Travelers(TRV) - 2025 Q2 - Quarterly Results

Consolidated Results Financial Highlights 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] - 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] Reconciliation to Net Income and Earnings Per Share 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 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] - Favorable prior year reserve development more than doubled to $693 million pre-tax YTD 2025 from $321 million YTD 2024[8] Net Income by Major Component and Combined Ratio - Consolidated 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] Core Income - Consolidated 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 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 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 Segment Income - Business Insurance 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] Segment Income by Major Component and Combined Ratio - Business Insurance 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 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 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] 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 Segment Income - Bond & Specialty Insurance 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] Segment Income by Major Component and Combined Ratio - Bond & Specialty Insurance 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 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 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 Segment Income (Loss) - Personal Insurance 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] - Favorable prior year reserve development increased to $392 million pre-tax YTD 2025 from $239 million YTD 2024[46] Segment Income (Loss) by Major Component and Combined Ratio - Personal Insurance 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] Selected Statistics - Personal Insurance 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][58][61] Selected Statistics - Automobile 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] Selected Statistics - Homeowners and Other 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] Net Written Premiums - Personal Insurance 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 Interest Expense and Other 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 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 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] Investment Portfolio - Fixed Maturities Data 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] - Investment grade securities (Aaa, Aa, A, Baa) constitute $86.5 billion, or 98.8% of the total fixed maturities portfolio[70] Investment Income 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 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] - The balance of net unrealized investment losses, net of tax, in shareholders' equity was $3.031 billion as of June 30, 2025[74] Reinsurance Recoverables 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] - Of the rated reinsurance recoverables, 94% were from reinsurers rated A- or better by A.M. Best[79] Net Reserves for Losses and Loss Adjustment Expense 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 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 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] Statutory Capital and Surplus to GAAP Shareholders' Equity Reconciliation 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 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] Glossary and Segment Descriptions Glossary of Financial Measures and Description of Reportable Business Segments 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] - 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] - 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] - Bond & Specialty Insurance: Provides surety, fidelity, and various liability coverages (management, professional) in the U.S. and other select countries[113] - Personal Insurance: Offers auto, homeowners, and other personal P&C products to individuals, primarily in the U.S. and Canada[115]