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Travelers Reports Second Quarter Net Income and Core Income per Diluted Share of $1.92 and $1.81, Respectively, Which Includes Catastrophe Losses of $1.40 per Diluted Share

NEW YORK--(BUSINESS WIRE)--

Second Quarter Return on Equity of 9.2% and Core Return on Equity of 8.7%

  • Second quarter net income of $524 million and core income of $494 million.
  • Catastrophe losses of $488 million pre-tax increased by $85 million pre-tax from the prior year quarter. Quarter-over-quarter results also impacted by an incremental charge of $45 million pre-tax associated with a few large commercial losses, primarily fire related.
  • Consolidated combined ratio of 98.1%; underlying combined ratio of 93.6%.
  • Record net written premiums of $7.131 billion, up 7% from the prior year quarter, reflecting growth in all segments.
  • Renewal premium change in Business Insurance at highest level since 2014.
  • Total capital returned to shareholders of $559 million in the quarter, including $350 million of share repurchases. Year-to-date total capital returned to shareholders of $1.157 billion, including $751 million of share repurchases.
  • Book value per share of $84.51, down 3% from year-end 2017, due to the impact of higher interest rates on net unrealized investment gains/(losses). Adjusted book value per share of $84.93, up 2% from year-end 2017.
  • Board of Directors declared quarterly dividend per share of $0.77.

The Travelers Companies, Inc. today reported net income of $524 million, or $1.92 per diluted share, for the quarter ended June 30, 2018, compared to $595 million, or $2.11 per diluted share, in the prior year quarter. Core income in the current quarter was $494 million, or $1.81 per diluted share, compared to $543 million, or $1.92 per diluted share, in the prior year quarter. Core income before income taxes decreased primarily due to an increase in catastrophe losses of $85 million, an incremental charge of $45 million associated with a few large commercial losses, primarily fire related, and an $18 million assessment from the Texas Windstorm Insurance Association (TWIA) related to Hurricane Harvey. Core income benefited by $54 million from a lower U.S. corporate income tax rate. Net realized investment gains of $36 million pre-tax ($30 million after-tax) decreased due to lower gains on equity securities. Per diluted share amounts benefited from the impact of share repurchases.

                     

Consolidated Highlights

 
($ in millions, except for per share amounts, and after-tax, Three Months Ended June 30, Six Months Ended June 30,
except for premiums & revenues) 2018     2017 Change 2018     2017 Change
 
Net written premiums     $ 7,131       $ 6,640         7     %       $ 13,955         $ 13,135         6   %
Total revenues $ 7,477 $ 7,184 4 $ 14,763 $ 14,126 5
 
Net income $ 524 $ 595 (12 ) $ 1,193 $ 1,212 (2 )
per diluted share $ 1.92 $ 2.11 (9 ) $ 4.35 $ 4.28 2
Core income $ 494 $ 543 (9 ) $ 1,172 $ 1,157 1
per diluted share $ 1.81 $ 1.92 (6 ) $ 4.27 $ 4.08 5
 
 
Diluted weighted average 271.1 280.0 (3 ) 272.5 281.2 (3 )
shares outstanding
 
Combined ratio 98.1 % 96.7 % 1.4 pts 96.8 % 96.4 % 0.4 pts
Underlying combined ratio 93.6 % 93.5 % 0.1 pts 93.0 % 92.7 % 0.3 pts
 
Return on equity 9.2 % 10.0 % (0.8 ) pts 10.3 % 10.3 % - pts
Core return on equity 8.7 % 9.5 % (0.8 ) pts 10.3 % 10.2 % 0.1 pts

 

                                             
 
 
Change from
June 30, December 31, June 30, December 31, June 30,
2018 2017 2017 2017 2017
Book value per share $ 84.51 $ 87.46 $ 86.46 (3 ) % (2 ) %
Adjusted book value per share 84.93 83.36 82.71 2 3
 

See Glossary of Financial Measures for definitions and the statistical supplement for additional financial data.

