusted by a $5 million after-tax realized investment gain to arrive at Core Income of $1,504 million Reconciliation of Net Income to Core Income (Q2 2025, in millions) | Item | Amount | | :--- | :--- | | Net Income | $1,509 | | Net realized investment gains, after-tax | ($5) | | **Core Income** | **$1,504** | Reconciliation of Diluted EPS (Q2 2025) | Item | Per Share Amount | | :--- | :--- | | Net Income EPS | $6.53 | | Net realized investment gains, after-tax | ($0.02) | | **Core Income EPS** | **$6.51** | [Statement of Income - Consolidated](index=4&type=section&id=Statement%20of%20Income%20-%20Consolidated) The consolidated statement of income shows a significant increase in net income for Q2 2025, driven by higher premium revenues and controlled growth in claims and expenses compared to the prior-year quarter, with year-to-date revenues growing by 6.3% to $23.9 billion and net income rising to $1.9 billion Consolidated Income Statement Highlights (YTD, in millions) | Metric | YTD 2Q2025 | YTD 2Q2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $23,926 | $22,511 | +6.3% | | Premiums | $21,631 | $20,369 | +6.2% | | Net Investment Income | $1,872 | $1,731 | +8.1% | | Total Claims and Expenses | $21,577 | $20,485 | +5.3% | | **Net Income** | **$1,904** | **$1,657** | **+14.9%** | - Pre-tax catastrophe losses, net of reinsurance, were significantly higher at **$3.19 billion** YTD 2025 compared to **$2.22 billion** YTD 2024[8](index=8&type=chunk) - Favorable prior year reserve development more than doubled to **$693 million** pre-tax YTD 2025 from **$321 million** YTD 2024[8](index=8&type=chunk) [Net Income by Major Component and Combined Ratio - Consolidated](index=5&type=section&id=Net%20Income%20by%20Major%20Component%20and%20Combined%20Ratio%20-%20Consolidated) The company's consolidated combined ratio improved to 90.3% in Q2 2025 from 100.2% in Q2 2024, with the underlying combined ratio also improving to 84.7%, reflecting better underwriting results despite a significant impact from catastrophes Consolidated Combined Ratio Analysis | Ratio Component | Q2 2025 | Q2 2024 | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | :--- | :--- | | Combined Ratio | 90.3% | 100.2% | 96.3% | 97.1% | | Catastrophes Impact | 8.5% | 14.7% | 14.8% | 10.9% | | Prior Year Development | (2.9)% | (2.2)% | (3.2)% | (1.5)% | | **Underlying Combined Ratio** | **84.7%** | **87.7%** | **84.7%** | **87.7%** | - The underwriting gain in Q2 2025 was **$808 million** (net of tax), a significant turnaround from an underwriting loss of **$58 million** in Q2 2024[10](index=10&type=chunk) [Core Income - Consolidated](index=6&type=section&id=Core%20Income%20-%20Consolidated) Consolidated core income, which excludes realized investment gains/losses, reached $1.50 billion in Q2 2025, a substantial increase from $585 million in the prior-year quarter, and grew to $1.95 billion for the first half of 2025 from $1.68 billion in 2024, reflecting strong underlying operational performance Core Income Performance (in millions) | Period | Core Income | Core Income Before Tax | | :--- | :--- | :--- | | Q2 2025 | $1,504 | $1,875 | | Q2 2024 | $585 | $721 | | YTD 2Q2025 | $1,947 | $2,404 | | YTD 2Q2024 | $1,681 | $2,056 | [Selected Statistics - Property and Casualty Operations](index=7&type=section&id=Selected%20Statistics%20-%20Property%20and%20Casualty%20Operations) Statutory data for Property and Casualty operations shows a 3.4% increase in net written premiums to $22.0 billion for YTD 2025, with the statutory underwriting gain improving to $571 million from $326 million in the prior year, and statutory capital and surplus growing to $28.4 billion P&C Statutory Operations (YTD, in millions) | Metric | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | | Gross Written Premiums | $24,115 | $23,175 | | Net Written Premiums | $22,031 | $21,299 | | Statutory Underwriting Gain | $571 | $326 | | Statutory Capital and Surplus | $28,364 | $25,210 | [Written and Earned Premiums - Property and Casualty Operations](index=8&type=section&id=Written%20and%20Earned%20Premiums%20-%20Property%20and%20Casualty%20Operations) For the first half of 2025, net written premiums for Property and Casualty operations increased by 3.6% to $22.1 billion, while net earned premiums grew by 6.2% to $21.6 billion compared to the same period in 2024 P&C Premiums (YTD, in