The Travelers Companies Inc.

04/16/2026 | Press release | Distributed by Public on 04/16/2026 05:00

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion and analysis of the Company's financial condition and results of operations.
FINANCIAL HIGHLIGHTS
2026 First Quarter Consolidated Results of Operations
•Net income of $1.71 billion, or $7.89 per share basic and $7.78 per share diluted
•Net earned premiums of $10.61 billion
•Catastrophe losses of $761 million ($601 million after-tax)
•Net favorable prior year reserve development of $413 million ($325 million after-tax)
•Combined ratio of 88.6%
•Net investment income of $1.01 billion ($833 million after-tax)
•Net realized investment gains of $49 million ($15 million after-tax)
•Operating cash flows of $2.20 billion
2026 First Quarter Consolidated Financial Condition
•Total investments of $102.98 billion; fixed maturities and short-term securities comprised 95% of total investments
•Total assets of $142.31 billion
•Total debt of $9.27 billion, resulting in a debt-to-total capital ratio of 22.5% (21.2% excluding net unrealized investment losses, net of tax)
•Total capital returned to shareholders of $2.22 billion, comprising $1.99 billion of share repurchases and $238 million of dividends
•Shareholders' equity of $31.99 billion
•Net unrealized investment losses of $3.01 billion ($2.38 billion after-tax)
•Book value per common share of $150.42
•Holding company liquidity of $2.38 billion
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
CONSOLIDATED OVERVIEW
Consolidated Results of Operations
Three Months Ended
March 31,
(in millions, except ratio and per share amounts) 2026 2025
Revenues
Premiums $ 10,605 $ 10,710
Net investment income 1,008 930
Fee income 121 119
Net realized investment gains (losses) 49 (61)
Other revenues 141 112
Total revenues 11,924 11,810
Claims and expenses
Claims and claim adjustment expenses 6,382 8,006
Amortization of deferred acquisition costs 1,766 1,778
General and administrative expenses 1,541 1,459
Interest expense 116 99
Total claims and expenses 9,805 11,342
Income before income taxes 2,119 468
Income tax expense 408 73
Net income $ 1,711 $ 395
Net income per share
Basic $ 7.89 $ 1.73
Diluted $ 7.78 $ 1.70
Combined ratio
Loss and loss adjustment expense ratio 59.6 % 74.2 %
Underwriting expense ratio 29.0 28.3
Combined ratio 88.6 % 102.5 %
The following discussions of the Company's net income and segment income are presented on an after-tax basis. Discussions of the components of net income and segment income are presented on a pre-tax basis, unless otherwise noted. Discussions of net income per common share are presented on a diluted basis.
Overview
Diluted net income per share of $7.78 in the first quarter of 2026 increased by 358% over diluted net income per share of $1.70 in the same period of 2025. Net income of $1.71 billion in the first quarter of 2026 increased by 333% over net income of $395 million in the same period of 2025. The higher rate of increase in diluted net income per share reflected the impact of share repurchases in recent periods. The increase in income before income taxes in the first quarter of 2026 primarily reflected the pre-tax impacts of (i) lower catastrophe losses, (ii) net realized investment gains compared to net realized investment losses in the same period of 2025, (iii) higher net investment income and (iv) higher net favorable prior year reserve development, partially offset by (v) lower underwriting margins excluding catastrophe losses and prior year reserve development ("underlying underwriting margins"). Catastrophe losses in the first quarters of 2026 and 2025 were $761 million and $2.27 billion, respectively. Net favorable prior year reserve development in the first quarters of 2026 and 2025 was $413 million and $378 million, respectively. The lower underlying underwriting margins in the first quarter of 2026 were driven by Business Insurance and Bond & Specialty Insurance, partially offset by Personal Insurance. Income tax expense in the first quarter of 2026 was higher than in the same period of 2025, primarily reflecting the impact of the increase in income before income taxes.
The Company has insurance operations in the United Kingdom, the Republic of Ireland, Canada and throughout other parts of the world as a corporate member of Lloyd's, as well as in Brazil through a joint venture. Because these operations are conducted in local currencies other than the U.S. dollar, the Company is subject to changes in foreign currency exchange rates. For the three months ended March 31, 2026 and 2025, changes in foreign currency exchange rates impacted reported line items
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
in the statement of income by insignificant amounts. The impact of these changes was not material to the Company's net income or segment income for the periods reported.
Revenues
Earned Premiums
Earned premiums in the first quarter of 2026 were $10.61 billion, $105 million or 1% lower than in the same period of 2025. Earned premiums in the first quarter of 2025 included $258 million related to the Canadian operations divested by the Company in the first quarter of 2026. In Business Insurance, earned premiums in the first quarter of 2026 increased by 1% over the same period of 2025. In Bond & Specialty Insurance, earned premiums in the first quarter of 2026 increased by 2% over the same period of 2025. In Personal Insurance, earned premiums in the first quarter of 2026 decreased by 4% from the same period of 2025. Factors contributing to the changes in earned premiums in each segment are discussed in more detail in the segment discussions that follow.
Net Investment Income
The following table sets forth information regarding the Company's investments.
Three Months Ended
March 31,
(dollars in millions) 2026 2025
Average investments (1)
$ 106,666 $ 101,000
Pre-tax net investment income 1,008 930
After-tax net investment income 833 763
Average pre-tax yield (2)
3.8 % 3.7 %
Average after-tax yield (2)
3.1 % 3.0 %
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(1)Excludes net unrealized investment gains and losses and reflects cash, receivables for investment sales, payables on investment purchases and accrued investment income.
(2)Excludes net realized and net unrealized investment gains and losses.
Net investment income in the first quarter of 2026 was $1.01 billion, $78 million or 8% higher than in the same period of 2025. Net investment income from fixed maturity investments in the first quarter of 2026 was $899 million, $87 million higher than in the same period of 2025. The increase in the first quarter of 2026 primarily resulted from higher long-term average yields and a higher average level of fixed maturity investments. Net investment income from short-term securities in the first quarter of 2026 was $75 million, $18 million higher than in the same period of 2025. The increase in the first quarter of 2026 primarily resulted from a higher average level of short-term securities, partially offset by lower short-term average yields. The Company's remaining investment portfolios had net investment income of $47 million in the first quarter of 2026, $29 million lower than in the same period of 2025, primarily reflecting lower private equity partnership returns. Included in other investments are private equity, hedge fund and real estate partnerships that are accounted for under the equity method of accounting and typically report their financial statement information to the Company one month to three months following the end of the reporting period. Accordingly, net investment income from these other investments is generally reflected in the Company's financial statements on a quarter lag basis.
Fee Income
Fee income in the first quarter of 2026 was $121 million, $2 million higher than in the same period of 2025. The National Accounts market in Business Insurance is the primary source of the Company's fee-based business and is discussed in the Business Insurance segment discussion that follows.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
Net Realized Investment Gains (Losses)
The following table sets forth information regarding the Company's net realized investment gains (losses).
Three Months Ended
March 31,
(in millions) 2026 2025
Impairment gains (losses):
Fixed maturities $ (3) $ (2)
Net realized investment gains (losses) on equity securities still held (5) (22)
Other net realized investment gains (losses), including from sales 57 (37)
Total $ 49 $ (61)
Net realized investment losses on equity securities still held of $5 million and $22 million in the first quarters of 2026 and 2025, respectively, were driven by the impact of changes in fair value attributable to unfavorable equity markets.
Other net realized investment gains in the first quarter of 2026 were driven by net realized investment gains related to the Canadian operations divested by the Company in the first quarter of 2026, partially offset by net realized investment losses related to fixed maturity investments.
Other Revenues
Other revenues in the first quarter of 2026 were $141 million, $29 million higher than in the same period of 2025. Other revenues include revenues from Simply Business, installment premium charges and other policyholder service charges.
Claims and Expenses
Claims and Claim Adjustment Expenses
Claims and claim adjustment expenses in the first quarter of 2026 were $6.38 billion, $1.62 billion or 20% lower than in the same period of 2025, driven by Personal Insurance and Business Insurance, partially offset by Bond & Specialty Insurance. Claims and claim adjustment expenses in the first quarter of 2025 included $182 million related to the Canadian operations divested by the Company in the first quarter of 2026. Catastrophe losses in the first quarter of 2026 primarily resulted from severe wind and hail storms and winter storms in multiple states. Catastrophe losses in the first quarter of 2025 primarily resulted from the January 2025 wildfires and severe wind and hail storms in multiple states. Factors contributing to the changes in claims and claim adjustment expenses in each segment are discussed in more detail in the segment discussions that follow.
Factors contributing to net prior year reserve development during the first quarters of 2026 and 2025 are discussed in more detail in note 7 of the notes to the unaudited consolidated financial statements.
Significant Catastrophe Losses
The following table presents the amount of losses recorded by the Company for significant catastrophes that occurred in the three months ended March 31, 2026 and 2025, the amount of net unfavorable (favorable) prior year reserve development recognized in the three months ended March 31, 2026 and 2025 for significant catastrophes that occurred in 2025 and 2024, and the estimate of ultimate losses for those catastrophes at March 31, 2026 and December 31, 2025. For purposes of the table, a significant catastrophe is an event for which the Company estimates its ultimate losses will be $100 million or more after reinsurance and before taxes. The Company's threshold for disclosing catastrophes is primarily determined at the reportable segment level and for 2026 ranged from $20 million to $30 million of losses before reinsurance and taxes. For the Company's definition of a catastrophe, refer to "Part II-Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations- Consolidated Overview" in the Company's 2025 Annual Report.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
Losses Incurred/Unfavorable (Favorable)
Prior Year Reserve Development
Three Months Ended
March 31,
Estimated Ultimate Losses
(in millions, pre-tax and net of reinsurance) 2026 2025 March 31, 2026 December 31, 2025
2024
PCS Serial Number:
26 - Severe wind and hail storms (2) (2) 249 251
39 - Severe wind and hail storms (2) (2) 241 243
42 - Severe wind and hail storms (1) (3) 148 149
44 - Severe wind and hail storms - 1 170 170
45 - Severe wind and hail storms 1 3 175 174
46 - Severe wind and hail storms 3 1 194 191
61 - Severe wind and hail storms (2) (1) 125 127
77 - Hurricane Helene (9) (29) 656 665
2025
PCS Serial Number:
11 - California wildfire - Palisades fire (73) 1,339 1,271 1,344
12 - California wildfire - Eaton fire (43) 392 334 377
24 - Severe wind and hail storms - 315 337 337
29 - Severe wind and hail storms - n/a 137 137
37 - Severe wind and hail storms - n/a 227 227
39 - Severe wind and hail storms - n/a 101 101
43 - Severe wind and hail storms (5) n/a 92 97
45 - Severe wind and hail storms (5) n/a 102 107
2026
PCS Serial Number:
13 - Severe winter storm 199 n/a 199 n/a
24 - Severe wind and hail storms 226 n/a 226 n/a
_______________________________________________
n/a: not applicable.