“Second quarter core income was $494 million, down from $543 million in the prior year quarter, due to a $122 million after-tax increase in catastrophe losses resulting from an active tornado and hail season,” said Alan Schnitzer, Chairman and Chief Executive Officer. “Results excluding catastrophe losses were strong, reflecting record net earned premiums and a consolidated underlying combined ratio of 93.6%, with each of our business segments contributing. The underlying combined ratio in Business Insurance was a solid 96.5%. The underlying combined ratio in our Bond & Specialty Insurance business was strong at 80.5%. The underlying combined ratio in Personal Insurance improved to 92.6%, reflecting a 6.9 point improvement in Agency Auto as a result of our actions in recent quarters to increase profitability. The consolidated expense ratio improved by 0.4 points from disciplined top line growth and expense management, along with the successful execution of our productivity initiatives. Our investment portfolio continued to perform well, with income from our fixed income portfolio continuing to increase. Our capital management strategy remains unchanged, and we returned approximately $560 million of excess capital to our shareholders this quarter, including $350 million of share repurchases, bringing the year-to-date total to over $1.15 billion.

“We are pleased with the execution of our marketplace strategies. Net written premiums increased by 7% to a record $7.1 billion. Net written premiums in Business Insurance increased by 7%. This was driven by very strong execution by our domestic field organization, which resulted in renewal premium change that reached 5.3%, its highest level since 2014, while still achieving retention of 85%, consistent with historical highs. The recent establishment of business centers in our Commercial Accounts business contributed to an 8% increase in domestic new business in Business Insurance. In Bond & Specialty Insurance, net written premiums increased by 9%, with strong production across our Management Liability and Surety businesses. In Personal Insurance, net written premiums increased by 8%, benefiting from renewal premium change of 9% in Agency Auto and continued growth in Agency Homeowners.

“Turning to weather more broadly, absent a severe hurricane season, we expect catastrophe losses to be highest in the second quarter. Catastrophe losses were $488 million this quarter, approximately $50 million more than we would have expected, but within the range of normal variability. This follows several recent quarters in which catastrophe losses exceeded our historical experience and expectations. Weather is inherently unpredictable, and accordingly, we take a balanced approach to developing conclusions from what happens in a relatively short period of time. As always, the impact of weather on our business has our full attention, and we will continue to use our leading actuarial expertise and the latest in weather modeling to inform our underwriting and pricing decisions.

“With a strong foundation, an active innovation agenda, superior talent and a track record of successfully managing our businesses for the long term, we remain well positioned to continue to deliver leading returns over time.”

                                         

Consolidated Results

 
($ in millions and pre-tax, unless noted otherwise)
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 Change 2018 2017 Change
 
Underwriting gain: $ 90 $ 173 $ (83 ) $ 348 $ 384 $ (36 )

Underwriting gain includes:

Net favorable prior year reserve development 186 203 (17 ) 336 284 52
Catastrophes, net of reinsurance (488 ) (403 ) (85 ) (842 ) (750 ) (92 )
 
Net investment income 595 598 (3 ) 1,198 1,208 (10 )
 
Other income/(expense), including interest expense   (90 )   (61 )   (29 )   (162 )   (127 )   (35 )
Core income before income taxes 595 710 (115 ) 1,384 1,465 (81 )
Income tax expense   101     167     (66 )   212     308     (96 )
Core income 494 543 (49 ) 1,172 1,157 15
Net realized investment gains after income taxes   30     52     (22 )   21     55     (34 )
Net income $ 524   $ 595   $ (71 ) $ 1,193   $ 1,212   $ (19 )
                                                                   
 
Combined ratio 98.1 % 96.7 % 1.4 pts 96.8 % 96.4 % 0.4 pts
 

Impact on combined ratio

Net favorable prior year reserve development (2.8 ) pts (3.2 ) pts 0.4 pts (2.5 ) pts (2.3 ) pts (0.2 ) pts
Catastrophes, net of reinsurance 7.3 pts 6.4 pts 0.9 pts 6.3 pts 6.0 pts 0.3 pts
 
