Travelers 2024 Annual Report

Our long-standing commitment to excellence and care was an important contributor to our exceptional top- and bottom-line results this past year. We delivered record core income, underlying underwriting income, net income per diluted share, cash flow from operations and net written premiums.

Alan D. Schnitzer

Chairman and Chief Executive Officer

To My Fellow Shareholders

Strong results such as we delivered in 2024 not only benefit our shareholders but also empower us to be there for the customers and communities we are privileged to serve, especially during their times of greatest need. That took on particular importance last year as we faced record-breaking natural catastrophes. Our team of more than 30,000 committed employees rose to the occasion with countless individual acts of excellence – helping families and businesses recover, building resilience in affected communities and underscoring the value at the heart of our business.

Our long-standing commitment to excellence and care was an important contributor to our exceptional top- and bottom-line results this past year. We delivered record core income, underlying underwriting income, net income per diluted share, cash flow from operations and net written premiums. Each of our three business segments was a strong contributor to these results.

We earned $5 billion* of core income, generating core return on equity of 17.2%. The record underlying underwriting income, along with net favorable prior year reserve development and strong net investment income, more than offset a record level of catastrophe losses. Core return on equity was more than 1,200 basis points above the average 10-year Treasury.

This year, our underlying underwriting income reached $4.5 billion after-tax, surpassing $4 billion for the first time, driven by record net earned premiums and very strong profitability.

This level of underlying underwriting income is an important and highly consequential result of the strong top-line growth and profitability that we have achieved over the last eight years. It positions us to deliver strong bottom-line results even in the face of elevated losses from catastrophes, as we and the industry experienced this year.

Net income per diluted share was $21.47, which was 68% higher than the prior year. Share repurchases, an important component of our disciplined capital management strategy, contributed to the strong earnings per share result.

Thanks to our exceptional franchise value and excellent marketplace execution by our field organization, we grew net written premiums by 8% to a record $43.4 billion. Net written premiums were up more than 70% from $25 billion in 2016, with both reported and underlying profitability also improving over that period. Growth with improving profitability is a noteworthy accomplishment in this business.

These excellent results, along with our strong balance sheet, enabled us to continue making important investments in our business and return $2.1 billion of excess capital to our shareholders during the year, including through $1.1 billion of share repurchases. Even after this deployment of capital, we grew adjusted book value per share by 13% during the year.

With that, let me turn to a more detailed discussion of our 2024 performance and how we are positioning Travelers for continued success.

* See “Additional information” for a discussion and calculation of non-GAAP financial measures.

Our 2024 Results Speak to the Broad Strength of the Travelers Franchise

Travelers delivered core income of $5 billion, or $21.58 of core income per diluted share, generating core return on equity of 17.2% – an exceptional result and a meaningful spread over both the 10-year Treasury and our cost of equity. We achieved these excellent results in the face of record catastrophe losses. We delivered a record $4.5 billion of after-tax underlying underwriting income, an increase of nearly 40% compared to last year’s then record, and an underlying combined ratio that improved 330 basis points to an excellent 86.2%.

This year’s outstanding underlying underwriting results are even more impressive when considered in their historical context. As illustrated by the chart below, prior to 2020, underlying underwriting income had never exceeded $1.5 billion. Since that time, we have taken underlying underwriting income to an entirely new level by profitably growing our business.

Turning to the top line, today’s production generates tomorrow’s earned premiums. In 2024, we delivered record net written premiums of $43.4 billion, up 8% compared to the prior year. This represents the 15th consecutive year of net written premium growth. All three of our business segments contributed to this strong top-line performance, with Business Insurance increasing 8%, Bond & Specialty Insurance increasing 7% and Personal Insurance increasing 8%. This growth has been part of a deliberate strategy we developed in 2016 to profitably improve our growth trajectory. We seek to achieve profitable growth not by competing on price but by investing in franchise value – making sure that we offer the products, services and experiences that our customers want to buy and our distribution partners want to sell.

Also central to our growth strategy is our very granular approach to risk selection, underwriting and pricing. As a result of that approach, and investments we have made over decades in leading data and analytics, our growth in insured exposures correlates to returns. In other words, generally speaking, the more attractive the returns in a business, the more we have been growing insured exposures in that business. Conversely, where returns have not met our target, we have grown by pricing accordingly. All of which is to say, Travelers’ unique combination of franchise value and execution yields high-quality, profitable growth.