Amortization of Deferred Acquisition Costs
Amortization of deferred acquisition costs in the first quarter of 2026 was $1.77 billion, $12 million or 1% lower than in the same period of 2025. The decrease was generally consistent with the decrease in earned premiums. Amortization of deferred acquisition costs is discussed in more detail in the segment discussions that follow.
General and Administrative Expenses
General and administrative expenses in the first quarter of 2026 were $1.54 billion, $82 million or 6% higher than in the same period of 2025, primarily reflecting normal quarter-to-quarter variability. General and administrative expenses are discussed in more detail in the segment discussions that follow.
Interest Expense
Interest expense in the first quarter of 2026 was $116 million, compared with $99 million in the same period of 2025.
Income Tax Expense
Income tax expense in the first quarter of 2026 was $408 million, $335 million or 459% higher than in the same period of 2025, primarily reflecting the impact of the $1.65 billion increase in income before income taxes in the first quarter of 2026.
The Company's effective tax rate was 19% and 16% in the first quarters of 2026 and 2025, respectively. The effective tax rate for all periods reflected the impact of tax-exempt investment income on the calculation of the Company's income tax provision.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
Combined Ratio
The combined ratio of 88.6% in the first quarter of 2026 was 13.9 points lower than the combined ratio of 102.5% in the same period of 2025. The loss and loss adjustment expense ratio of 59.6% in the first quarter of 2026 was 14.6 points lower than the loss and loss adjustment expense ratio of 74.2% in the same period of 2025. The underwriting expense ratio of 29.0% in the first quarter of 2026 was 0.7 points higher than the underwriting expense ratio of 28.3% in the same period of 2025. The Company expects the full year 2026 expense ratio to be approximately 28.5%.
Catastrophe losses in the first quarters of 2026 and 2025 accounted for 7.2 points and 21.2 points, respectively, of the combined ratio. Net favorable prior year reserve development in the first quarters of 2026 and 2025 provided 3.9 points and 3.5 points of benefit, respectively, to the combined ratio. The combined ratio excluding prior year reserve development and catastrophe losses ("underlying combined ratio") in the first quarter of 2026 was 0.5 points higher than the 2025 ratio on the same basis, primarily reflecting the impacts of a higher expense ratio in Business Insurance and Bond & Specialty Insurance, partially offset by lower losses in Personal Insurance.
The combined ratio continues to be impacted by the tort environment, including more aggressive attorney involvement in insurance claims.
Written Premiums
Consolidated gross and net written premiums were as follows:
Gross Written Premiums
Three Months Ended
March 31,
(in millions) 2026 2025
Business Insurance $ 6,806 $ 6,740
Bond & Specialty Insurance 1,211 1,129
Personal Insurance 3,748 4,021
Total $ 11,765 $ 11,890
Net Written Premiums
Three Months Ended
March 31,
(in millions) 2026 2025
Business Insurance $ 5,786 $ 5,698
Bond & Specialty Insurance 1,066 999
Personal Insurance 3,486 3,818
Total $ 10,338 $ 10,515
Gross and net written premiums in the first quarter of 2026 decreased by 1% and 2%, respectively, from the same period of 2025. Gross and net written premiums in the first quarter of 2025 included $238 million and $223 million, respectively, related to the Canadian operations divested by the Company in the first quarter of 2026. Excluding the impact of the sale, gross written premiums increased by 1% over the same period of 2025 and net written premiums increased slightly over the same period of 2025. Factors contributing to the changes in gross and net written premiums in each segment are discussed in more detail in the segment discussions that follow.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
RESULTS OF OPERATIONS BY SEGMENT
Business Insurance
Results of Business Insurance were as follows:
Three Months Ended
March 31,
(dollars in millions) 2026 2025
Revenues
Earned premiums $ 5,493 $ 5,465
Net investment income 708 656
Fee income 111 108
Other revenues 104 82
Total revenues 6,416 6,311
Total claims and expenses 5,381 5,469
Segment income before income taxes 1,035 842
Income tax expense 196 159
Segment income $ 839 $ 683
Loss and loss adjustment expense ratio 63.3 % 66.8 %
Underwriting expense ratio 30.5 29.4
Combined ratio 93.8 % 96.2 %
Overview
Segment income in the first quarter of 2026 was $839 million, $156 million or 23% higher than segment income of $683 million in the same period of 2025. The increase in segment income before income taxes primarily reflected the pre-tax impacts of (i) lower catastrophe losses, (ii) higher net favorable prior year reserve development and (iii) higher net investment income, partially offset by (iv) lower underlying underwriting margins. Catastrophe losses in the first quarters of 2026 and 2025 were $379 million and $509 million, respectively. Net favorable prior year reserve development in the first quarters of 2026 and 2025 was $162 million and $74 million, respectively. The lower underlying underwriting margins primarily reflected the impacts of (i) higher general and administrative expenses and (ii) lower business volumes, partially offset by (iii) the benefit of earned pricing. Income tax expense in the first quarter of 2026 was higher than in the same period of 2025, primarily reflecting the impact of the increase in segment income before income taxes.
Revenues
Earned Premiums
Earned premiums in the first quarter of 2026 were $5.49 billion, $28 million or 1% higher than in the same period of 2025, primarily reflecting the increase in net written premiums over the preceding twelve months. Earned premiums in the first quarter of 2025 included $79 million related to the Canadian operations divested by the Company in the first quarter of 2026.
Net Investment Income
Net investment income in the first quarter of 2026 was $708 million, $52 million or 8% higher than in the same period of 2025. Refer to the "Revenues-Net Investment Income" section of the "Consolidated Results of Operations" discussion herein for a description of the factors contributing to the increase in the Company's consolidated net investment income in the first quarter of 2026 compared with the same period of 2025. In addition, refer to note 2 of the notes to the consolidated financial statements in the Company's 2025 Annual Report for a discussion of the Company's net investment income allocation methodology.
Fee Income
National Accounts is the primary source of fee income due to revenue from its large deductible policies and service businesses, which include risk management, claims administration, loss control and risk management information services provided to third parties, as well as policy issuance and claims management services to workers' compensation residual market pools. Fee income in the first quarter of 2026 was $111 million, $3 million or 3% higher than in the same period of 2025.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
Other Revenues
Other revenues in the first quarter of 2026 were $104 million, $22 million higher than in the same period of 2025. Other revenues include revenues from Simply Business, premium installment charges and other policyholder service charges.
Claims and Expenses
Claims and Claim Adjustment Expenses
Claims and claim adjustment expenses in the first quarter of 2026 were $3.53 billion, $174 million or 5% lower than in the same period of 2025, primarily reflecting the impacts of (i) lower catastrophe losses, (ii) lower business volumes, (iii) higher net favorable prior year reserve development and (iv) the Canadian operations divested by the Company in the first quarter of 2026, partially offset by (v) loss cost trends.
Factors contributing to net prior year reserve development during the first quarters of 2026 and 2025 are discussed in more detail in note 7 of the notes to the unaudited consolidated financial statements.
Amortization of Deferred Acquisition Costs
Amortization of deferred acquisition costs in the first quarter of 2026 was $938 million, $21 million or 2% higher than the same period of 2025, generally consistent with the increase in earned premiums.
General and Administrative Expenses
General and administrative expenses in the first quarter of 2026 were $912 million, $65 million or 8% higher than in the same period of 2025, primarily reflecting normal quarter-to-quarter variability.
Income Tax Expense
Income tax expense in the first quarter of 2026 was $196 million, $37 million or 23% higher than the same period of 2025, primarily reflecting the impact of the $193 million increase in income before income taxes.
Combined Ratio
The combined ratio of 93.8% in the first quarter of 2026 was 2.4 points lower than the combined ratio of 96.2% in the same period of 2025. The loss and loss adjustment expense ratio of 63.3% in the first quarter of 2026 was 3.5 points lower than the loss and loss adjustment expense ratio of 66.8% in the same period of 2025. The underwriting expense ratio of 30.5% in the first quarter of 2026 was 1.1 points higher than the underwriting expense ratio of 29.4% in the same period of 2025.
Catastrophe losses in the first quarters of 2026 and 2025 accounted for 6.9 points and 9.3 points, respectively, of the combined ratio. Net favorable prior year reserve development in the first quarters of 2026 and 2025 provided 2.9 points and 1.3 points of benefit, respectively, of the combined ratio. The underlying combined ratio in the first quarter of 2026 was 1.6 points higher than the 2025 ratio on the same basis, primarily reflecting a higher expense ratio.
Written Premiums
Business Insurance's gross and net written premiums by market were as follows:
Gross Written Premiums
Three Months Ended
March 31,
(in millions) 2026 2025
Domestic:
Select Accounts $ 1,081 $ 1,045
Middle Market 3,851 3,682
National Accounts 537 511
National Property and Other 823 873
Total Domestic 6,292 6,111
International 514 629
Total Business Insurance $ 6,806 $ 6,740
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
Net Written Premiums
Three Months Ended
March 31,
(in millions) 2026 2025
Domestic:
Select Accounts $ 1,006 $ 976
Middle Market 3,329 3,166
National Accounts 343 312
National Property and Other 691 720
Total Domestic 5,369 5,174
International 417 524
Total Business Insurance $ 5,786 $ 5,698
Gross and net written premiums in the first quarter of 2026 increased by 1% and 2%, respectively, over the same period of 2025. Gross and net written premiums in the first quarter of 2025 included $77 million and $67 million, respectively, related to the Canadian operations divested by the Company in the first quarter of 2026. Excluding the impact of the sale, gross and net written premiums increased by 2% and 3%, respectively, over the same period of 2025.