millions) | Premium Type | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | | Gross Written | $24,141 | $23,175 | | Net Written | $22,058 | $21,297 | | Net Earned | $21,631 | $20,369 | [Business Insurance](index=9&type=section&id=Business%20Insurance) [Segment Income - Business Insurance](index=9&type=section&id=Segment%20Income%20-%20Business%20Insurance) The Business Insurance segment reported a 5.4% increase in segment income to $1.50 billion for the first half of 2025, driven by 6.6% growth in premium revenues and an increase in net investment income, partially offset by higher catastrophe losses Business Insurance Segment Income (YTD, in millions) | Metric | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | | Premiums | $11,010 | $10,328 | | Net Investment Income | $1,318 | $1,241 | | **Segment Income** | **$1,496** | **$1,420** | - Pre-tax catastrophe losses for the segment increased to **$877 million** YTD 2025 from **$598 million** YTD 2024[22](index=22&type=chunk) [Segment Income by Major Component and Combined Ratio - Business Insurance](index=10&type=section&id=Segment%20Income%20by%20Major%20Component%20and%20Combined%20Ratio%20-%20Business%20Insurance) The Business Insurance segment's combined ratio improved to 93.6% in Q2 2025 from 96.1% in Q2 2024, though the underlying combined ratio deteriorated slightly to 88.3% from 89.2% in the prior year quarter, reflecting performance excluding the impacts of catastrophes and reserve development Business Insurance Combined Ratio Analysis | Ratio Component | Q2 2025 | Q2 2024 | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | :--- | :--- | | Combined Ratio | 93.6% | 96.1% | 94.9% | 94.7% | | Catastrophes Impact | 6.7% | 7.5% | 8.0% | 5.8% | | Prior Year Development | (1.4)% | (0.6)% | (1.4)% | (0.3)% | | **Underlying Combined Ratio** | **88.3%** | **89.2%** | **88.3%** | **89.2%** | [Selected Statistics - Business Insurance](index=11&type=section&id=Selected%20Statistics%20-%20Business%20Insurance) On a statutory basis, the Business Insurance segment saw net written premiums grow to $11.5 billion for YTD 2025, up from $11.1 billion in the prior year, with the statutory underwriting gain increasing to $402 million from $376 million over the same period Business Insurance Statutory Data (YTD, in millions) | Metric | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | | Gross Written Premiums | $13,099 | $12,552 | | Net Written Premiums | $11,463 | $11,137 | | Statutory Underwriting Gain | $402 | $376 | [Net Written Premiums - Business Insurance](index=12&type=section&id=Net%20Written%20Premiums%20-%20Business%20Insurance) Net written premiums in Business Insurance grew 3.2% YTD to $11.5 billion, driven by the Domestic Middle Market and International segments, with Commercial Multi-Peril and Commercial Automobile showing strong growth, while Workers' Compensation premiums declined - Total Domestic net written premiums grew to **$10.4 billion** YTD 2025 from **$10.1 billion** YTD 2024[31](index=31&type=chunk) Net Written Premiums by Product Line (YTD, in millions) | Product Line | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | | Commercial multi-peril | $3,018 | $2,761 | | Commercial automobile | $2,049 | $1,887 | | Commercial property | $1,924 | $1,817 | | Workers' compensation | $1,771 | $1,866 | [Bond & Specialty Insurance](index=13&type=section&id=Bond%20%26%20Specialty%20Insurance) [Segment Income - Bond & Specialty Insurance](index=13&type=section&id=Segment%20Income%20-%20Bond%20%26%20Specialty%20Insurance) The Bond & Specialty Insurance segment demonstrated strong profitability, with segment income rising 27.1% to $464 million for the first half of 2025, fueled by higher premium revenues, increased net investment income, and significant favorable prior year reserve development Bond & Specialty Insurance Segment Income (YTD, in millions) | Metric | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | | Premiums | $2,016 | $1,933 | | Net Investment Income | $209 | $184 | | **Segment Income** | **$464** | **$365** | - Favorable prior year reserve development was a key driver, increasing to **$148 million** pre-tax YTD 2025 from **$48 million** in the prior year period[34](index=34&type=chunk) [Segment Income by Major Component and Combined Ratio - Bond & Specialty