$43.4 B

Record
Net Written
Premiums

$43.4 B

$5.0 B

Record
Core Income

$5.0 B

Our Investment Portfolio Continues to Perform

We strive to be thoughtful underwriters on both sides of the balance sheet, and we have always managed our investment portfolio to support our insurance operations, not the other way around. Accordingly, our investment portfolio is positioned to meet our obligations to policyholders under almost every foreseeable circumstance – anything from a global pandemic to a significant natural disaster to a financial crisis. With this in mind, we are focused on risk-adjusted returns and credit quality rather than reaching for yield that is not commensurate with the underlying risk.

Our well-defined and consistent investment portfolio has been a meaningful and reliable contributor to our results, year in and year out. This is exactly what we saw in 2024.

Our well-defined and consistent investment portfolio has been a meaningful and reliable contributor to our results, year in and year out. This is exactly what we saw in 2024. Net investment income from our fixed income and alternative investment portfolios increased by more than 21% to a very strong $3 billion after-tax. From a fixed income perspective, net investment income benefited from very strong top-line growth and record cash flow from operations, as well as from slightly higher average interest rates. For 2025, we expect to earn approximately $3 billion after-tax on our fixed income portfolio alone.

Our Data-Driven Underwriting Culture and Expertise Matter More Than Ever

Underwriting excellence is, of course, key to our success, and there is nothing more critical to underwriting excellence than a culture that values strong performance over time and understands how to balance the art and science of decision making based on data and analytics. In other words, evaluating risk and reward is at the heart of what we do. In that regard, our culture alone is a significant competitive advantage, and one that we believe is very hard to replicate. A critical component of this culture is our granular approach to underwriting. In our commercial businesses, that means execution on an account-by-account or class-by-class basis. In personal lines, it means a very high degree of segmentation by risk profile, product and geography. With that and our advanced data and analytics, we thoughtfully select the risks that we write and price our products deliberately with our target return in mind.

Like every aspect of our business, our focus on performance over time is core to how we manage our catastrophe exposure. Although we are unable to predict what the next event will be or where it will occur, we are taking steps every day to ensure that our portfolio of risk properly contemplates the potential for loss and that we maintain the right balance of risk and reward. While the impact of the risk-based decisions that we are making today is not always immediately evident, those decisions will continue to drive our performance over time. Due to our thoughtful approach to catastrophe management, our share of catastrophe losses this year and over time has been significantly favorable relative to our market share. This outperformance is the result of our prudent and integrated approach to managing our catastrophe exposures through portfolio, risk selection, underwriting and pricing actions. We continue to make significant investments in advanced capabilities to ensure that our catastrophe management teams and underwriters have the tools and insights necessary to develop a comprehensive view of catastrophe risk. We believe that these investments position Travelers to continue to outperform over time.

While our competitive advantage in underwriting is both durable and differentiating, it is important that insurance markets be allowed to operate in a way that allows insurers to properly assess risk and set fair prices, preserving the value proposition of insurance for both consumers and carriers.

While our competitive advantage in underwriting is both durable and differentiating, it is important that insurance markets be allowed to operate in a way that allows insurers to properly assess risk and set fair prices, preserving the value proposition of insurance for both consumers and carriers. While most insurance markets across the U.S. remain stable and competitive, a number of states face significant disruptions due to localized policy decisions and market dynamics. We are engaging with stakeholders across sectors to advocate for commonsense reforms and plan to make this an area of focus in the year ahead. I have expanded on this topic below.

Availabilty and Affordability

Why Some Insurance Markets Are Struggling and How We Can Fix Them*

In the aftermath of the devastating fires that swept through Los Angeles neighborhoods in January, I visited the area to see the damage firsthand and meet with affected customers and employees. It was a heartbreaking scene – families mourning lost homes, businesses facing uncertain futures, entire communities grappling with unimaginable loss.

While the full impact of the event is still unfolding, and much remains to be done to support these communities in their recovery, it is important that lessons from a tragedy like this lead us toward better approaches. That means taking meaningful steps to mitigate and adapt to more frequent extreme weather, as well as addressing the underlying factors that leave communities vulnerable to both personal and financial harm.