Select Accounts. Net written premiums of $1.01 billion in the first quarter of 2026 increased by 3% over the same period of 2025. Retention rates remained strong in the first quarter of 2026 and increased over the same period of 2025. Renewal premium changes in the first quarter of 2026 remained positive but were lower than the same period of 2025. New business premiums in the first quarter of 2026 decreased slightly from the same period of 2025.
Middle Market. Net written premiums of $3.33 billion in the first quarter of 2026 increased by 5% over the same period of 2025. Retention rates remained strong in the first quarter of 2026 and were comparable with the same period of 2025. Renewal premium changes in the first quarter of 2026 remained positive but were lower than the same period of 2025. New business premiums in the first quarter of 2026 increased over the same period of 2025.
National Accounts. Net written premiums of $343 million in the first quarter of 2026 increased by 10% over the same period of 2025. Retention rates remained strong in the first quarter of 2026 and were comparable with the same period of 2025. Renewal premium changes in the first quarter of 2026 remained positive but were lower than the same period of 2025. New business premiums in the first quarter of 2026 decreased from the same period of 2025.
National Property and Other. Net written premiums of $691 million in the first quarter of 2026 decreased by 4% from the same period of 2025. Retention rates remained strong in the first quarter of 2026 and were comparable with the same period of 2025. Renewal premium changes in the first quarter of 2026 were lower than the same period of 2025. New business premiums in the first quarter of 2026 increased over the same period of 2025.
International. Net written premiums of $417 million in the first quarter of 2026 decreased by 20% from the same period of 2025. Net written premiums in the first quarter of 2025 included $67 million related to the Canadian operations divested by the Company in the first quarter of 2026. Excluding the impact of the sale, net written premiums decreased by 9% from the same period of 2025.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
Bond & Specialty Insurance
Results of Bond & Specialty Insurance were as follows:
Three Months Ended
March 31,
(dollars in millions) 2026 2025
Revenues
Earned premiums $ 1,018 $ 995
Net investment income 113 102
Other revenues 5 6
Total revenues 1,136 1,103
Total claims and expenses 854 826
Segment income before income taxes 282 277
Income tax expense 28 57
Segment income $ 254 $ 220
Loss and loss adjustment expense ratio 43.0 % 43.2 %
Underwriting expense ratio 40.3 39.3
Combined ratio 83.3 % 82.5 %
Overview
Segment income in the first quarter of 2026 was $254 million, $34 million or 15% higher than segment income of $220 million in the same period of 2025. The increase in segment income before income taxes primarily reflected the pre-tax impacts of (i) lower catastrophe losses and (ii) higher net investment income, partially offset by (iii) lower underlying underwriting margins. Catastrophe losses in the first quarters of 2026 and 2025 were $8 million and $19 million, respectively. Net favorable prior year reserve development in the first quarters of 2026 and 2025 was $65 million and $67 million, respectively. The lower underlying underwriting margins primarily reflected (i) higher general and administrative expenses and (ii) the impact of earned pricing, partially offset by (iii) higher business volumes. Income tax expense in the first quarter of 2026 was lower than in the same period of 2025, primarily reflecting a tax benefit related to the Canadian operations divested by the Company in the first quarter of 2026, partially offset by the impact of the increase in segment income before income taxes.
Revenues
Earned Premiums
Earned premiums in the first quarter of 2026 were $1.02 billion, $23 million or 2% higher than in the same period of 2025, primarily reflecting increases in net written premiums in prior quarters, including the impact of longer duration surety bonds and multi-year management liability policies. Earned premiums in the first quarter of 2025 included $14 million related to the Canadian operations divested by the Company in the first quarter of 2026.
Net Investment Income
Net investment income in the first quarter of 2026 was $113 million, $11 million or 11% higher than in the same period of 2025. Included in Bond & Specialty Insurance are certain legal entities whose invested assets and related net investment income are reported exclusively in this segment and not allocated among all business segments. Refer to the "Revenues-Net Investment Income" section of "Consolidated Results of Operations" herein for a discussion of the factors contributing to the increase in the Company's consolidated net investment income in the first quarter of 2026 compared with the same period of 2025. In addition, refer to note 2 of the notes to the consolidated financial statements in the Company's 2025 Annual Report for a discussion of the Company's net investment income allocation methodology.
Claims and Expenses
Claims and Claim Adjustment Expense
Claims and claim adjustment expenses in the first quarter of 2026 were $441 million, $7 million or 2% higher than in the same period of 2025, primarily reflecting the impacts of (i) loss cost trends and (ii) higher business volumes, partially offset by (iii) lower catastrophe losses and (iv) the Canadian operations divested by the Company in the first quarter of 2026.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
Factors contributing to net favorable prior year reserve development during the first quarters of 2026 and 2025 are discussed in more detail in note 7 of the notes to the unaudited consolidated financial statements.
Amortization of Deferred Acquisition Costs
Amortization of deferred acquisition costs in the first quarter of 2026 was $194 million, $7 million or 4% higher than in the same period of 2025, generally consistent with the increase in earned premiums.
General and Administrative Expenses
General and administrative expenses in the first quarter of 2026 were $219 million, $14 million or 7% higher than in the same period of 2025, primarily in support of business growth.
Income Tax Expense
Income tax expense in the first quarter of 2026 was $28 million, $29 million or 51% lower than in the same period of 2025, primarily reflecting a tax benefit related to the Canadian operations divested by the Company in the first quarter of 2026, partially offset by the impact of the $5 million increase in segment income before income taxes.
Combined Ratio
The combined ratio of 83.3% in the first quarter of 2026 was 0.8 points higher than the combined ratio of 82.5% in the same period of 2025. The loss and loss adjustment expense ratio of 43.0% in the first quarter of 2026 was 0.2 points lower than the loss and loss adjustment expense ratio of 43.2% in the same period of 2025. The underwriting expense ratio of 40.3% in the first quarter of 2026 was 1.0 points higher than the underwriting expense ratio of 39.3% in the same period of 2025.
Net favorable prior year reserve development in the first quarters of 2026 and 2025 provided 6.4 points and 6.7 points of benefit, respectively, to the combined ratio. Catastrophe losses in the first quarters of 2026 and 2025 accounted for 0.8 and 1.9 points of the combined ratio. The underlying combined ratio in the first quarter of 2026 was 1.6 points higher than the 2025 ratio on the same basis, primarily reflecting a higher expense ratio.
Written Premiums
The Bond & Specialty Insurance segment's gross and net written premiums were as follows:
Gross Written Premiums
Three Months Ended
March 31,
(in millions) 2026 2025
Domestic:
Management Liability $ 644 $ 615
Surety 441 391
Total Domestic 1,085 1,006
International 126 123
Total Bond & Specialty Insurance $ 1,211 $ 1,129
Net Written Premiums
Three Months Ended
March 31,
(in millions) 2026 2025
Domestic:
Management Liability $ 572 $ 553
Surety 381 333
Total Domestic 953 886
International 113 113
Total Bond & Specialty Insurance $ 1,066 $ 999
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
Gross and net written premiums in the first quarter of 2026 both increased by 7% over the same period of 2025. Gross and net written premiums in the first quarter of 2025 included $11 million and $10 million, respectively, related to the Canadian operations divested by the Company in the first quarter of 2026. Excluding the impact of the sale, gross and net written premiums both increased by 8% over the same period of 2025.
Domestic. Net written premiums of $953 million in the first quarter of 2026 increased by 8% over the same period of 2025. Excluding the surety line of business, for which the following are not relevant measures, retention rates remained strong in the first quarter of 2026 but decreased from the same period of 2025. Renewal premium changes in the first quarter of 2026 remained positive but were lower than the same period of 2025. New business premiums in the first quarter of 2026 decreased from the same period of 2025.
International. Net written premiums of $113 million in the first quarter of 2026 were comparable with the same period of 2025. Net written premiums in the first quarter of 2025 included $10 million related to the Canadian operations divested by the Company in the first quarter of 2026. Excluding the impact of the sale, net written premiums increased by 10% over the same period of 2025.
Personal Insurance
Results of Personal Insurance were as follows:
Three Months Ended
March 31,
(dollars in millions) 2026 2025
Revenues
Earned premiums $ 4,094 $ 4,250
Net investment income 187 172
Fee income 10 11
Other revenues 32 24
Total revenues 4,323 4,457
Total claims and expenses 3,441 4,937
Segment income (loss) before income taxes 882 (480)
Income tax expense (benefit) 178 (106)
Segment income (loss) $ 704 $ (374)
Loss and loss adjustment expense ratio 58.8 % 91.0 %
Underwriting expense ratio 24.1 24.2
Combined ratio 82.9 % 115.2 %
Overview
Segment income in the first quarter of 2026 was $704 million, compared with a segment loss of $374 million in the same period of 2025. The increase in segment income before income taxes was driven by the pre-tax impacts of (i) lower catastrophe losses, (ii) higher underlying underwriting margins and (iii) higher net investment income, partially offset by (iv) lower net favorable prior year reserve development. Catastrophe losses in the first quarters of 2026 and 2025 were $374 million and $1.74 billion, respectively. Net favorable prior year reserve development in the first quarters of 2026 and 2025 was $186 million and $237 million, respectively. The higher underlying underwriting margins primarily reflected the impacts of (i) the benefit of earned pricing in the homeowners and other product line, (ii) lower non-catastrophe weather-related losses in the homeowners and other product line and (iii) lower losses in the automobile product line, partially offset by (iv) the impact of earned pricing in the automobile product line. The segment recorded income tax expense in the first quarter of 2026 compared with an income tax benefit in the same period of 2025. The change primarily reflected the impact of the increase in segment income before income taxes.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
Revenues
Earned Premiums
Earned premiums in the first quarter of 2026 were $4.09 billion, $156 million or 4% lower than in the same period of 2025. Earned premiums in the first quarter of 2025 included $165 million related to the Canadian operations divested by the Company in the first quarter of 2026.
Net Investment Income
Net investment income in the first quarter of 2026 was $187 million, $15 million or 9% higher than in the same period of 2025. Refer to the "Revenues-Net Investment Income" section of the "Consolidated Results of Operations" discussion herein for a description of the factors contributing to the increase in the Company's consolidated net investment income in the first quarter of 2026 compared with the same period of 2025. In addition, refer to note 2 of the notes to the consolidated financial statements in the Company's 2025 Annual Report for a discussion of the Company's net investment income allocation methodology.