Insurance](index=14&type=section&id=Segment%20Income%20by%20Major%20Component%20and%20Combined%20Ratio%20-%20Bond%20%26%20Specialty%20Insurance) This segment maintained excellent underwriting profitability with a combined ratio of 80.3% in Q2 2025 and 81.4% year-to-date, significantly aided by net favorable prior year reserve development, which had an 8.0% positive impact on the Q2 combined ratio Bond & Specialty Insurance Combined Ratio Analysis | Ratio Component | Q2 2025 | Q2 2024 | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | :--- | :--- | | Combined Ratio | 80.3% | 87.7% | 81.4% | 86.1% | | Prior Year Development | (8.0)% | (2.5)% | (7.3)% | (2.5)% | | Catastrophes Impact | 0.5% | 4.1% | 1.2% | 2.3% | | **Underlying Combined Ratio** | **87.8%** | **86.1%** | **87.5%** | **86.3%** | [Selected Statistics - Bond & Specialty Insurance](index=15&type=section&id=Selected%20Statistics%20-%20Bond%20%26%20Specialty%20Insurance) Statutory results for the Bond & Specialty Insurance segment show a 5.1% increase in net written premiums to $2.1 billion for YTD 2025, with the statutory underwriting gain growing substantially to $316 million from $222 million in the prior year Bond & Specialty Insurance Statutory Data (YTD, in millions) | Metric | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | | Gross Written Premiums | $2,295 | $2,203 | | Net Written Premiums | $2,084 | $1,983 | | Statutory Underwriting Gain | $316 | $222 | [Net Written Premiums - Bond & Specialty Insurance](index=16&type=section&id=Net%20Written%20Premiums%20-%20Bond%20%26%20Specialty%20Insurance) Net written premiums for the segment grew 5.1% YTD to $2.1 billion, with growth observed across both Domestic and International markets, and Surety showing stronger growth than Management Liability within the Domestic market Net Written Premiums by Market (YTD, in millions) | Market | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | | Domestic - Management Liability | $1,142 | $1,129 | | Domestic - Surety | $675 | $621 | | International | $267 | $233 | | **Total** | **$2,084** | **$1,983** | [Personal Insurance](index=17&type=section&id=Personal%20Insurance) [Segment Income (Loss) - Personal Insurance](index=17&type=section&id=Segment%20Income%20%28Loss%29%20-%20Personal%20Insurance) The Personal Insurance segment's income more than doubled to $160 million for the first half of 2025, up from $67 million in the prior year, an improvement despite a significant increase in catastrophe losses, supported by premium growth, higher investment income, and strong favorable prior year reserve development Personal Insurance Segment Income (YTD, in millions) | Metric | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | | Premiums | $8,605 | $8,108 | | **Segment Income (Loss)** | **$160** | **$67** | - Pre-tax catastrophe losses surged to **$2.29 billion** YTD 2025, compared to **$1.58 billion** in the same period of 2024[46](index=46&type=chunk) - Favorable prior year reserve development increased to **$392 million** pre-tax YTD 2025 from **$239 million** YTD 2024[46](index=46&type=chunk) [Segment Income (Loss) by Major Component and Combined Ratio - Personal Insurance](index=18&type=section&id=Segment%20Income%20%28Loss%29%20by%20Major%20Component%20and%20Combined%20Ratio%20-%20Personal%20Insurance) The Personal Insurance segment's combined ratio improved to 88.4% in Q2 2025 from 108.5% in Q2 2024, though the year-to-date combined ratio remained high at 101.7% due to severe catastrophe losses in the first quarter, while the underlying combined ratio showed significant improvement, reaching 79.3% in Q2 2025 Personal Insurance Combined Ratio Analysis | Ratio Component | Q2 2025 | Q2 2024 | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | :--- | :--- | | Combined Ratio | 88.4% | 108.5% | 101.7% | 102.8% | | Catastrophes Impact | 12.7% | 26.4% | 26.6% | 19.5% | | Prior Year Development | (3.6)% | (4.2)% | (4.5)% | (2.9)% | | **Underlying Combined Ratio** | **79.3%** | **86.3%** | **79.6%** | **86.2%** | - The segment recorded an underwriting loss of **$149 million** YTD 2025, an improvement from the **$214 million** loss in YTD 2024[49](index=49&type=chunk) [Selected Statistics - Personal Insurance](index=19&type=section&id=Selected%20Statistics%20-%20Personal%20Insurance) Statutory data for the Personal Insurance segment shows a 3.7% increase in net written premiums to $8.5 billion for