While climate change is rightly cited as an explanation, this is an incomplete answer to a more complex problem. Economic inflation, aging infrastructure and population migration into higher-risk areas have emerged as primary drivers of rising weather-related losses – trends that will likely continue. There is also a constellation of other factors. Consider, for example, the staggering cost of litigation abuse, as well as development decisions and building practices that fail to account for foreseeable extreme weather events.

Insurance plays a critical role on the sustainable path forward. At its core, insurance is a cost-sharing mechanism, bringing individuals and businesses together to pool resources through premiums that accurately reflect each policyholder’s exposure to risk. When insurers can properly assess risk and set fair prices, this system functions reliably – even in the face of extreme weather. Importantly, insurance also serves as a crucial barometer of the true cost of building or rebuilding in higher-risk areas, allowing these costs to be properly considered during planning and development.

When this risk-sharing equation breaks down, it destabilizes the insurance marketplace and creates protection gaps. While most insurance markets across the U.S. remain stable and competitive, a number of states face significant disruptions due to localized policy decisions and market dynamics. For an insurance market to function properly, pricing and terms must be permitted to reflect the evolving level of risk. Regulatory policies that disconnect pricing and terms from actual risk drive insurers out of the market, reducing competition and limiting consumer choice.

Markets of last resort, such as FAIR plans and wind pools, serve a vital role by ensuring that coverage remains available for everyone. Unfortunately, some programs have evolved far beyond their intended purpose, increasingly becoming markets of choice that mask underlying market failures. Many have seen rapid growth driven by pricing that is neither actuarially sound nor reflective of the current risk environment. These pricing inadequacies become painfully evident during extreme events, such as the January wildfires, when these programs prove unsustainable – often leaving consumers as the ultimate financial backstop.

When an insurance marketplace fails to function, families and businesses bear the consequences. Costs rise, coverage shrinks and economic opportunity suffers. These challenges will not be easy to solve, but it is well past time we get started. Real progress will require committed partnership among policymakers, carriers and consumers. The urgency is clear – we are seeing the damaging consequences in troubled markets. Without prompt action, the road ahead will only grow more difficult.

*As published by Alan Schnitzer on LinkedIn on March 31, 2025

When Disaster Strikes, Excellence in Claim Sets Us Apart

We have long described our Claim organization as a crown jewel of Travelers. It is both at the heart of the promise we make to our customers and a significant competitive advantage. This commitment to Claim excellence sets us apart, but it particularly distinguishes us in years like 2024, when industrywide catastrophes were significant in both frequency and severity.

Our objective is to close 90% of property claims arising out of catastrophe events within 30 days. What that means in practice is our Claim team – some 13,000 strong – gets to work often before an event strikes and well before the skies clear, the wind dies down or the firefighters finish their work. That includes leveraging aerial imagery, enabling us to proactively identify locations with likely losses and determine the degree of damage – sometimes even before our customers have had a chance to return to their homes. We also promptly share this information with those customers so that they can begin the recovery process. For our Claim team, a speedy and compassionate response is a baseline. This means the world to our customers, as reflected in both customer satisfaction and retention.

Advanced Geospatial

Capabilities

Comprehensive imagery of more than 85% of U.S. properties, combined with our proprietary artificial intelligence, allows for early identification of losses, appropriate resource deployment, and timely customer contact and payment.

Travelers’

Unrivaled

Claim Capability

Leading Wildfire

Mitigation and

Response

Our wildfire services combine professional consulting with risk mitigation and loss intervention.

Sophisticated Automated
Inspection

Predictive models power
cutting-edge inspection
methods, which results in more than 50% of claims being paid the same day they are inspected.

Dedicated Catastrophe Response

Our data-driven catastrophe response allows us to resolve more than 90% of property claims arising out of catastrophe events within 30 days.

Expert Loss Consultation

We connect customers and agents with an expert who can help them make an informed decision about whether to file a claim.

Extensive Contractor Network

We provide access to high-quality repairs from 10,000+ vetted contractors through a proprietary digital platform, backed by a full warranty.

Comprehensive Digital Services

A substantial and increasing volume of claims can be resolved 100% through our digital portals. These portals allow customers to file a claim; upload documents, photos and videos; communicate and receive payment electronically.

