Travelers(TRV) - 2025 Q4 - Annual Report

Business Insurance Performance - Total direct written premiums for Business Insurance reached $22.679 billion in 2025, an increase from $22.078 billion in 2024, representing a growth of 2.7%[23] - The Middle Market segment generated $12.541 billion in net written premiums in 2025, accounting for 55.3% of total Business Insurance premiums[23] - The company's total domestic written premiums for 2025 were $20.745 billion, up from $20.143 billion in 2024, indicating a growth of 3.0%[23] - Business Insurance's direct written premiums for the year ended December 31, 2025, were distributed as follows: Domestic 96.0% and International 4.0%[39] - The largest share of domestic direct written premiums came from California (13.2%), followed by New York (8.0%) and Texas (7.5%)[39] International Operations - The company’s international operations contributed $1.934 billion in net written premiums, representing 8.5% of total Business Insurance premiums[23] - Bond & Specialty Insurance's surety business in Brazil is conducted through a joint venture, Junto Holding Brasil S.A., where the Company owns 49.5%[49] - For the year ended December 31, 2025, Bond & Specialty Insurance's direct written premiums were distributed as follows: Domestic 86.7%, International 13.3%[59] Pricing and Underwriting Strategy - The company has a disciplined approach to pricing and underwriting, focusing on profitable growth rather than premium volume, with a strong emphasis on risk management[13] - The company utilizes various analyses and modeling processes to manage catastrophe exposure, which includes underwriting actions such as tightening standards and selective price increases[17] - The company’s competitive position is influenced by its ability to profitably price business, retain customers, and adapt to technological changes, including the use of data analytics[12] Catastrophe Management - The Company utilizes catastrophe reinsurance to manage risk exposure from catastrophic events, ensuring financial protection against large losses[202] - The Corporate Catastrophe Excess-of-Loss Reinsurance Treaty provides recovery of 100% of each qualifying loss in excess of a $3.0 billion retention up to $4.0 billion, with a maximum recovery of $4.7 billion[90] - The Company has a catastrophe protection agreement with Long Point Re IV, providing coverage of up to $575 million for certain losses from tropical cyclones and earthquakes, subject to a $2.89 billion retention[92] - The Business Insurance Earthquake Catastrophe Excess-of-Loss Reinsurance Treaty provides up to $775 million of coverage, subject to a $350 million retention, for earthquake-related losses[101] Claims and Reserves - Claims and claim adjustment expense reserves represent management's estimate of the ultimate liability for unpaid losses and loss adjustment expenses[104] - The Company refines its reserve estimates based on key assumptions, historical loss experience, and regular reviews by qualified actuaries[105] - The process of estimating loss reserves involves a high degree of judgment and is affected by various internal and external events[106] - As of December 31, 2025, GAAP reserves for claims and claim adjustment expenses were $99 million higher than statutory reserves[107] Employee and Human Capital Management - The Company employs approximately 12,300 professionals in its Claims Services organization, which manages claims across the United States and internationally[80] - The average employee tenure at the Company is over 11 years, with a voluntary turnover rate of approximately 8% over the past three years[177] - The Company has established recruiting, retention, and development practices to attract and retain high-performing employees[178] - The Company actively engages its Board of Directors in overseeing human capital management strategies, including diversity and inclusion efforts[195] Financial Performance Metrics - The combined ratio indicates underwriting profitability, with a ratio under 100% suggesting a profit and over 100% indicating a loss[202] - Core income excludes the impact of realized investment gains and losses, providing a clearer view of operational performance[202] - Return on equity is defined as the ratio of net income less preferred dividends to average shareholders' equity, providing insight into profitability[207] - Risk-based capital (RBC) measures the minimum statutory policyholders' surplus requirements for insurers, with regulatory actions varying based on capital adequacy[207] Regulatory Compliance - The Company is licensed to transact insurance business in all U.S. states and territories, subject to varying degrees of state regulation[127] - The State of Connecticut is designated as the Company's lead regulator, coordinating supervisory colleges for the insurance holding company system[131] - The Company’s U.S. insurance subsidiaries exceeded the required policyholders' surplus levels as of December 31, 2025, avoiding regulatory action under Risk-Based Capital (RBC) requirements[143] - The Company is compliant with investment regulations, which dictate the types and concentrations of investments allowed[147]