Other Revenues
Other revenues in the first quarters of 2026 and 2025 primarily consisted of installment premium charges.
Claims and Expenses
Claims and Claim Adjustment Expenses
Claims and claim adjustment expenses in the first quarter of 2026 were $2.41 billion, $1.46 billion or 38% lower than in the same period of 2025, primarily reflecting the impacts of (i) lower catastrophe losses and (ii) the Canadian operations divested by the Company in the first quarter of 2026, partially offset by (iii) loss cost trends and (iv) lower net favorable prior year reserve development.
Factors contributing to net favorable prior year reserve development during the first quarters of 2026 and 2025 are discussed in more detail in note 7 of the notes to the unaudited consolidated financial statements.
Amortization of Deferred Acquisition Costs
Amortization of deferred acquisition costs in the first quarter of 2026 was $634 million, $40 million or 6% lower than in the same period of 2025, generally consistent with the decrease in earned premiums.
General and Administrative Expenses
General and administrative expenses in the first quarter of 2026 were $397 million, $1 million higher than in the same period of 2025.
Income Tax Expense (Benefit)
Income tax expense in the first quarter of 2026 was $178 million, compared with an income tax benefit of $106 million in the same period of 2025, primarily reflecting the impact of the $1.36 billion increase in segment income before income taxes.
Combined Ratio
The combined ratio of 82.9% in the first quarter of 2026 was 32.3 points lower than the combined ratio of 115.2% in the same period of 2025. The loss and loss adjustment expense ratio of 58.8% in the first quarter of 2026 was 32.2 points lower than the loss and loss adjustment expense ratio of 91.0% in the same period of 2025. The underwriting expense ratio of 24.1% in the first quarter of 2026 was 0.1 points lower than the underwriting expense ratio of 24.2% in the same period of 2025.
Catastrophe losses in the first quarters of 2026 and 2025 accounted for 9.1 points and 40.9 points, respectively, of the combined ratio. Net favorable prior year reserve development in the first quarters of 2026 and 2025 provided 4.5 points and 5.6 points of benefit, respectively, to the combined ratio. The underlying combined ratio in the first quarter of 2026 was 1.6 points lower than the 2025 ratio on the same basis, primarily reflecting the impacts of (i) the benefit of earned pricing in the homeowners and other product line, (ii) lower non-catastrophe weather-related losses in the homeowners and other product line and (iii) lower losses in the automobile product line, partially offset by (iv) the impact of earned pricing in the automobile product line.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
Written Premiums
Personal Insurance's gross and net written premiums were as follows:
Gross Written Premiums
Three Months Ended
March 31,
(in millions) 2026 2025
Domestic:
Automobile $ 1,767 $ 1,867
Homeowners and Other 1,981 2,004
Total Domestic 3,748 3,871
International - 150
Total Personal Insurance $ 3,748 $ 4,021
Net Written Premiums
Three Months Ended
March 31,
(in millions) 2026 2025
Domestic:
Automobile $ 1,756 $ 1,859
Homeowners and Other 1,730 1,813
Total Domestic 3,486 3,672
International - 146
Total Personal Insurance $ 3,486 $ 3,818
Gross and net written premiums in the first quarter of 2026 decreased by 7% and 9%, respectively, from the same period of 2025. Gross and net written premiums in the first quarter of 2025 included $150 million and $146 million, respectively, related to the Canadian operations divested by the Company in the first quarter of 2026. Excluding the impact of the sale, gross and net written premiums decreased by 3% and 5%, respectively, from the same period of 2025.
Domestic
Automobile net written premiums of $1.76 billion in the first quarter of 2026 decreased by 6% from the same period of 2025. Retention rates remained strong in the first quarter of 2026 and increased over the same period of 2025. Renewal premium changes in the first quarter of 2026 remained positive but were lower than in the same period of 2025. New business premiums in the first quarter of 2026 increased over the same period of 2025.
Homeowners and Other net written premiums of $1.73 billion in the first quarter of 2026 decreased by 5% from the same period of 2025. Retention rates remained strong in the first quarter of 2026 and increased over the same period of 2025. Renewal premium changes in the first quarter of 2026 remained positive but were lower than in the same period of 2025. New business premiums in the first quarter of 2026 increased slightly over the same period of 2025.
For its Domestic business, Personal Insurance had approximately 8.3 million and 8.7 million active policies at March 31, 2026 and 2025, respectively.
International
Personal Insurance had approximately 412,000 active policies as of March 31, 2025 for the Canadian operations divested by the Company in the first quarter of 2026.
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MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
Interest Expense and Other
Three Months Ended
March 31,
(in millions) 2026 2025
Income (loss) $ (101) $ (86)
The Income (loss) for Interest Expense and Other for the first quarters of 2026 and 2025 was $(101) million and $(86) million, respectively. Pre-tax interest expense for the first quarters of 2026 and 2025 was $116 million and $99 million, respectively. After-tax interest expense for the first quarters of 2026 and 2025 was $92 million and $78 million, respectively.
ASBESTOS CLAIMS AND LITIGATION
The Company believes that the property and casualty insurance industry has suffered from court decisions and other trends that have expanded insurance coverage for asbestos claims far beyond the original intent of insurers and policyholders. The Company has received and continues to receive a significant number of asbestos claims. Factors underlying these claim filings include continued intensive advertising by lawyers seeking asbestos claimants and the focus by plaintiffs on defendants, such as manufacturers of talcum powder, who were not traditionally sued and/or primary targets of asbestos litigation. Many defendants have also been subject to increased settlement demands, in part due to the bankruptcy of many traditional primary targets of asbestos litigation. Currently, in many jurisdictions, those who allege very serious injury and who can present credible medical evidence of their injuries are receiving priority trial settings in the courts, while those who have not shown any credible disease manifestation are having their hearing dates delayed or placed on an inactive docket. Prioritizing claims involving credible evidence of injuries, along with the focus on defendants who were not traditionally primary targets of asbestos litigation, contributes to the claims and claim adjustment expense payment patterns experienced by the Company. The Company's asbestos-related claims and claim adjustment expense experience also has been impacted by the unavailability of other insurance sources potentially available to policyholders, whether through exhaustion of policy limits or through the insolvency of other participating insurers.
The Company continues to be involved in disputes, including litigation, with a number of policyholders, some of whom are in bankruptcy, over coverage for asbestos-related claims. Many coverage disputes with policyholders are only resolved through settlement agreements. Because many policyholders make exaggerated demands, it is difficult to predict the outcome of settlement negotiations. Settlements involving bankrupt policyholders may include extensive releases which are favorable to the Company, but which could result in settlements for larger amounts than originally anticipated. Although the Company has seen a reduction in the overall risk associated with these disputes, it remains difficult to predict the ultimate cost of these claims. As in the past, the Company will continue to pursue settlement opportunities.
In addition to claims against policyholders, proceedings have been launched directly against insurers, including the Company, by individuals challenging insurers' conduct with respect to the handling of past asbestos claims and by individuals seeking damages arising from alleged asbestos-related bodily injuries. While the number of direct actions has decreased significantly over time, it is possible that other direct actions against insurers, including the Company, could be filed in the future. It is difficult to predict the outcome of these proceedings, including whether the plaintiffs would be able to sustain these actions against insurers based on novel legal theories of liability. The Company believes it has meritorious defenses to any such claims and has received favorable rulings in certain jurisdictions.
Because each policyholder presents different liability and coverage issues, the Company generally conducts an in-depth asbestos claim review on an annual basis, including a review of domestic policyholders with open claims and litigation cases for potential product and "non-product" liability. Policyholders are identified for this review based upon, among other factors: a combination of past payments and current case reserves in excess of a specified threshold (currently $100,000), perceived level of exposure, number of reported claims, products/completed operations and potential "non-product" exposures, size of policyholder and geographic distribution of products or services sold by the policyholder.
Among the factors the Company may consider in the course of this review are: available insurance coverage, including the role of any umbrella or excess insurance the Company has issued to the policyholder; limits and deductibles; an analysis of the policyholder's potential liability, including as a result of the bankruptcy of other defendants; the jurisdictions involved, including any trends, judicial rulings or legislative actions in those jurisdictions; past and anticipated future claim activity and loss development on pending claims; past settlement values of similar claims; allocated claim adjustment expense; the potential role of other insurance; the role, if any, of non-asbestos claims or potential non-asbestos claims in any resolution process; and
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
applicable coverage defenses or determinations, if any, including the determination as to whether or not an asbestos claim is a products/completed operation claim subject to an aggregate limit and the available coverage, if any, for that claim.
The Company also reviews its asbestos reserves quarterly. These reviews include, as appropriate, an analysis of exposure and claim payment patterns by policyholder, as well as recent settlements, policyholder bankruptcies, judicial rulings and legislative actions. The Company also analyzes developing payment patterns among policyholders and the assumed reinsurance component of reserves, as well as projected reinsurance billings and recoveries. In addition, the Company reviews its historical gross and net loss and expense paid experience, year-by-year, to assess any emerging trends, fluctuations, or characteristics suggested by the aggregate paid activity. Conventional actuarial methods are not utilized to establish asbestos reserves, and the Company's evaluations have not resulted in a reliable method to determine a meaningful average asbestos defense or indemnity payment.
Over the past decade, the property and casualty insurance industry, including the Company, has experienced net unfavorable prior year reserve development with regard to asbestos reserves, but the Company believes that over that period there has been a reduction in the volatility associated with the Company's overall asbestos exposure as the overall asbestos environment has evolved from one dominated by exposure to significant litigation risks, particularly coverage disputes relating to policyholders in bankruptcy who were asserting that their claims were not subject to the aggregate limits contained in their policies, to an environment primarily driven by a frequency of litigation related to individuals with mesothelioma. The Company's overall view of the current underlying asbestos environment is essentially unchanged from recent periods, and there remains a high degree of uncertainty with respect to future exposure to asbestos claims.
Net asbestos paid loss and loss adjustment expenses in the first three months of 2026 and 2025 were $62 million and $59 million, respectively. Net asbestos reserves were $1.29 billion and $1.28 billion as of March 31, 2026 and 2025, respectively.