World-Class Expertise

Our Claim professionals are trained at Claim University, our flagship learning institution dedicated to helping our claim professionals better serve our customers, and virtually all of our claims are managed by a Travelers employee.

Preparing for Tomorrow – Leveraging the Power of Artificial Intelligence

When we choose to make strategic investments, we evaluate them through the lens of our Perform and Transform call to action. Perform is about delivering on our objective of industry-leading returns over time, and Transform is about innovating to ensure that our competitive advantages are as relevant and differentiating tomorrow as they are today

.

Our long-standing investment in, and leveraging of, artificial intelligence (AI) is a powerful example. We continue to position Travelers as a leader in the property casualty industry in this regard. It is becoming increasingly evident that the impact of AI across the economy is going to be profound. So is the opportunity for Travelers.

Our AI strategy begins with our significant scale and hard-to-replicate data advantage. Given the competitive advantages that will come from deploying AI across the insurance value chain, and the expertise, resources and data required to get there, scale will increasingly be a differentiator in our industry, as will the ability to execute complex initiatives effectively and efficiently. Expertise, resources, data, scale and execution excellence all favor Travelers.

Building on this strong foundation, we have focused on responsibly developing differentiating AI capabilities across our three innovation priorities: extending our lead in risk expertise; providing great experiences for our customers, agents, brokers and employees; and optimizing productivity and efficiency.

A key success driver in insurance is segmenting risk as finely as possible to achieve pricing that is accurately calibrated to the risk. In that regard, deep learning models have significantly improved our ability to classify and segment risk in our flow businesses.

In 2024, we implemented AI capabilities ranging from those driving efficiency through automation to more advanced generative AI and large language models. In terms of driving efficiency, we are now using AI-infused automation broadly throughout our business to handle hundreds of routine workflows. Over the past few years, automation and AI have been meaningful contributors to our expense ratio improvement. We are also using more advanced models to augment various aspects of our underwriting, claim processing, service delivery, technology, analytics and other core capabilities, including customer experience. A key success driver in insurance is segmenting risk as finely as possible to achieve pricing that is accurately calibrated to the risk. In that regard, deep learning models have significantly improved our ability to classify and segment risk in our flow businesses.

In terms of AI, we are investing with speed and strategic direction, consistent with our stated objective of delivering industry-leading returns. This field will continue to develop rapidly – and the breadth of its impact remains to be seen. What is clear to us at Travelers is that our efforts to leverage automation and AI have already compounded our competitive advantages and are contributing to our record results. Moving forward, our ambition is to continue to be a market leader in this area, and it will be a sustained area of focus for Travelers.

Consistent and Successful Long-Term Financial Strategy Delivers Shareholder Value

It is always important to consider our financial results and strategic initiatives in the context of what we are ultimately trying to achieve. At Travelers, our simple and unwavering mission for creating shareholder value is to:

• Deliver superior returns on equity by leveraging our competitive advantages;

• Generate earnings and capital substantially in excess of our growth needs; and

• Thoughtfully rightsize capital and grow book value per share over time.

The results we deliver are due to our deliberate and consistent approach to creating shareholder value. We have been clear for many years that one of our crucial responsibilities is to produce an appropriate return on equity for our shareholders. This has meant developing and executing financial and operational plans consistent with our goal of achieving superior returns, which we defined many years ago as a mid-teens core return on equity over time. We emphasize that this objective is measured over time because we recognize that the macroeconomic environment, loss cost trends, weather, and geopolitical and other factors impact our results from year to year, and that there will be years – or longer periods – and environments in which a return below mid-teens is industry leading.

The level and consistency of our return on equity over time, particularly in the context of the growth we have achieved, reflect the value of our competitive advantages and the discipline with which we run our business.

Our 2024 return on equity of 19.2% and core return on equity of 17.2% again meaningfully exceeded the average return on equity for the domestic P&C industry of 13.3%, according to estimates from Conning, Inc., a global investment management firm and insurance research provider. As shown in the chart on page 10, our return on equity has significantly outperformed the average return on equity for the industry in each of the past 10 years. Importantly, these industry-leading returns on an absolute basis are even more impressive on a risk-adjusted basis when you take into account our low level of volatility. The level and consistency of our return on equity over time, particularly in the context of the growth we have achieved, reflect the value of our competitive advantages and the discipline with which we run our business.