Underlying combined ratio 93.6 % 93.5 % 0.1 pts 93.0 % 92.7 % 0.3 pts
                                                                   
 
Net written premiums
Business Insurance $ 3,781 $ 3,544 7 % $ 7,775 $ 7,399 5 %
Bond & Specialty Insurance 653 598 9 1,227 1,142 7
Personal Insurance   2,697     2,498   8   4,953     4,594   8
Total $ 7,131   $ 6,640   7 % $ 13,955   $ 13,135   6 %
 

Second Quarter 2018 Results
(All comparisons vs. second quarter 2017, unless noted otherwise)

Net income of $524 million decreased $71 million due to lower core income and lower net realized investment gains. Core income of $494 million decreased $49 million. Core income before income taxes decreased primarily due to an increase in catastrophe losses of $85 million, an incremental charge of $45 million associated with a few large commercial losses, primarily fire related, and the $18 million assessment from TWIA. Core income benefited by $54 million from a lower U.S. corporate income tax rate. Net realized investment gains of $36 million pre-tax ($30 million after-tax) decreased due to lower gains on equity securities.

Underwriting results:

  • The combined ratio of 98.1% increased 1.4 points due to higher catastrophe losses (0.9 points), lower net favorable prior year reserve development (0.4 points) and a higher underlying combined ratio (0.1 points).
  • The underlying combined ratio of 93.6% increased 0.1 points. See below for details by segment.
  • Net favorable prior year reserve development occurred in all segments. Catastrophe losses in the second quarter of 2018 primarily resulted from nine wind and hail storms in several regions of the United States.

Net investment income of $595 million pre-tax was comparable to the prior year quarter. Private equity returns, although strong, were lower than the prior year quarter, while income from our fixed income investment portfolio increased due to a higher average level of fixed maturity investments and higher short-term interest rates.

Record net written premiums of $7.131 billion increased 7%, reflecting growth in all segments.

Year-to-Date 2018 Results
(All comparisons vs. year-to-date 2017, unless noted otherwise)

Net income of $1.193 billion decreased $19 million due to lower net realized investment gains, partially offset by higher core income. Core income of $1.172 million increased $15 million. Core income before income taxes decreased due to higher catastrophe losses, partially offset by higher net favorable prior year reserve development. Core income benefited by $127 million from a lower U.S. corporate income tax rate. Net realized investment gains of $25 million pre-tax ($21 million after-tax) were lower, primarily driven by gains on the sale of equity securities in the prior year period.

Underwriting results:

  • The combined ratio of 96.8% increased 0.4 points due to a higher underlying combined ratio (0.3 points) and higher catastrophe losses (0.3 points), partially offset by higher net favorable prior year reserve development (0.2 points).
  • The underlying combined ratio of 93.0% increased 0.3 points.
  • Net favorable prior year reserve development occurred in all segments. Catastrophe losses included the second quarter events described above, as well as winter storms in the eastern United States, a wind and hail storm in the southern United States and mudslides in California in the first quarter of 2018.

Net investment income of $1.198 billion pre-tax ($1.020 billion after-tax) was comparable to the prior year period and benefited from the same factors as discussed above for the second quarter 2018.

Record net written premiums of $13.955 billion increased 6%, reflecting growth in all segments.

Shareholders’ Equity

Shareholders’ equity of $22.623 billion decreased 5% from year-end 2017 due to the impact of higher interest rates on net unrealized investment gains/(losses). Net unrealized investment losses included in shareholders’ equity were $(135) million pre-tax ($(112) million after-tax), compared to net unrealized investment gains of $1.414 billion pre-tax ($1.112 billion after-tax) at year-end 2017. Book value per share of $84.51 decreased 3% from year-end 2017, also due to the impact of higher interest rates on net unrealized investment gains/(losses), and adjusted book value per share of $84.93 increased 2% from year-end 2017.