YTD 2025, though the segment recorded a statutory underwriting loss of $147 million, an improvement from a $272 million loss in the prior year, while policies in force continued to decline for both Automobile and Homeowners Personal Insurance Statutory Data (YTD, in millions) | Metric | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | | Net Written Premiums | $8,484 | $8,179 | | Statutory Underwriting Loss | ($147) | ($272) | - Policies in force at the end of Q2 2025 were down **3.1%** for Automobile and **4.6%** for Homeowners compared to the prior year[52](index=52&type=chunk)[58](index=58&type=chunk)[61](index=61&type=chunk) [Selected Statistics - Automobile](index=21&type=section&id=Selected%20Statistics%20-%20Automobile) The Automobile line showed strong underwriting performance with a combined ratio of 85.3% in Q2 2025 and 84.3% YTD, resulting in a statutory underwriting gain of $651 million YTD 2025, a significant improvement from a $122 million gain in the prior year, though policies in force declined by 3.1% year-over-year Automobile Combined Ratio Analysis (YTD) | Ratio Component | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | | Combined Ratio | 84.3% | 96.3% | | Underlying Combined Ratio | 88.2% | 95.1% | - Policies in force for Automobile stood at **3.083 million** at the end of Q2 2025, down from **3.180 million** a year earlier[58](index=58&type=chunk) [Selected Statistics - Homeowners and Other](index=22&type=section&id=Selected%20Statistics%20-%20Homeowners%20and%20Other) The Homeowners and Other line was heavily impacted by catastrophes, resulting in a combined ratio of 117.9% for YTD 2025, with catastrophe losses adding 50.1 points to the YTD combined ratio, leading to a statutory underwriting loss of $798 million, and policies in force declining 4.6% year-over-year Homeowners Combined Ratio Analysis (YTD) | Ratio Component | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | | Combined Ratio | 117.9% | 109.1% | | Catastrophes Impact | 50.1% | 35.5% | | Underlying Combined Ratio | 71.4% | 77.6% | - Pre-tax catastrophe losses for Homeowners were **$2.23 billion** YTD 2025, up from **$1.45 billion** in the prior year period[61](index=61&type=chunk) [Net Written Premiums - Personal Insurance](index=20&type=section&id=Net%20Written%20Premiums%20-%20Personal%20Insurance) Net written premiums in the Personal Insurance segment grew 3.7% YTD to $8.5 billion, driven by the Homeowners and Other line, which saw premiums increase to $4.3 billion, while Automobile premiums were slightly down Net Written Premiums by Product Line (YTD, in millions) | Product Line | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | | Automobile | $3,827 | $3,860 | | Homeowners and Other | $4,333 | $3,982 | | **Total Domestic** | **$8,160** | **$7,842** | [Supplemental Detail](index=23&type=section&id=Supplemental%20Detail) [Interest Expense and Other](index=23&type=section&id=Interest%20Expense%20and%20Other) This section details non-operating expenses, primarily interest on debt, showing that for the first half of 2025, total interest expense was $198 million, resulting in an after-tax loss of $173 million for this component, consistent with the prior year Interest Expense and Other (YTD, in millions) | Item | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | | Interest Expense | $198 | $196 | | Total Claims and Expenses | $221 | $216 | | **Loss (after tax)** | **($173)** | **($171)** | [Consolidated Balance Sheet](index=24&type=section&id=Consolidated%20Balance%20Sheet) The company's consolidated balance sheet strengthened as of June 30, 2025, with total assets increasing to $138.9 billion from $133.2 billion at year-end 2024, and total shareholders' equity growing to $29.5 billion from $27.9 billion, driven by retained earnings growth Balance Sheet Highlights (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Investments | $98,065 | $94,223 | | Total Assets | $138,873 | $133,189 | | Claims and Claim Adjustment Expense Reserves | $66,941 | $64,093 | | Total Liabilities | $109,355 | $105,325 | | Total Shareholders' Equity | $29,518 | $27,864 | [Investment Portfolio](index=25&type=section&id=Investment%20Portfolio) As of June 30, 2025, the total investment portfolio was valued at $98.1 billion, up from $94.2 billion at year-end 2024, predominantly composed of fixed maturities ($87.6 