PREPARING FOR TOMORROW ...

Leveraging the Power of Artificial Intelligence

Underwriting

Our underwriting tools provide timely, accurate and summarized coverage information that improves the efficiency of experienced underwriters, enhances the onboarding and training experience for new underwriters and ensures underwriting rigor and compliance.

Claim

Our claim tool provides industry-leading technical guidance to our thousands of claim professionals, leading to more consistent outcomes and time savings for day-to-day questions.

Submissions

Our business submission tool significantly reduces the time it takes to register new business submissions in Bond & Specialty Insurance – from two hours to two minutes – positioning us to both win more business and deliver better service to our customers.

Billing

Our billing tool allows us to quickly and accurately access relevant data for customer billing inquiries, which has reduced our response time by 98%.

Travelers’ Powerful Earnings Engine

Any strategy to deliver a leading return on equity over time requires a strategy to grow over time. To that end, we have laid out a strategy to achieve profitable growth in the context of the forces of change impacting our industry – namely, changing consumer expectations, emerging technology trends, more sophisticated data and analytics, and evolving distribution models.

Strong underwriting is the flywheel that sets it all in motion. Thanks to exceptional franchise value and excellent marketplace execution, we have profitably grown our premium base by more than 70% since 2016, from $25 billion to more than $43 billion today. Our reported and underlying profitability significantly improved over that period of time. Our growth has been largely organic, from products in which we have deep expertise, through distribution partners with whom we have long-standing relationships, and in geographies where we have a thorough understanding of the regulatory environment and other market dynamics – in other words, a relatively low-risk growth strategy. As we have grown our business, we have also successfully executed on our strategic initiative to improve productivity and efficiency.

It is a virtuous cycle, one in which the combination of well-conceived and executed strategic initiatives, an effective capital management strategy and a thoughtful investment strategy contributes to attractive returns and growth in adjusted book value per share. The successful execution of this strategy over time has led to significantly higher underlying underwriting income, meaningfully higher cash flow from operations and growth in our investment portfolio.

The tremendous strength and relative predictability of our underlying underwriting income have increasingly contributed to our bottom line. Our underlying underwriting income has more than tripled over the last eight years, reaching $4.5 billion after-tax in 2024. This level of underlying underwriting income positions us to deliver strong income and returns, even with the level of outsized natural catastrophes that we and the industry experienced in 2024.

Our growth in underwriting income also contributes to the increase in our cash flow from operations. Since 2016, we have more than doubled our annual cash flow from operations to a record $9.1 billion in 2024. Cash flow is not a measure that we or the industry talk a lot about, but it is important. Cash flow is what enables us to make strategic investments in our business, return excess capital to shareholders and grow our investment portfolio. Since 2016, we have invested $12 billion in technology (with a steadily increasing allocation to important strategic initiatives), returned more than $20 billion of excess capital to our shareholders and grown our investment portfolio, excluding unrealized investment gains (losses), by $30 billion to almost $100 billion. Importantly, our growing investment portfolio positions us to continue generating a higher level of predictable and reliable net investment income.

The following charts illustrate the power of this strategy at work and its compounding, multiyear benefit.

1 Represents growth from 2012 through 2016.

2 Represents growth from 2016 through 2024.

3 Underlying underwriting combined ratio, which excludes the impact of net prior year reserve development and catastrophe losses.

4 Underlying underwriting income, which excludes the impact of net prior year reserve development and catastrophe losses.

5 Invested assets excludes net unrealized investment gains (losses).

A Balanced Approach to Rightsizing Capital

The successful execution of our financial strategy, together with our fortress balance sheet, has enabled us to grow book value per share and adjusted book value per share consistently over the last 10 years.

During this period, we have also returned a significant amount of excess capital to our shareholders through dividends and share repurchases. Over the last 10 years, we have increased our dividend each year.

Notably, since we began our share repurchase program in 2006, we have returned approximately $57 billion of excess capital to our shareholders, including through $42 billion of share repurchases – well in excess of the market capitalization of the company when we started. If you owned Travelers stock when we began our share repurchase program in 2006, your percentage ownership has more than tripled. This percentage increase is even higher if you participated in our dividend reinvestment program. Over that same period, we have increased our dividend at an average annual rate of more than 8%.