The Company repurchased 2.7 million shares during the second quarter at an average price of $129.66 per share for a total cost of $350 million. Capacity remaining under the existing share repurchase authorization was $3.856 billion at the end of the quarter. At the end of second quarter 2018, statutory capital and surplus was $20.371 billion and the ratio of debt-to-capital was 22.2%. The ratio of debt-to-capital excluding after-tax net unrealized investment gains/(losses) included in shareholders’ equity was 22.1%, within the Company’s target range of 15% to 25%.

The Board of Directors declared a quarterly dividend of $0.77 per share. This dividend is payable on September 28, 2018, to shareholders of record as of the close of business on September 10, 2018.

                               

Business Insurance Segment Financial Results

                                                         
($ in millions and pre-tax, unless noted otherwise)
  Three Months Ended June 30, Six Months Ended June 30,
2018 2017 Change 2018 2017 Change
 
Underwriting gain: $ 32 $ 107 $ (75 ) $ 105 $ 216 $ (111 )

Underwriting gain includes:

Net favorable prior year reserve development 84 125 (41 ) 150 186 (36 )
Catastrophes, net of reinsurance (168 ) (184 ) 16 (306 ) (316 ) 10
 
Net investment income 440 447 (7 ) 886 900 (14 )
 
Other income/(expense)   (10 )   15     (25 )   (7 )   24     (31 )
Segment income before income taxes 462 569 (107 ) 984 1,140 (156 )
Income tax expense   77     140     (63 )   147     269     (122 )
Segment income $ 385   $ 429   $ (44 ) $ 837   $ 871   $ (34 )
                                                           
 
Combined ratio 98.8 % 96.5 % 2.3 pts 98.2 % 96.5 % 1.7 pts
 

Impact on combined ratio

Net favorable prior year reserve development (2.3 ) pts (3.6 ) pts 1.3 pts (2.1 ) pts (2.7 ) pts 0.6 pts
Catastrophes, net of reinsurance 4.6 pts 5.3 pts (0.7 ) pts 4.3 pts 4.6 pts (0.3 ) pts
 
Underlying combined ratio 96.5 % 94.8 % 1.7 pts 96.0 % 94.6 % 1.4 pts
                                                           
 
Net written premiums by market
Domestic
Select Accounts $ 729 $ 720 1 % $ 1,502 $ 1,475 2 %
Middle Market 1,985 1,820 9 4,247 3,997 6
National Accounts 231 219 5 540 507 7
National Property and Other   518     496   4   898     882   2
Total Domestic 3,463 3,255 6 7,187 6,861 5
International   318     289   10   588     538   9
Total $ 3,781   $ 3,544   7 % $ 7,775   $ 7,399   5 %
 

Second Quarter 2018 Results
(All comparisons vs. second quarter 2017, unless noted otherwise)

Segment income for Business Insurance was $385 million after-tax, a decrease of $44 million. Segment income before income taxes was impacted by a lower underlying underwriting gain and lower net favorable prior year reserve development. The lower underlying underwriting gain was driven by normal quarterly variability in both loss and expense activity, including an incremental charge of $45 million associated with a few large commercial losses, primarily fire related, and $9 million from the TWIA assessment. Segment income in the current quarter benefited from a lower U.S. corporate income tax rate.

Underwriting results:

  • The combined ratio of 98.8% increased 2.3 points due to a higher underlying combined ratio (1.7 points) and lower net favorable prior year reserve development (1.3 points), partially offset by lower catastrophe losses (0.7 points).
  • The underlying combined ratio of 96.5% increased 1.7 points driven by normal quarterly variability in both loss and expense activity, including a few large commercial losses, primarily fire related, and the TWIA assessment.
  • Net favorable prior year reserve development was primarily driven by better than expected loss experience in the segment’s domestic operations in the workers’ compensation product line for multiple accident years, partially offset by higher than expected loss experience in the general liability product line for accident years 2008 and prior, including a $55 million increase to environmental reserves.