billion), with a smaller allocation to equities and other investments, and the pre-tax book yield on fixed maturities increased to 3.74% Investment Portfolio Composition (in millions) | Investment Type | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Fixed Maturities | $87,569 | $83,666 | | Equity Securities | $651 | $687 | | Other Investments | $4,206 | $4,202 | | **Total Investments** | **$98,065** | **$94,223** | - Net unrealized investment losses included in shareholders' equity improved, decreasing to **$3.03 billion** from **$3.64 billion** at year-end 2024[67](index=67&type=chunk) [Investment Portfolio - Fixed Maturities Data](index=26&type=section&id=Investment%20Portfolio%20-%20Fixed%20Maturities%20Data) The fixed maturities portfolio of $87.6 billion as of June 30, 2025, is high-quality, with 98.8% of assets rated investment grade (Baa or better), an average weighted quality of Aa2/AA, and a slightly increased weighted average duration of 4.6 years from 4.3 years at the end of 2024 - The portfolio is well-diversified, with major holdings in Corporate bonds (**$41.1 billion**), Obligations of U.S. states (**$28.6 billion**), and Mortgage-backed securities (**$13.1 billion**)[69](index=69&type=chunk) - Investment grade securities (Aaa, Aa, A, Baa) constitute **$86.5 billion**, or **98.8%** of the total fixed maturities portfolio[70](index=70&type=chunk) [Investment Income](index=27&type=section&id=Investment%20Income) Net investment income increased to $1.87 billion for the first half of 2025, up 8.1% from $1.73 billion in the prior year period, with growth primarily driven by higher income from the fixed maturities portfolio, reflecting a higher average yield on a larger asset base Net Investment Income (YTD, in millions) | Source | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | | Fixed Maturities | $1,645 | $1,401 | | Short-term Securities | $112 | $140 | | Other | $143 | $216 | | **Net Investment Income (Pre-tax)** | **$1,872** | **$1,731** | [Net Realized Investment Gains (Losses) and Net Unrealized Investment Gains (Losses) included in Shareholders' Equity](index=28&type=section&id=Net%20Realized%20Investment%20Gains%20%28Losses%29%20and%20Net%20Unrealized%20Investment%20Gains%20%28Losses%29%20included%20in%20Shareholders%27%20Equity) The company recorded a net realized investment loss of $55 million before tax for YTD 2025, compared to a loss of $30 million in the prior year, while the net unrealized loss position in shareholders' equity improved, narrowing to $3.03 billion at the end of Q2 2025 from $3.64 billion at year-end 2024 - For YTD 2025, the company had a net realized investment loss of **$43 million** after tax[74](index=74&type=chunk) - The balance of net unrealized investment losses, net of tax, in shareholders' equity was **$3.031 billion** as of June 30, 2025[74](index=74&type=chunk) [Reinsurance Recoverables](index=29&type=section&id=Reinsurance%20Recoverables) As of June 30, 2025, net reinsurance recoverables totaled $8.06 billion, with the majority from highly-rated reinsurers, including the top five groups (Swiss Re, Berkshire Hathaway, Munich Re, Axa, Arch) all rated A+ or better by A.M. Best - Gross reinsurance recoverables were **$8.19 billion**, offset by a **$127 million** allowance for uncollectible reinsurance[76](index=76&type=chunk) - Of the rated reinsurance recoverables, **94%** were from reinsurers rated A- or better by A.M. Best[79](index=79&type=chunk) [Net Reserves for Losses and Loss Adjustment Expense](index=30&type=section&id=Net%20Reserves%20for%20Losses%20and%20Loss%20Adjustment%20Expense) Total statutory loss reserves increased to $59.1 billion at the end of Q2 2025 from $56.3 billion at year-end 2024, with the company recording significant net favorable prior year reserve development of $693 million YTD 2025, more than double the $321 million from the prior year, with all segments contributing favorably Favorable Prior Year Reserve Development (YTD, in millions) | Segment | YTD 2Q2025 | YTD 2Q2024 | | :--- | :--- | :--- | | Business Insurance | $153 | $34 | | Bond & Specialty Insurance | $148 | $48 | | Personal Insurance | $392 | $239 | | **Total** | **$693** | **$321** | [Asbestos Reserves](index=31&type=section&id=Asbestos%20Reserves) Net asbestos reserves decreased to $1.24 billion as of June 30, 2025, down from $1.34 billion at the end of 