The following table displays activity for asbestos losses and loss adjustment expenses and reserves:
(as of and for the three months ended March 31, in millions) 2026 2025
Beginning reserves:
Gross $ 1,700 $ 1,708
Ceded (345) (370)
Net 1,355 1,338
Incurred losses and loss adjustment expenses:
Gross - -
Ceded - -
Net - -
Paid loss and loss adjustment expenses:
Gross 77 72
Ceded (15) (13)
Net 62 59
Foreign exchange and other:
Gross - -
Ceded - -
Net - -
Ending reserves:
Gross 1,623 1,636
Ceded (330) (357)
Net $ 1,293 $ 1,279
UNCERTAINTY REGARDING ADEQUACY OF ASBESTOS RESERVES
As a result of the processes and procedures discussed above, management believes that the reserves carried for asbestos claims are appropriately established based upon known facts, current law and management's judgment. However, the uncertainties surrounding the final resolution of these claims continue, and it is difficult to determine the ultimate exposure for asbestos
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
claims and related litigation. As a result, these reserves are subject to revision as new information becomes available and as claims develop. The continuing uncertainties include, without limitation:
•the risks and lack of predictability inherent in complex litigation;
•a further increase in the cost to resolve, and/or the number of, asbestos claims beyond that which is anticipated;
•the emergence of a greater number of asbestos claims than anticipated as a result of extended life expectancies resulting from medical advances and lifestyle improvements;
•the role of any umbrella or excess policies we have issued;
•the resolution or adjudication of disputes concerning coverage for asbestos claims in a manner inconsistent with our previous assessment of these disputes;
•the number and outcome of direct actions against us;
•future developments pertaining to our ability to recover reinsurance for asbestos claims;
•any impact on asbestos defendants we insure due to the bankruptcy of other asbestos defendants;
•the unavailability of other insurance sources potentially available to policyholders, whether through exhaustion of policy limits or through the insolvency of other participating insurers; and
•uncertainties arising from the insolvency or bankruptcy of policyholders.
Changes in the legal, regulatory and legislative environment may impact the future resolution of asbestos claims and result in adverse loss reserve development. The emergence of a greater number of asbestos claims beyond that which is anticipated may result in adverse loss reserve development. Changes in applicable legislation and future court and regulatory decisions and interpretations, including the outcome of legal challenges to legislative and/or judicial reforms establishing medical criteria for the pursuit of asbestos claims, could affect the settlement of asbestos claims. It is also difficult to predict the ultimate outcome of complex coverage disputes until settlement negotiations near completion and significant legal questions are resolved or, failing settlement, until the dispute is adjudicated. This is particularly the case with policyholders in bankruptcy where negotiations often involve a large number of claimants and other parties and require court approval to be effective. As part of its continuing analysis of asbestos reserves, the Company continues to study the implications of these and other developments.
Because of the uncertainties set forth above, additional liabilities may arise for amounts in excess of the Company's current reserves. In addition, the Company's estimate of claims and claim adjustment expenses may change. These additional liabilities or increases in estimates, or a range of either, cannot now be reasonably estimated and could result in income statement charges that could be material to the Company's operating results in future periods.
INVESTMENT PORTFOLIO
The Company's invested assets as of March 31, 2026 were $102.98 billion, of which 95% was invested in fixed maturity and short-term investments, 0% in equity securities, 1% in real estate investments and 4% in other investments. Because the primary purpose of the investment portfolio is to fund future claims payments, the Company employs a thoughtful investment philosophy that focuses on appropriate risk-adjusted returns. A significant majority of funds available for investment are deployed in a widely diversified portfolio of high quality, liquid, taxable U.S. government, tax-exempt and taxable U.S. municipal and taxable corporate and U.S. agency mortgage-backed bonds.
The carrying value of the Company's fixed maturity portfolio as of March 31, 2026 was $90.74 billion. The Company closely monitors the duration of its fixed maturity investments, and investment purchases and sales are executed with the objective of having adequate funds available to satisfy the Company's insurance and debt obligations. The weighted average credit quality of the Company's fixed maturity portfolio was "Aa3" and "Aa2" as of March 31, 2026 and December 31, 2025, respectively. Below investment grade securities represented 1.2% of the total fixed maturity investment portfolio as of both March 31, 2026 and December 31, 2025. The weighted average effective duration of fixed maturities and short-term securities was 4.9 (5.3 excluding short-term securities) as of March 31, 2026 and 4.7 (5.0 excluding short-term securities) as of December 31, 2025.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
Obligations of U.S. States, Municipalities and Political Subdivisions
The Company's fixed maturity investment portfolio as of March 31, 2026 and December 31, 2025 included $31.98 billion and $31.38 billion, respectively, of securities which are obligations of U.S. states, municipalities and political subdivisions (collectively referred to as the municipal bond portfolio). The municipal bond portfolio is diversified across the United States, the District of Columbia and Puerto Rico and includes general obligation and revenue bonds issued by states, cities, counties, school districts and similar issuers. Included in the municipal bond portfolio as of March 31, 2026 and December 31, 2025 were $369 million and $416 million, respectively, of pre-refunded bonds, which are bonds for which U.S. states or municipalities have established irrevocable trusts, almost exclusively comprised of U.S. Treasury securities and obligations of U.S. government and government agencies and authorities. These trusts were created to fund the payment of principal and interest due under the bonds. The irrevocable trusts are verified as to their sufficiency by an independent verification agent of the underwriter, issuer or trustee. All of the Company's holdings of securities issued by Puerto Rico and related entities have either been pre-refunded and therefore are defeased by U.S. Treasury securities or have FHA guarantees subject to federal appropriation.
The Company bases its investment decision on the underlying credit characteristics of the municipal security. The weighted average credit rating of the municipal bond portfolio was "Aaa/Aa1" as of both March 31, 2026 and December 31, 2025.
Mortgage-Backed Securities, Collateralized Mortgage Obligations and Pass-Through Securities
The Company's fixed maturity investment portfolio as of March 31, 2026 and December 31, 2025 included $12.85 billion and $13.23 billion, respectively, of residential mortgage-backed securities, including pass-through securities and collateralized mortgage obligations (CMOs), all of which are subject to prepayment risk (either shortening or lengthening of duration). While prepayment risk for securities and its effect on income cannot be fully controlled, particularly when interest rates move dramatically, the Company's investment strategy generally favors securities that reduce this risk within expected interest rate ranges. Included in the totals as of March 31, 2026 and December 31, 2025 were $9.96 billion and $10.24 billion, respectively, of GNMA, FNMA, FHLMC (excluding FHA project loans) and Canadian government guaranteed residential mortgage-backed pass-through securities classified as available for sale. Also included in those totals were residential CMOs classified as available for sale with a fair value of $2.89 billion and $2.99 billion as of March 31, 2026 and December 31, 2025, respectively. Approximately 45% of the Company's CMO holdings as of both March 31, 2026 and December 31, 2025, were guaranteed by or fully collateralized by securities issued by GNMA, FNMA or FHLMC. The weighted average credit rating of the $1.59 billion and $1.64 billion of non-guaranteed CMO holdings was "Aaa" as of both March 31, 2026 and December 31, 2025. The weighted average credit rating of all of the above securities was "Aa1" as of both March 31, 2026 and December 31, 2025. For further discussion regarding the Company's investments in residential CMOs, see "Part II-Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations-Investment Portfolio" in the Company's 2025 Annual Report.
Equity Securities, Real Estate and Short-Term Investments
See note 1 of the notes to the consolidated financial statements in the Company's 2025 Annual Report for further information about these invested asset classes.
Other Investments
The Company also invests in private equity, hedge fund and real estate partnerships, and joint ventures. These asset classes have historically provided a higher return than investments in fixed maturities but are subject to more volatility. As of March 31, 2026 and December 31, 2025, the carrying value of the Company's other investments was $4.09 billion and $4.12 billion, respectively.
Investments in private equity, hedge fund and real estate partnerships that are accounted for under the equity method of accounting typically report their financial statement information to the Company one month to three months following the end of the reporting period. Accordingly, net investment income from these other investments is generally reflected in the Company's financial statements on a quarter lag basis.
REINSURANCE RECOVERABLES
The Company reinsures a portion of the risks it underwrites in order to control its exposure to losses. For a description of the Company's reinsurance recoverables, refer to "Part II-Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations-Reinsurance Recoverables" in the Company's 2025 Annual Report.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
The following table summarizes the composition of the Company's reinsurance recoverables.
(in millions) March 31,
2026 		December 31, 2025
Gross reinsurance recoverables on paid and unpaid claims and claim adjustment expenses $ 4,364 $ 4,352
Gross structured settlements 2,279 2,469
Mandatory pools and associations 1,475 1,485
Gross reinsurance recoverables 8,118 8,306
Allowance for estimated uncollectible reinsurance (130) (135)
Less amounts classified as held for sale - 285
Net reinsurance recoverables $ 7,988 $ 7,886
OUTLOOK
The following discussion provides outlook information for certain key drivers of the Company's results of operations and capital position.
Premiums. The Company's earned premiums are a function of net written premium volume. Net written premiums comprise both renewal business and new business and are recognized as earned premium over the term of the underlying policies. When business renews, the amount of net written premiums associated with that business may increase or decrease (renewal premium change) as a result of increases or decreases in rate and/or insured exposures, which the Company considers as a measure of units of exposure (such as the number and value of vehicles or properties insured). Net written premiums from both renewal and new business, and therefore earned premiums, are impacted by competitive market conditions as well as general economic conditions, which, particularly in the case of Business Insurance, affect audit premium adjustments, policy endorsements and mid-term cancellations. Net written premiums may also be impacted by the structure of reinsurance programs and related costs, as well as changes in foreign currency exchange rates.
Overall, the Company expects that retention levels (the amount of expiring premium that renews, before the impact of renewal premium changes) will remain strong during the remainder of 2026.
Property and casualty insurance market conditions are expected to remain competitive during the remainder of 2026 for new business. In each of the Company's business segments, new business generally has less of an impact on underwriting profitability than renewal business, given the volume of new business relative to renewal business. However, in periods of meaningful increases in new business, despite its positive impact on underwriting gains over time, the impact of higher new business levels may negatively impact the combined ratio for a period of time. In periods of meaningful decreases in new business, despite its negative impact on underwriting gains over time, the impact of lower new business levels may positively impact the combined ratio for a period of time.