Net written premiums of $3.781 billion increased 7%, benefiting from continued strong retention, higher renewal premium change and higher levels of new business.

Year-to-Date 2018 Results
(All comparisons vs. year-to-date 2017, unless noted otherwise)

Segment income for Business Insurance was $837 million after-tax, a decrease of $34 million. Segment income before income taxes was impacted by a lower underlying underwriting gain, primarily driven by normal variability in loss activity, including a charge of $45 million associated with a few large commercial losses, primarily fire related, and lower net favorable prior year reserve development. Segment income in the current quarter benefited from a lower U.S. corporate income tax rate. Segment income in the prior year period included a $15 million benefit from the resolution of prior year tax matters.

Underwriting results:

  • The combined ratio of 98.2% increased 1.7 points due to a higher underlying combined ratio (1.4 points) and lower net favorable prior year reserve development (0.6 points), partially offset by lower catastrophe losses (0.3 points).
  • The underlying combined ratio of 96.0% increased 1.4 points, primarily driven by normal variability in loss activity, including a few large commercial losses, primarily fire related.
  • Net favorable prior year reserve development was primarily driven by better than expected loss experience in the segment’s domestic operations in the workers’ compensation product line for multiple accident years and the commercial property product line for recent accident years, partially offset by higher than expected loss experience in the general liability product line for accident years 2008 and prior (including a $55 million increase to environmental reserves) and higher than expected loss experience in the commercial automobile product line for recent accident years.

Net written premiums of $7.775 billion increased 5% and benefited from the same factors discussed above for the second quarter 2018.

                               

Bond & Specialty Insurance Segment Financial Results

                                                         
($ in millions and pre-tax, unless noted otherwise)
  Three Months Ended June 30, Six Months Ended June 30,
2018 2017 Change 2018 2017 Change
 
Underwriting gain: $ 199 $ 177 $ 22 $ 343 $ 289 $ 54

Underwriting gain includes:

Net favorable prior year reserve development 89 78 11 124 92 32
Catastrophes, net of reinsurance (5 ) (1 ) (4 ) (5 ) (2 ) (3 )
 
Net investment income 57 56 1 115 117 (2 )
 
Other income   3     6     (3 )   9     11     (2 )
Segment income before income taxes 259 239 20 467 417 50
Income tax expense   55     76     (21 )   90     109     (19 )
Segment income $ 204   $ 163   $ 41   $ 377   $ 308   $ 69  
                                                           
 
Combined ratio 66.5 % 68.7 % (2.2 ) pts 70.5 % 74.0 % (3.5 ) pts
 

Impact on combined ratio

Net favorable prior year reserve development (14.8 ) pts (13.5 ) pts (1.3 ) pts (10.5 ) pts (8.2 ) pts (2.3 ) pts
Catastrophes, net of reinsurance 0.8 pts 0.2 pts 0.6 pts 0.4 pts 0.2 pts 0.2 pts
 
Underlying combined ratio 80.5 % 82.0 % (1.5 ) pts 80.6 % 82.0 % (1.4 ) pts
                                                           
 
Net written premiums
Domestic
Management Liability $ 362 $ 341 6 % $ 710 $ 671 6 %
Surety   235     211   11   420     385   9
Total Domestic 597 552 8 1,130 1,056 7
International   56     46   22   97     86   13
Total $ 653   $ 598   9 % $ 1,227   $ 1,142   7 %
 

Second Quarter 2018 Results
(All comparisons vs. second quarter 2017, unless noted otherwise)

Segment income for Bond & Specialty Insurance was $204 million, an increase of $41 million. Segment income before income taxes benefited from a higher underlying underwriting gain and higher net favorable prior year reserve development. Segment income in the current quarter benefited from a lower U.S. corporate income tax rate.

