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What changed in Travelers Companies (The)'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Travelers Companies (The)'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+574 added−577 removedSource: 10-K (2025-02-13) vs 10-K (2024-02-15)

Top changes in Travelers Companies (The)'s 2024 10-K

574 paragraphs added · 577 removed · 532 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

171 edited+15 added−15 removed319 unchanged
Biggest changeThe Company uses various analyses and methods, including proprietary and third-party modeling processes, to make underwriting and reinsurance decisions designed to manage its exposure to catastrophic events. In addition to catastrophe modeling and analysis, the Company also models and analyzes its exposure to other extreme events. The Company also utilizes proprietary and third-party modeling processes to evaluate capital adequacy.
Biggest changeERM involves risk-based analytics, as well as reporting and feedback throughout the enterprise in support of the Company’s long-term financial strategies and objectives. The Company uses various analyses and methods, including proprietary and third-party modeling processes, to make underwriting and reinsurance decisions designed to manage its exposure to catastrophic events.
The applicable state laws and regulations establish standards in certain lines of business to ensure that rates are not excessive, inadequate, unfairly 3 discriminatory, or used to engage in unfair price competition. The Company’s ability to increase rates and the relative timing of the process are dependent upon each respective state’s requirements, as well as the competitive market environment.
The applicable state 3 laws and regulations establish standards in certain lines of business to ensure that rates are not excessive, inadequate, unfairly discriminatory, or used to engage in unfair price competition. The Company’s ability to increase rates and the relative timing of the process are dependent upon each respective state’s requirements, as well as the competitive market environment.
Business Insurance is organized as follows: Domestic • Select Accounts provides small businesses with property and casualty insurance products and services, including commercial multi-peril, workers’ compensation, commercial automobile, general liability and commercial property. 4 • Middle Market provides mid-sized businesses with property and casualty insurance products and services, including workers’ compensation, general liability, commercial multi-peril, commercial automobile and commercial property, as well as risk management, claims handling and other services.
Business Insurance is organized as follows: 4 Domestic • Select Accounts provides small businesses with property and casualty insurance products and services, including commercial multi-peril, workers’ compensation, commercial automobile, general liability and commercial property. • Middle Market provides mid-sized businesses with property and casualty insurance products and services, including workers’ compensation, general liability, commercial multi-peril, commercial automobile and commercial property, as well as risk management, claims handling and other services.
The businesses covered by this reinsurance agreement are subsets of the Company’s overall insurance portfolio, comprising specified property coverages spread across the following geographic locations: Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Virginia and Vermont.
The businesses covered by this reinsurance agreement are subsets of the Company’s overall insurance portfolio, comprising specified property coverages spread across the following geographic locations: Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont and Virginia.
The Company’s domestic insurance subsidiaries are also required to participate in various involuntary assigned risk pools, principally involving workers’ compensation, automobile insurance, property damage due to wind (windpools) in states prone to property damage from hurricanes and Fair Access to Insurance Requirements (FAIR) plans, as well as automobile assigned risk plans the results of which are not pooled with other carriers, which provide various insurance coverages to individuals or other entities that otherwise are unable to purchase that coverage in the voluntary market.
The Company’s domestic insurance subsidiaries are also required to participate in various involuntary assigned risk pools, principally involving workers’ compensation, automobile insurance, property damage due to wind (windpools) in states prone to property damage from hurricanes and in Fair Access to Insurance Requirements (FAIR) plans, as well as automobile assigned risk plans the results of which are not pooled with other carriers, which provide various insurance coverages to individuals or other entities that otherwise are unable to purchase that coverage in the voluntary market.
Diversity and Inclusion The Company believes that its diversity and inclusion efforts are important to its success. The Chief Diversity Officer leads the Company’s diversity and inclusion efforts. The Company also has a Diversity Council that is chaired by the Chairman and Chief Executive Officer and is composed of the most senior members of the Company’s leadership team.
Diversity and Inclusion The Company believes that its diversity and inclusion efforts are important to its success. The Chief Diversity & Inclusion Officer leads the Company’s diversity and inclusion efforts. The Company also has a Diversity Council that is chaired by the Chairman and Chief Executive Officer and is composed of the most senior members of the Company’s leadership team.
Insurers having premium volume above certain thresholds, including the Company, are also required to perform at least annually a self-assessment of their current and future 28 risks, including their likely future solvency position (known as an own risk and solvency assessment, or ORSA) and file a confidential report with the insurer’s lead insurance regulator.
Insurers having premium volume above certain thresholds, including the Company, are also required to perform at least annually a self-assessment of their current and future risks, including their likely future solvency position (known as an own risk and solvency assessment, or ORSA) and file a confidential report with the insurer’s lead insurance regulator.
Other companies’ method of computing a similarly titled measure may not be comparable to the Company’s method of computing this ratio. Underwriting gain or loss Net earned premiums and fee income less claims and claim adjustment expenses and insurance-related expenses. Unearned premium The portion of premiums written that is allocable to the unexpired portion of the policy term.
Other companies’ method of computing a similarly titled measure may not be comparable to the Company’s method of computing this ratio. Underwriting gain or loss Net earned premiums and fee income less claims and claim adjustment expenses and insurance-related expenses. 42 Unearned premium The portion of premiums written that is allocable to the unexpired portion of the policy term.