Effective January 1, 2026, the Company renewed a quota share reinsurance agreement with subsidiaries of Fidelis Insurance Holdings Limited (Fidelis) for 2026 pursuant to which the Company assumes 20% of the subject gross written premiums of Fidelis on a risk-attaching basis, subject to a loss ratio cap. The Company's portion of premiums from Fidelis is reported as part of the International results of Business Insurance. The Company also has a minority investment in Fidelis.
Underwriting Gain/Loss. The Company's underwriting gain/loss can be significantly impacted by catastrophe losses and net favorable or unfavorable prior year reserve development, as well as underlying underwriting margins. Underlying underwriting margins can be impacted by a number of factors, including variability in non-catastrophe weather, large loss and other loss activity; changes in current period loss estimates resulting from prior period loss development; changes in loss cost trends; changes in business mix; changes in reinsurance coverages and/or costs; premium adjustments; and variability in expenses and assessments.
Catastrophe losses and non-catastrophe weather-related losses are inherently unpredictable from period to period. The Company's results of operations could be adversely impacted if significant catastrophe and non-catastrophe weather-related losses were to occur.
On average for the ten-year period ended December 31, 2025, the Company experienced approximately 37% of its annual catastrophe losses during the second quarter, primarily arising out of severe wind and hail storms, including tornadoes. Hurricanes, wildfires and winter storms tend to happen at other times of the year and can also have a material impact on the Company's results of operations. Catastrophe losses incurred in a particular quarter in any given year may differ materially
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
from historical experience. In addition, most of the Company's reinsurance programs renew on January 1 or July 1 of each year, and, therefore, any changes to the availability, cost or coverage terms of such programs will be effective after such dates.
Over much of the past decade, the Company's results have included significant amounts of net favorable prior year reserve development driven by better than expected loss experience. However, given the inherent uncertainty in estimating claims and claim adjustment expense reserves, loss experience could develop such that the Company recognizes in future periods higher or lower levels of favorable prior year reserve development, no favorable prior year reserve development or unfavorable prior year reserve development. In addition, the ongoing review of prior year claims and claim adjustment expense reserves, or other changes in current period circumstances, may result in the Company revising current year loss estimates upward or downward in future periods of the current year.
It is possible that changes in economic conditions, the supply chain, international trade, including the impact of tariffs, the labor market and geopolitical tensions, including the war with Iran, as well as steps taken by federal, state and/or local governments and the Federal Reserve could lead to higher or lower inflation than the Company anticipated, which could in turn lead to an increase or decrease in the Company's loss costs and the need to strengthen or reduce claims and claim adjustment expense reserves. These impacts of inflation on loss costs and claims and claim adjustment expense reserves could be more pronounced for those lines of business that require a relatively longer period of time to finalize and settle claims for a given accident year and, accordingly, are relatively more inflation sensitive. Higher costs of labor, parts and raw materials adversely impacted severity in recent years in our personal and commercial businesses. Tariff and immigration policy could also impact severity. For a further discussion, see "Part I-Item 1A-Risk Factors-If actual claims exceed our claims and claim adjustment expense reserves, or if changes in the estimated level of claims and claim adjustment expense reserves are necessary, including as a result of, among other things, changes in the legal/tort, regulatory and economic environments in which the Company operates, our financial results could be materially and adversely affected" in the Company's 2025 Annual Report.
The Company's results of operations may be impacted by a number of other factors, including an economic slowdown, a recession, financial market volatility, monetary and fiscal policy measures, heightened geopolitical tensions, including the war with Iran, fluctuations in interest rates and foreign currency exchange rates, the political and regulatory environment, changes to the U.S. Federal budget and potential changes in tax laws.
Investment Portfolio. The Company expects to continue to focus its investment strategy on maintaining a high-quality investment portfolio and a relatively short average effective duration. The weighted average effective duration of fixed maturities and short-term securities was 4.9 (5.3 excluding short-term securities) as of March 31, 2026. From time to time, the Company enters into short positions in U.S. Treasury futures contracts to manage the duration of its fixed maturity portfolio. As of March 31, 2026, the Company had no open U.S. Treasury futures contracts. The Company regularly evaluates its investment alternatives and mix. Currently, the majority of the Company's investments are comprised of a widely diversified portfolio of high-quality, liquid, taxable U.S. government, tax-exempt and taxable U.S. municipal, taxable corporate and U.S. agency mortgage-backed bonds.
The Company also invests much smaller amounts in equity securities, real estate and private equity, hedge fund and real estate partnerships, and joint ventures. These investment classes have the potential for higher returns but also the potential for greater volatility and higher degrees of risk, including less stable rates of return and less liquidity.
Approximately 26% of the fixed maturity portfolio is expected to mature over the next three years (including the early redemption of bonds, assuming interest rates (including credit spreads) do not rise significantly by applicable call dates). As a result, the overall yield on and composition of its portfolio could be meaningfully impacted by the types of investments available for reinvestment with the proceeds of maturing bonds.
Net investment income is a material contributor to the Company's results of operations. Based on the Company's current expectations for the impact of expected higher reinvestment yields on the Company's fixed income investments and higher levels of fixed income investments, the Company expects that after-tax net investment income from that portfolio will be approximately $810 million in the second quarter of 2026, $840 million in the third quarter of 2026 and $870 million in the fourth quarter of 2026. This expectation could be impacted by the direction of interest rates and disruptions in global financial markets. Included in other investments are private equity, hedge fund and real estate partnerships that are accounted for under the equity method of accounting and typically report their financial statement information to the Company one month to three months following the end of the reporting period. Accordingly, net investment income or loss from these other investments is generally reflected in the Company's financial statements on a quarter lag basis. The Company's net investment income in future periods from its non-fixed income investment portfolio will be impacted, positively or negatively, by the performance of global financial markets.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
The Company had net pre-tax realized investment gains of $49 million in the first three months of 2026. Changes in global financial markets could result in net realized investment gains or losses in the Company's investment portfolio.
The Company had a net pre-tax unrealized investment loss of $3.00 billion ($2.37 billion after-tax) in its fixed maturity investment portfolio as of March 31, 2026, compared to $1.86 billion ($1.48 billion after-tax) as of December 31, 2025. The net unrealized investment loss is primarily due to the impact of movements in interest rates. The increase in the net unrealized investment loss in the first three months of 2026 was due to increases in interest rates. While the Company does not attempt to predict future interest rate movements, a rising interest rate environment reduces the market value of fixed maturity investments and, therefore, reduces shareholders' equity, and a declining interest rate environment has the opposite effects. The net unrealized loss discussed above is considered temporary in nature as it is not due to credit impairments, there is no impact on expected contractual cash flows from fixed maturities, and the Company generally holds its fixed maturity investments to maturity. In addition, given the temporary nature of net unrealized losses combined with the Company's strong operating cash flows (which include income received on investments and the proceeds received upon maturity of the investments), the net unrealized investment loss is not expected to meaningfully impact the Company's assessment of capital adequacy or liquidity. Equity securities, which include common and non-redeemable preferred stocks, are reported at fair value with changes in fair value recognized in net income.
Additionally, disruptions in global financial markets could also impact the market value of the Company's investment portfolio. The Company's investment portfolio has benefited from certain tax exemptions (primarily those related to interest from municipal bonds) and certain other tax laws, including, but not limited to, those governing dividends-received deductions and tax credits (such as foreign tax credits). Changes in these laws could adversely impact the value of the Company's investment portfolio. See "Our businesses are heavily regulated by the states and countries in which we conduct business, including licensing, market conduct and financial supervision, and changes in regulation, including changes in tax regulation, may reduce our profitability and limit our growth" included in "Part I-Item 1A-Risk Factors" in the Company's 2025 Annual Report.
For further discussion of the Company's investment portfolio, see "Investment Portfolio." For a discussion of the risks to the Company's business during or following a financial market disruption and risks to the Company's investment portfolio, see the risk factors entitled "During or following a period of financial market disruption or an economic downturn, our business could be materially and adversely affected" and "Our investment portfolio is subject to credit and interest rate risk, and may suffer reduced or low returns or material realized or unrealized losses" included in "Part I-Item 1A-Risk Factors" in the Company's 2025 Annual Report. For a discussion of the risks to the Company's investments from foreign currency exchange rate fluctuations, see the risk factor entitled "We are subject to additional risks associated with our business outside the United States" included in "Part I-Item 1A-Risk Factors" in the Company's 2025 Annual Report and see "Part II-Item 7A-Quantitative and Qualitative Disclosures About Market Risk-Foreign Currency Exchange Rate Risk" in the Company's 2025 Annual Report.
Capital Position. The Company believes it has a strong capital position and, as part of its ongoing efforts to create shareholder value, expects to continue to return capital not needed to support its business operations to its shareholders, subject to the considerations described below. The Company expects that, generally over time, the combination of dividends to common shareholders and common share repurchases will likely not exceed net income. The Company also expects that to the extent that it continues to grow premium volumes, the level of capital to support the Company's financial strength ratings will also increase, and accordingly, the amount of capital returned to shareholders relative to earnings would be somewhat less than it otherwise would have been absent the growth in premium volumes. The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the Company's financial position, earnings, share price, catastrophe losses, maintaining appropriate capital levels for business operations, changes in the levels of written premiums, funding of its qualified pension plan, regulatory capital requirements of the operating insurance subsidiaries, legal requirements, regulatory constraints, other investment opportunities (including mergers and acquisitions and related financings), market conditions, changes in tax laws and other factors. For information regarding the Company's common share repurchases in 2026, see "Liquidity and Capital Resources" herein.