Underwriting results:

  • The combined ratio of 66.5% improved 2.2 points due to a lower underlying combined ratio (1.5 points) and higher net favorable prior year reserve development (1.3 points), partially offset by higher catastrophe losses (0.6 points).
  • The underlying combined ratio remained very strong at 80.5% and improved 1.5 points, primarily driven by improvement in the expense ratio from the impact of higher levels of earned premiums.
  • Net favorable prior year reserve development resulted from better than expected loss experience in the segment’s domestic operations in the general liability product line for multiple accident years.

Net written premiums of $653 million increased 9%, reflecting an increase in surety premiums, as well as continued strong retention and an increase in new business in management liability.

Year-to-Date 2018 Results
(All comparisons vs. year-to-date 2017, unless noted otherwise)

Segment income for Bond & Specialty Insurance was $377 million, an increase of $69 million. Segment income before income taxes benefited from higher net favorable prior year reserve development and a higher underlying underwriting gain. Segment income in the current period benefited from a lower U.S. corporate income tax rate. Segment income in the prior year period included a $17 million benefit from the resolution of prior year tax matters.

Underwriting results:

  • The combined ratio of 70.5% improved 3.5 points due to higher net favorable prior year reserve development (2.3 points) and a lower underlying combined ratio (1.4 points), partially offset by higher catastrophe losses (0.2 points).
  • The underlying combined ratio remained very strong at 80.6% and improved 1.4 points, primarily driven by improvement in the expense ratio from the impact of higher levels of earned premiums.
  • Net favorable prior year reserve development resulted from better than expected loss experience in the segment’s domestic operations in the general liability product line for multiple accident years.

Net written premiums of $1.227 billion grew 7% from the prior year period and benefited from the same factors as discussed above for second quarter 2018.

                               

Personal Insurance Segment Financial Results

                                                         
($ in millions and pre-tax, unless noted otherwise)
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 Change 2018 2017 Change
 
Underwriting gain/(loss): $ (141 )

 

$ (111 ) $ (30 ) $ (100 ) $ (121 ) $ 21

Underwriting gain includes:

Net favorable prior year reserve development 13 - 13 62 6 56
Catastrophes, net of reinsurance (315 ) (218 ) (97 ) (531 ) (432 ) (99 )
 
Net investment income 98 95 3 197 191 6
 
Other income   14     15     (1 )   31     31     -  
Segment income/(loss) before income taxes (29 ) (1 ) (28 ) 128 101 27
Income tax expense/(benefit)   (12 )   (13 )   1     16     -     16  
Segment income/(loss) $ (17 ) $ 12   $ (29 ) $ 112   $ 101   $ 11  
                                                         
 
Combined ratio 104.9 % 104.1 % 0.8 pts 101.3 % 101.9 % (0.6 ) pts
 

Impact on combined ratio

Net favorable prior year reserve development (0.5 ) pts - pts (0.5 ) pts (1.3 ) pts (0.2 ) pts (1.1 ) pts
Catastrophes, net of reinsurance 12.8 pts 9.6 pts 3.2 pts 11.0 pts 9.7 pts 1.3 pts
 
Underlying combined ratio 92.6 % 94.5 % (1.9 ) pts 91.6 % 92.4 % (0.8 ) pts
                                                         
 
Net written premiums
Domestic
Agency 1
Automobile $ 1,258 $ 1,159 9 % $ 2,441 $ 2,246 9 %
Homeowners & Other   1,137     1,077   6   1,969     1,871   5
Total Agency 2,395 2,236 7 4,410 4,117 7
Direct to Consumer   99     88   13   191     171   12
Total Domestic 2,494 2,324 7 4,601 4,288 7
International   203     174   17   352     306   15
Total $ 2,697   $ 2,498   8 % $ 4,953   $ 4,594   8 %
 
1 Represents business sold through agents, brokers and other intermediaries, and excludes direct to consumer.
 

Second Quarter 2018 Results
(All comparisons vs. second quarter 2017, unless noted otherwise)