2024, primarily due to paid losses, with no new incurred losses reported during the first half of 2025 Asbestos Reserve Roll-Forward (YTD 2025, in millions) | Item | Amount | | :--- | :--- | | Beginning Net Reserves (Dec 31, 2024) | $1,338 | | Incurred Losses (Net) | $0 | | Paid Losses (Net) | ($103) | | **Ending Net Reserves (June 30, 2025)** | **$1,237** | [Capitalization](index=32&type=section&id=Capitalization) The company maintained a strong capital position with total capital (excluding unrealized investment gains/losses) of $40.6 billion as of June 30, 2025, and the total debt to capital ratio improved to 19.8% from 20.3% at year-end 2024 Capitalization Summary (in millions) | Item | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Debt | $8,034 | $8,033 | | Common Equity (Adjusted) | $32,549 | $31,504 | | **Total Capital (Adjusted)** | **$40,583** | **$39,537** | - The total debt to capital ratio (excluding net unrealized investment gains/losses) was **19.8%** at June 30, 2025[87](index=87&type=chunk) [Statutory Capital and Surplus to GAAP Shareholders' Equity Reconciliation](index=33&type=section&id=Statutory%20Capital%20and%20Surplus%20to%20GAAP%20Shareholders%27%20Equity%20Reconciliation) This schedule reconciles the statutory capital and surplus of $28.4 billion to the GAAP shareholders' equity of $29.5 billion as of June 30, 2025, with key adjustments including the add-back of goodwill and deferred acquisition costs, and deductions for noninsurance companies and certain investment valuations Statutory to GAAP Equity Reconciliation (June 30, 2025, in millions) | Item | Amount | | :--- | :--- | | Statutory Capital and Surplus | $28,364 | | Goodwill and intangible assets | $3,644 | | Investments | ($3,305) | | Noninsurance companies | ($4,032) | | Deferred acquisition costs | $3,524 | | Other Adjustments | $339 | | **GAAP Shareholders' Equity** | **$29,518** | [Statement of Cash Flows](index=34&type=section&id=Statement%20of%20Cash%20Flows) For the first half of 2025, the company generated strong net cash from operating activities of $3.7 billion, while cash used in investing activities was $2.5 billion, primarily for net purchases of fixed maturities, and financing activities used $1.2 billion, driven by $750 million in share repurchases and $490 million in dividend payments Cash Flow Summary (YTD 2Q2025, in millions) | Cash Flow Source | Amount | | :--- | :--- | | Net Cash from Operating Activities | $3,694 | | Net Cash used in Investing Activities | ($2,524) | | Net Cash used in Financing Activities | ($1,237) | | **Net Decrease in Cash** | **($40)** | - Key uses of cash in financing activities for YTD 2025 included **$750 million** for share repurchases and **$490 million** for dividend payments[95](index=95&type=chunk) [Glossary and Segment Descriptions](index=36&type=section&id=Glossary%20and%20Segment%20Descriptions) [Glossary of Financial Measures and Description of Reportable Business Segments](index=36&type=section&id=Glossary%20of%20Financial%20Measures%20and%20Description%20of%20Reportable%20Business%20Segments) This section defines key non-GAAP financial measures used by management to evaluate performance, such as Core Income, Return on Equity, and Underlying Combined Ratio, and provides detailed descriptions of the company's three reportable business segments: Business Insurance, Bond & Specialty Insurance, and Personal Insurance - **Core Income:** Defined as net income excluding after-tax net realized investment gains/losses and other non-recurring items, used by management to analyze segment performance[99](index=99&type=chunk) - **Underlying Combined Ratio:** This is the combined ratio excluding the impact of catastrophes and prior year reserve development, used to measure core underwriting performance[106](index=106&type=chunk) - **Business Segments:** - **Business Insurance:** Offers P&C products to businesses in the U.S. and internationally, covering select accounts, middle market, and national accounts[112](index=112&type=chunk) - **Bond & Specialty Insurance:** Provides surety, fidelity, and various liability coverages (management, professional) in the U.S. and other select countries[113](index=113&type=chunk) - **Personal Insurance:** Offers auto, homeowners, and other personal P&C products to individuals, primarily in the U.S. and Canada[115](index=115&type=chunk)