As a result of the Company's business outside of the United States, primarily in the United Kingdom (including Lloyd's), the Republic of Ireland, Canada and in Brazil through a joint venture, the Company's capital is also subject to the effects of changes in foreign currency exchange rates. Strengthening of the U.S. dollar in comparison to other currencies could result in a reduction in shareholders' equity, while a weakening of the U.S. dollar in comparison to other currencies could result in an increase in shareholders' equity. For additional discussion of the Company's foreign exchange market risk exposure, see "Part II-Item 7A-Quantitative and Qualitative Disclosures About Market Risk" in the Company's 2025 Annual Report.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
Many of the statements in this "Outlook" section and in "Liquidity and Capital Resources" are forward-looking statements, which are subject to risks and uncertainties that are often difficult to predict and beyond the Company's control. Actual results could differ materially from those expressed or implied by such forward-looking statements. Further, such forward-looking statements speak only as of the date of this report and the Company undertakes no obligation to update them. See "Part II-Item 7-Forward-Looking Statements." For a discussion of potential risks and uncertainties that could impact the Company's results of operations or financial position, see "Part I-Item 2-Management's Discussion and Analysis of Financial Condition and Results of Operations" herein and "Part I-Item 1A-Risk Factors" and "Part II-Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 2025 Annual Report, in each case as updated by the Company's periodic filings with the SEC.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is a measure of a company's ability to generate sufficient cash flows to meet the cash requirements of its business operations and to satisfy general corporate purposes when needed.
Operating Company Liquidity. The liquidity requirements of the Company's insurance subsidiaries are met primarily by funds generated from premiums, fees, income received on investments and investment maturities. The Company believes that cash flows from operating activities are sufficient to meet the future liquidity requirements of its insurance subsidiaries. Additionally, investment maturities provide a significant level of available liquidity without requiring the sale of investment securities. For further discussion of operating company liquidity, see "Part II-Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources" in the Company's 2025 Annual Report.
Holding Company Liquidity. TRV's liquidity requirements primarily include shareholder dividends, debt servicing, common share repurchases and, from time to time, contributions to its qualified domestic pension plan. As of March 31, 2026, TRV held total cash and short-term invested assets in the United States aggregating $2.38 billion and having a weighted average maturity of 22 days. TRV has established a holding company liquidity target equal to its estimated annual pre-tax interest expense and common shareholder dividends (currently approximately $1.36 billion). TRV's holding company liquidity of $2.38 billion as of March 31, 2026 exceeded this target, and it is the opinion of the Company's management that these assets are sufficient to meet TRV's current liquidity requirements.
TRV is not dependent on dividends or other forms of repatriation from its foreign operations to support its liquidity needs. The undistributed earnings of the Company's foreign operations are intended to be permanently reinvested in those operations, and such earnings were not material to the Company's financial position or liquidity as of March 31, 2026.
TRV has a shelf registration statement filed with the Securities and Exchange Commission (SEC) that expires on June 4, 2028 which permits it to issue securities from time to time. TRV also has a $1.0 billion line of credit facility with a syndicate of financial institutions that expires on June 15, 2027. As of March 31, 2026, the Company had $100 million of commercial paper outstanding. TRV is not reliant on its commercial paper program to meet its operating cash flow needs. The Company had $200 million of senior notes that matured on April 15, 2026.
The Company utilized uncollateralized letters of credit issued by major banks with an aggregate limit of $260 million to provide a portion of the capital needed to support its obligations at Lloyd's as of March 31, 2026. If uncollateralized letters of credit are not available at a reasonable price or at all in the future, the Company can collateralize these letters of credit or may have to seek alternative means of supporting its obligations at Lloyd's, which could include utilizing holding company funds on hand.
Operating Activities
Net cash provided by operating activities in the first three months of 2026 and 2025 was $2.20 billion and $1.36 billion, respectively. The increase in cash flows in the first three months of 2026 primarily reflected the impact of lower levels of payments for claims and claim adjustment expenses.
Investing Activities
Net cash used in investing activities in the first three months of 2026 and 2025 was $335 million and $808 million, respectively. The Company's consolidated total investments as of March 31, 2026 increased by $1.80 billion, or 2%, over year-end 2025, primarily reflecting the impacts of (i) proceeds from the Canadian operations divested by the Company in the first quarter of 2026 and (ii) net cash flows provided by operating activities, partially offset by (iii) net cash used in financing activities and (iv) higher net unrealized investment losses due to the impact of higher interest rates during the first three months of 2026.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
The Company's investment portfolio is managed to support its insurance operations; accordingly, the portfolio is positioned to meet obligations to policyholders. As such, the primary goals of the Company's asset-liability management process are to satisfy the insurance liabilities and maintain sufficient liquidity to cover fluctuations in projected liability cash flows. Generally, the expected principal and interest payments produced by the Company's fixed maturity portfolio adequately fund the estimated runoff of the Company's insurance reserves. Although this is not an exact cash flow match in each period, the substantial amount by which the market value of the fixed maturity portfolio exceeds the value of the net insurance liabilities, as well as the positive cash flow from newly sold policies and the large amount of high quality liquid bonds, contributes to the Company's ability to fund claim payments without having to sell illiquid assets or access credit facilities.
Financing Activities
Net cash used in financing activities in the first three months of 2026 and 2025 was $2.09 billion and $535 million, respectively. The totals in both 2026 and 2025 reflected common share repurchases and dividends paid to shareholders, partially offset by the net proceeds from employee stock option exercises. Common share repurchases in the first three months of 2026 and 2025 were $1.93 billion and $352 million, respectively.
Dividends. Dividends paid to shareholders were $237 million and $240 million in the first three months of 2026 and 2025, respectively. The declaration and payment of future dividends to holders of the Company's common stock will be at the discretion of the Company's Board of Directors and will depend upon many factors, including the Company's financial position, earnings, capital requirements of the Company's operating subsidiaries, legal requirements, regulatory constraints and other factors as the Board of Directors deems relevant. Dividends will be paid by the Company only if declared by its Board of Directors out of funds legally available, subject to any other restrictions that may be applicable to the Company. On April 16, 2026, the Company announced that it would increase its regular quarterly dividend by 14% from $1.10 per share to $1.25 per share. The dividend is payable June 30, 2026 to shareholders of record on June 10, 2026.
Share Repurchases. The Company's Board of Directors has approved common share repurchase authorizations under which repurchases may be made from time to time in the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in private transactions or otherwise. The authorizations do not have a stated expiration date. The Company expects that, generally over time, the combination of dividends to common shareholders and common share repurchases will likely not exceed net income. The Company also expects that in periods of growing premium volumes the amount of capital returned to shareholders relative to earnings would be somewhat less than it otherwise would have been absent the growth in premium volumes. The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the Company's financial position, earnings, share price, catastrophe losses, maintaining appropriate capital levels for business operations, changes in the levels of written premiums, funding of its qualified pension plan, regulatory capital requirements of the operating insurance subsidiaries, legal requirements, regulatory constraints, other investment opportunities (including mergers and acquisitions and related financings), market conditions, changes in tax laws and other factors. During the three months ended March 31, 2026, the Company repurchased 6.0 million common shares under its share repurchase authorizations for a total cost of $1.80 billion. The average cost per share repurchased was $300.30. The cost of the treasury stock acquired pursuant to common share repurchases includes the 1% federal excise tax imposed on common share repurchase activity, net of common share issuances, as part of the Inflation Reduction Act of 2022. As of March 31, 2026, the Company had $5.22 billion of capacity remaining under its share repurchase authorizations. The most recent authorization was approved by the Board of Directors on January 21, 2026 and added $5.0 billion of repurchase capacity to the $2.02 billion capacity remaining at that date.
Capital Resources. Capital resources reflect the overall financial strength of the Company and its ability to borrow funds at competitive rates and raise new capital to meet its needs. The following table summarizes the components of the Company's capital structure as of March 31, 2026 and December 31, 2025.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
(in millions) March 31,
2026 		December 31,
2025
Debt:
Short-term $ 300 $ 300
Long-term 9,054 9,054
Net unamortized fair value adjustments and debt issuance costs (86) (87)
Total debt 9,268 9,267
Shareholders' equity:
Common stock and retained earnings, less treasury stock 35,064 35,394
Accumulated other comprehensive loss (3,078) (2,500)
Total shareholders' equity 31,986 32,894
Total capitalization $ 41,254 $ 42,161
The following table provides a reconciliation of total capitalization presented in the foregoing table to total capitalization excluding net unrealized losses on investments, net of taxes, included in shareholders' equity.
(dollars in millions) March 31,
2026 		December 31,
2025
Total capitalization $ 41,254 $ 42,161
Less: net unrealized losses on investments, net of taxes, included in shareholders' equity (2,378) (1,478)
Total capitalization excluding net unrealized losses on investments, net of taxes, included in shareholders' equity $ 43,632 $ 43,639
Debt-to-total capital ratio 22.5 % 22.0 %
Debt-to-total capital ratio excluding net unrealized losses on investments, net of taxes, included in shareholders' equity 21.2 % 21.2 %
The debt-to-total capital ratio excluding net unrealized gains (losses) on investments, net of taxes, included in shareholders' equity, is calculated by dividing (a) debt by (b) total capitalization excluding net unrealized gains and losses on investments, net of taxes, included in shareholders' equity. Net unrealized gains and losses on investments can be significantly impacted by both interest rate movements and other economic factors. Accordingly, in the opinion of the Company's management, the debt-to-total capital ratio calculated on this basis provides another useful metric for investors to understand the Company's financial leverage position. The Company's ratio of debt-to-total capital excluding after-tax net unrealized investment losses included in shareholders' equity of 21.2% as of March 31, 2026 was within the Company's target range of 15% to 25%.
RATINGS
Ratings are an important factor in assessing the Company's competitive position in the insurance industry. The Company receives ratings from the following major rating agencies: A.M. Best Company (A.M. Best), Fitch Ratings (Fitch), Moody's Investors Service (Moody's) and S&P Global Ratings (S&P). There have been no rating agency actions taken with respect to the Company since February 12, 2026, the date on which the Company's 2025 Annual Report was filed with the SEC. For additional discussion of ratings, see "Part I-Item 1-Business-Ratings" in the Company's 2025 Annual Report.