Segment loss for Personal Insurance was $(17) million, as compared to segment income of $12 million in the prior year quarter, due to lower segment income before income taxes. The segment loss before income taxes resulted from higher catastrophe losses, partially offset by a higher underlying underwriting gain and net favorable prior year reserve development, compared to no net reserve development in the prior year quarter. The higher underlying underwriting gain resulted from improvement in Agency Automobile, driven by earned pricing that exceeded loss cost trends, partially offset by a reduction in Agency Homeowners & Other due to normal variability in loss activity as well as the inclusion of $9 million from the TWIA assessment. Segment loss in the current quarter was impacted by a lower U.S. corporate income tax rate.

Underwriting results:

  • The combined ratio of 104.9% increased 0.8 points due to higher catastrophe losses (3.2 points), partially offset by a lower underlying combined ratio (1.9 points) and net favorable prior year reserve development compared to no net reserve development in the prior year quarter (0.5 points).
  • The underlying combined ratio of 92.6% improved 1.9 points from improvement in Agency Automobile, driven by earned pricing that exceeded loss cost trends, partially offset by an increase in Agency Homeowners & Other due to normal variability in loss activity and the TWIA assessment.
  • Net favorable prior year reserve development resulted from better than expected loss experience in the domestic Automobile product line for recent accident years.

Net written premiums of $2.697 billion increased 8%. Agency Automobile net written premiums grew 9%, driven by renewal premium change of 9%. Agency Homeowners & Other net written premiums grew 6%, benefiting from year-over-year policies in force growth of 6% and positive renewal premium change.

Year-to-Date 2018 Results
(All comparisons vs. year-to-date 2017, unless noted otherwise)

Segment income for Personal Insurance was $112 million, an increase of $11 million. Segment income before income taxes benefited from a higher underlying underwriting gain and higher net favorable prior year reserve development, partially offset by higher catastrophe losses. The higher underlying underwriting gain was driven by earned pricing that exceeded loss cost trends in the Agency Automobile product line, partially offset by a reduction in Agency Homeowners & Other due to normal variability in loss activity. Segment income in the current period benefited from a lower U.S. corporate income tax rate. Segment income in the prior year period included a $7 million benefit from the resolution of prior year income tax matters.

Underwriting results:

  • The combined ratio of 101.3% improved 0.6 points due to higher net favorable prior year reserve development (1.1 points) and a lower underlying combined ratio (0.8 points), partially offset by higher catastrophe losses (1.3 points).
  • The underlying combined ratio of 91.6% improved 0.8 points, primarily driven by earned pricing that exceeded loss cost trends in Agency Automobile, partially offset by an increase in Agency Homeowners & Other due to normal variability in loss activity.
  • Net favorable prior year reserve development resulted from better than expected loss experience in the segment’s domestic operations in the Automobile product line for recent accident years.

Net written premiums of $4.953 billion increased 8%. Agency Automobile net written premiums grew 9% and Agency Homeowners & Other net written premiums grew 5%, benefiting from the same factors as discussed above for second quarter 2018.

Financial Supplement and Conference Call

The information in this press release should be read in conjunction with a financial supplement that is available on our website at www.travelers.com. Travelers management will discuss the contents of this release and other relevant topics via webcast at 9 a.m. Eastern (8 a.m. Central) on Thursday, July 19, 2018. Investors can access the call via webcast at http://investor.travelers.com or by dialing 1.866.393.4306 within the United States and 1.734.385.2616 outside the United States. Prior to the webcast, a slide presentation pertaining to the quarterly earnings will be available on the Company’s website.

Following the live event, an audio playback of the webcast and the slide presentation will be available on the same website.

About Travelers

The Travelers Companies, Inc. (TRV) is a leading provider of property casualty insurance for auto, home and business. A component of the Dow Jones Industrial Average, Travelers has appr...