Travelers(US:TRV)2025-07-17 11:00Part I — Financial Information Item 1. Financial Statements 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 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) 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 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 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 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 202626 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 development71 - 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 authorizations84 Management's Discussion and Analysis of Financial Condition and Results of Operations 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 levels275 - 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%281303 Results of Operations by Segment 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 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, 2024237 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 disputes240244 Investment Portfolio 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 investments242 - The fixed maturity portfolio's weighted average credit quality was 'Aa2', and below-investment-grade securities represented only 1.2% of the portfolio243 - The municipal bond portfolio, a significant component, totaled $28.56 billion and had a high weighted average credit rating of 'Aaa/Aa1'246247 Liquidity and Capital Resources 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 billion288 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 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 Report326 Controls and Procedures 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 level327 - 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 reporting328 Part II — Other Information Legal Proceedings 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 statements331 Risk Factors 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 Report332 Unregistered Sales of Equity Securities and Use of Proceeds 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 date336 Other Information 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 arrangement340 Exhibits 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 Act341