CRITICAL ACCOUNTING ESTIMATES
For a description of the Company's critical accounting estimates, refer to "Part II-Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates" in the Company's 2025 Annual Report. The Company considers its most significant accounting estimates to be those applied to claims and claim adjustment expense reserves and related reinsurance recoverables, and impairments of investments, goodwill and other intangible assets. Except as shown in the table below, there have been no material changes to the Company's critical accounting estimates since December 31, 2025.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS, Continued
Claims and Claim Adjustment Expense Reserves
The table below displays the Company's gross claims and claim adjustment expense reserves by product line. Because establishment of claims and claim adjustment expense reserves is an inherently uncertain process involving estimates and the application of judgment, currently established claims and claim adjustment expense reserves may change. The Company reflects adjustments to the reserves in the results of operations in the period the estimates are changed. These changes in estimates could result in income statement charges that could be material to the Company's operating results in future periods. In particular, a portion of the Company's gross claims and claim adjustment expense reserves (totaling $1.62 billion as of March 31, 2026) are for asbestos claims and related litigation. Asbestos reserves are included in the General liability, Commercial multi-peril and International and other lines in the summary table below. While the ongoing review of asbestos claims and associated liabilities considers the inconsistencies of court decisions as to coverage, plaintiffs' expanded theories of liability and the risks inherent in complex litigation and other uncertainties, in the opinion of the Company's management, it is possible that the outcome of the continued uncertainties regarding these claims could result in liability in future periods that differs from current insurance reserves by an amount that could be material to the Company's future operating results. Asbestos reserves are discussed separately; see "Asbestos Claims and Litigation" and "Uncertainty Regarding Adequacy of Asbestos Reserves" in this report.
Gross claims and claim adjustment expense reserves by product line were as follows:
March 31, 2026 December 31, 2025
(in millions) Case IBNR Total Case IBNR Total
General liability $ 6,001 $ 13,066 $ 19,067 $ 6,036 $ 12,769 $ 18,805
Commercial property 1,310 572 1,882 1,270 465 1,735
Commercial multi-peril 3,210 4,069 7,279 3,180 3,818 6,998
Commercial automobile 2,910 3,898 6,808 2,883 3,754 6,637
Workers' compensation 10,289 8,189 18,478 10,195 8,224 18,419
Fidelity and surety 143 708 851 146 654 800
Personal automobile 2,318 2,478 4,796 2,326 2,523 4,849
Personal homeowners and other 1,629 2,173 3,802 1,577 1,980 3,557
International and other 1,476 2,469 3,945 2,762 3,081 5,843
Property-casualty 29,286 37,622 66,908 30,375 37,268 67,643
Accident and health 4 - 4 3 - 3
Less amounts classified as held for sale - - - 1,123 786 1,909
Claims and claim adjustment expense reserves
$ 29,290 $ 37,622 $ 66,912 $ 29,255 $ 36,482 $ 65,737
The $1.18 billion increase in gross claims and claim adjustment expense reserves since December 31, 2025 primarily reflected the impacts of (i) catastrophe losses in the first three months of 2026 and (ii) loss cost trends for the current accident year, partially offset by (iii) claim payments made during the first three months of 2026 and (iv) net favorable prior year reserve development.
FUTURE APPLICATION OF ACCOUNTING STANDARDS
See note 1 of the notes to the unaudited consolidated financial statements contained in this quarterly report and in the Company's 2025 Annual Report for a discussion of recently issued accounting pronouncements.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
FORWARD-LOOKING STATEMENTS
This report contains, and management may make, certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. Words such as "may," "will," "should," "likely," "probably," "anticipates," "expects," "intends," "plans," "projects," "believes," "views," "ensures," "estimates" and similar expressions are used to identify these forward-looking statements. These statements include, among other things, the Company's statements about:
•the Company's outlook, the impact of trends on its business and its future results of operations and financial condition (including, among other things, anticipated premium volume, premium rates, renewal premium changes, underwriting margins and underlying underwriting margins, net and core income, investment income and performance, loss costs, return on equity, core return on equity and expected current returns, and combined ratios and underlying combined ratios);
•the impact of legislative or regulatory actions or court decisions;
•share repurchase plans;
•future pension plan contributions;
•the sufficiency of the Company's reserves, including asbestos;
•the impact of emerging claims issues as well as other insurance and non-insurance litigation;
•the cost and availability of reinsurance coverage;
•catastrophe losses and modeling, including statements about probabilities or likelihood of exceedance;
•the impact of investment (including changes in interest rates), economic (including inflation, the impact of tariffs, changes in tax laws, changes in commodity prices and fluctuations in foreign currency exchange rates) and underwriting market conditions;
•the Company's approach to managing its investment portfolio;
•the impact of changing climate conditions;
•strategic and operational initiatives to improve growth, profitability and competitiveness;
•the Company's competitive advantages and innovation agenda, including executing on that agenda with respect to artificial intelligence;
•the Company's cybersecurity policies and practices;
•new product offerings;
•the impact of developments in the tort environment, such as increased attorney involvement in insurance claims; and
•the impact of developments in the geopolitical environment, including the war with Iran.
The Company cautions investors that such statements are subject to risks and uncertainties, many of which are difficult to predict and generally beyond the Company's control, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.
Some of the factors that could cause actual results to differ include, but are not limited to, the following:
Insurance-Related Risks
•high levels of catastrophe losses, including as a result of factors such as increased concentrations of insured exposures in catastrophe-prone areas and changing climate conditions, could materially and adversely affect the Company's results of operations, its financial position and/or liquidity, and could adversely impact the Company's ratings, the Company's ability to raise capital and the availability and cost of reinsurance;
•if actual claims exceed the Company's claims and claim adjustment expense reserves, if changes in the estimated level of claims and claim adjustment expense reserves are necessary, or if the Company is unable to offset increases in loss costs with sufficient price increases, including as a result of, among other things, changes in the legal/tort, regulatory and economic environments in which the Company operates, including increased inflation and the impact of tariffs, the Company's financial results could be materially and adversely affected;
•the Company's business could be harmed because of its continued exposure to asbestos claims and related litigation;
•the Company is exposed to, and may face adverse developments involving, mass tort claims such as those relating to exposure to potentially harmful products or substances; and
•the effects of emerging claim and coverage issues on the Company's business are uncertain, and court decisions or legislative changes that take place after the Company issues its policies can result in an unexpected increase in the number of claims and have a material adverse impact on the Company's results of operations and/or the Company's financial position.
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
FORWARD-LOOKING STATEMENTS, Continued
Financial, Economic and Credit Risks
•during or following a period of financial market disruption or an economic downturn, the Company's business could be materially and adversely affected;
•the Company's investment portfolio is subject to credit and interest rate risk, and may suffer reduced or low returns or material realized or unrealized losses;
•the Company may not be able to collect all amounts due to it from reinsurers, reinsurance coverage may not be available to the Company in the future at commercially reasonable rates or at all and the Company is exposed to credit risk related to its structured settlements;
•the Company is exposed to credit risk in certain of its insurance operations and with respect to certain guarantee or indemnification arrangements that it has with third parties;
•a downgrade in the Company's claims-paying and financial strength ratings could adversely impact the Company's business volumes, adversely impact the Company's ability to access the capital markets and increase the Company's borrowing costs; and
•the inability of the Company's insurance subsidiaries to pay dividends to the Company's holding company in sufficient amounts would harm the Company's ability to meet its obligations, pay future shareholder dividends and/or make future share repurchases.
Business and Operational Risks
•the intense competition that the Company faces, including with respect to attracting and retaining employees, and the impact of innovation, technological change, including with respect to artificial intelligence, and changing customer preferences on the insurance industry and the markets in which it operates, could harm its ability to maintain or increase its business volumes and its profitability;
•disruptions to the Company's relationships with its independent agents and brokers or the Company's inability to manage effectively a changing distribution landscape could adversely affect the Company;
•the Company's efforts to develop new products or services, expand in targeted markets, improve business processes and workflows or pursue acquisitions or dispositions may not be successful and may create enhanced risks;
•the Company may be adversely affected if its pricing and capital models provide materially different indications than actual results;
•loss of or significant restrictions on the use of particular types of underwriting criteria, such as credit scoring, or other data or methodologies, in the pricing and underwriting of the Company's products could reduce the Company's future profitability;
•the Company is subject to additional risks associated with its business outside the United States; and
•future pandemics could materially affect the Company's results of operations, financial position and/or liquidity.
Technology and Intellectual Property Risks
•the Company's business success and profitability depend, in part, on effective information technology systems and on continuing to develop and implement improvements in technology, including with respect to artificial intelligence, particularly as its business processes become more digital;
•if, as a result of cyber attacks (the risk of which could be exacerbated by geopolitical tensions, including the war with Iran) or otherwise, the Company experiences difficulties with technology, data and network security, outsourcing relationships or cloud-based technology, the Company's ability to conduct its business could be negatively impacted; and
•intellectual property is important to the Company's business, and the Company may be unable to protect and enforce its own intellectual property or the Company may be subject to claims for infringing the intellectual property of others.
Regulatory and Compliance Risks
•the Company's businesses are heavily regulated by the states and countries in which it conducts business, including licensing, market conduct and financial supervision, and changes in regulation, including changes in tax regulation, may reduce the Company's profitability and limit its growth; and
•the Company could be adversely affected if its controls designed to ensure compliance with guidelines, policies and legal and regulatory standards are not effective.
In addition, the Company's share repurchase plans depend on a variety of factors, including the Company's financial position, earnings, share price, catastrophe losses, maintaining appropriate capital levels for business operations, changes in the levels of written premiums, funding of its qualified pension plan, regulatory capital requirements of the operating insurance subsidiaries,
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
FORWARD-LOOKING STATEMENTS, Continued
legal requirements, regulatory constraints, other investment opportunities (including mergers and acquisitions and related financings), market conditions, changes in tax laws and other factors.
The Company's forward-looking statements speak only as of the date of this report or as of the date they are made, and the Company undertakes no obligation to update forward-looking statements. For a more detailed discussion of these factors, see the information under the captions "Part I-Item 2-Management's Discussion and Analysis of Financial Condition and Results of Operations" herein and "Part I-Item 1A-Risk Factors" and "Part II-Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 2025 Annual Report, in each case as updated by the Company's periodic filings with the SEC.
WEBSITE AND SOCIAL MEDIA DISCLOSURE
The Company may use its website and/or social media outlets, such as Facebook and X, as distribution channels of material company information. Financial and other important information regarding the Company is routinely posted on and accessible through the Company's website at investor.travelers.com, its Facebook page at facebook.com/travelers and its X account (@Travelers) at x.com/Travelers. In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address by visiting the "Email Notifications" section under the "Investor Toolkit" section at investor.travelers.com.
The Travelers Companies Inc. published this content on April 16, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on April 16, 2026 at 11:02 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]