Our capital management strategy has been an important driver of shareholder value creation over time. Our first objective for the capital we generate is to reinvest it in our business – organically and inorganically – to create shareholder value. For example, as we continue to grow our top line, as we have meaningfully for the past few years, we will retain more capital to support that growth. Also, we continue to invest in everything from talent to technology to further our ambitious innovation agenda, advance our strategic objectives and drive tomorrow’s performance.

Having said that, we are disciplined stewards of our shareholders’ capital. To the extent that we generate capital that we cannot reinvest consistent with our objective of generating industry-leading returns over time, we will manage it in the same way we have for nearly two decades – by returning it to our shareholders through dividends and share repurchases. By returning excess capital to our investors, we give them the ability to allocate their investment dollars as they see fit, including by investing in companies with different growth profiles or capital needs, thereby efficiently allocating capital across the economy. Over time, that efficient allocation of capital in the marketplace contributes to a stronger economy.

THE POWER OF

Our Diversified Businesses

Our results this year and over time demonstrate the benefits of the diversification of our business across core commercial, specialty and personal lines coverages. We engage broadly across nine major lines of insurance through our three business segments. Our portfolio is balanced across these lines of business and further diversified by geography and customer size and type. The depth and breadth of our business is a significant competitive advantage and one that would be very difficult to replicate.

Meaningful Total Shareholder Return

Ultimately, it is the success of our strategy – with all its component parts – that drives our total return to shareholders over time. We have a well-established track record of managing the company to create value over the long term, through periods of weather volatility; through anticipated and unanticipated developments impacting loss trends; through both foreseeable and unforeseeable economic cycles; and through any number of more extreme economic, geopolitical and other conditions. With that in mind, the graph below compares our total return to shareholders since the 2008 financial crisis to the returns for the Dow 30, the S&P 500 and the S&P 500 Financials.

Our total return reflects the successful execution of our long-term strategy. We provide our shareholders with growth in book value, industry-leading returns, low volatility and high credit quality. The success of this long-term strategy is evident in the strong performance of our stock over time, which has been remarkably consistent relative to many others in the P&C industry. Viewing our performance through this long-term lens, we are as confident as ever that executing on our long-term financial strategy, managing Travelers with an over-time discipline and continuing to invest in our competitive advantages through our ambitious and focused innovation agenda is the right approach for building on Travelers’ outstanding record.

Firing on All Cylinders – the Outlook for Travelers

In the nearly 20 years since I joined Travelers, I have never been more confident about the future of our business than I am today.

Almost a decade ago, in service of our mission to deliver industry-leading returns over time, we embarked on our ambitious innovation strategy designed to profitably improve our growth trajectory. This strategy includes pairing industry-leading performance with transformation designed to ensure that our competitive advantages are cutting edge and effective in a changing world. Inside Travelers, our call to action has been Perform and Transform. The strong growth, industry-leading returns and industry-low volatility we have delivered since demonstrate both the wisdom of the strategy and our ability to execute it. We will build on this success by continuing to execute our strategy with laser focus.

In the nearly 20 years since I joined Travelers, I have never been more confident about the future of our business than I am today.

Looking a little further out, we see significant upside in the reinforcing benefits of scale – which, as I have said over the last few years, will increasingly be a differentiator in our industry. It is our scale, profitability and cash flow that support our ability to attract the industry’s best talent and invest more than $1.5 billion annually in technology. Our scale also provides us with large and proprietary data sets – critically important in the age of AI. We believe that companies that leverage talent and scale to invest successfully will have a significant advantage in consolidating industry premium over time. Travelers is very well positioned in this regard.

Perhaps most importantly, wherever the years ahead take us, we will stay true to the things that make Travelers, Travelers. As always, that begins with our mission of creating shareholder value and our purpose of taking care of the people we are privileged to serve – our customers, our communities and our colleagues.

***

It is a privilege to lead this great company. I am enormously grateful to my colleagues for their unwavering commitment to all that we stand for; to our agents and brokers for their tremendous partnership and friendship; to our customers and shareholders for their trust and confidence; and to our Board of Directors for their wisdom and support.

Alan D. Schnitzer

Chairman and Chief Executive Officer

2024 ANNUAL REPORT