International In Canada, the Company markets and distributes its personal insurance products principally through hundreds of brokers located throughout the country. 13 Pricing and Underwriting Personal Insurance has developed a product management methodology that integrates the disciplines of underwriting, claims, actuarial and product development. This approach is designed to maintain high-quality underwriting discipline and pricing segmentation.
International In Canada, the Company markets and distributes its personal insurance products principally through hundreds of brokers located throughout the country. Pricing and Underwriting Personal Insurance has developed a product management methodology that integrates the disciplines of underwriting, claims, actuarial and product development. This approach is designed to maintain high-quality underwriting discipline and pricing segmentation.
The GCC differs from the RBC in that it does not produce a ratio that is subject to a minimum value or result in an identified action level. Instead, the GCC is used in conjunction with other 25 regulatory tools to assist in the lead regulator’s group-wide supervision and evaluation of the adequacy of a group’s capital position.
The GCC differs from the RBC in that it does not produce a ratio that is subject to a minimum value or result in an identified action level. Instead, the GCC is used in conjunction with other regulatory tools to assist in the lead regulator’s group-wide supervision and evaluation of the adequacy of a group’s capital position.
Voluntary market The market in which a person seeking insurance obtains coverage without the assistance of residual market mechanisms. 42 Wholesale broker An independent or exclusive agent that represents both admitted and non-admitted insurers in market areas, which include standard, non-standard, specialty and excess and surplus lines of insurance. The wholesaler does not deal directly with the insurance consumer.
Voluntary market The market in which a person seeking insurance obtains coverage without the assistance of residual market mechanisms. Wholesale broker An independent or exclusive agent that represents both admitted and non-admitted insurers in market areas, which include standard, non-standard, specialty and excess and surplus lines of insurance. The wholesaler does not deal directly with the insurance consumer.
As the term is used in this document, “loss reserves” is meant to include reserves for both losses and LAE. Loss reserve development The increase or decrease in incurred claims and claim adjustment expenses as a result of the re-estimation of claims and claim adjustment expense reserves at successive valuation dates for a given group of claims.
As the term is used in this document, “loss reserves” is meant to include reserves for both losses and LAE. 38 Loss reserve development The increase or decrease in incurred claims and claim adjustment expenses as a result of the re-estimation of claims and claim adjustment expense reserves at successive valuation dates for a given group of claims.
The cost is shared by the insurance industry and self-insureds, funded through assessments to insurance companies and self-insureds based on either premiums or losses. 40 Segment income (loss) Determined in the same manner as core income (loss) on a segment basis. Management uses segment income (loss) to analyze each segment’s performance and as a tool in making business decisions.
The cost is shared by the insurance industry and self-insureds, funded through assessments to insurance companies and self-insureds based on either premiums or losses. Segment income (loss) Determined in the same manner as core income (loss) on a segment basis. Management uses segment income (loss) to analyze each segment’s performance and as a tool in making business decisions.
In addition to the normal risks associated with any multiple peril coverage, the profitability and pricing of both homeowners and automobile insurance are affected by the incidence of catastrophes and other weather-related events, as well as other unusual circumstances, such as the impact of supply chain disruptions, labor shortages and inflation.
In addition to the normal risks associated with any multiple peril coverage, the profitability and pricing of both homeowners and automobile insurance are affected by the incidence of catastrophes and other weather-related events, as well as other unusual circumstances, such as the impact of supply chain disruptions, labor shortages and elevated inflation.
Because the use of this technology facilitates the process of generating multiple quotes, the technology has increased price comparison on new and renewal business. International Personal Insurance competes with numerous international and domestic insurers in Canada. Companies compete based on similar factors to those described above for domestic operations.
Because the use of this technology facilitates the process of generating multiple quotes, the technology has increased price comparison on new and renewal business. 15 International Personal Insurance competes with numerous international and domestic insurers in Canada. Companies compete based on similar factors to those described above for domestic operations.
The Company regularly monitors its investment in claim resources to maintain an effective focus on claim outcomes and a disciplined approach to continual improvement. The Company operates a state-of-the-art claims-training facility which offers 16 hands-on experiential learning to help ensure that its claim professionals are properly trained.
The Company regularly monitors its investment in claim resources to maintain an effective focus on claim outcomes and a disciplined approach to continual improvement. The Company operates a state-of-the-art claims-training facility which offers hands-on experiential learning to help ensure that its claim professionals are properly trained.
A supervisory college is a forum of the regulators having jurisdictional authority over a holding company’s various insurance subsidiaries, including foreign insurance subsidiaries, convened to meet with the insurer’s executive management to evaluate the insurer’s business strategies, approach to enterprise risk management and corporate governance from both a groupwide and legal-entity perspective.
A supervisory college is a forum of the regulators having jurisdictional authority over a holding company’s various insurance subsidiaries, including foreign insurance subsidiaries, convened to meet with the insurer’s executive 23 management to evaluate the insurer’s business strategies, approach to enterprise risk management and corporate governance from both a groupwide and legal-entity perspective.
As part of these changes, insurance holding company regulations were amended to require insurers who are part of a holding company system to file an enterprise risk report to provide the lead insurance regulator with a summary of the company’s Enterprise Risk Management (ERM) framework, including the material risks within the insurance holding company system that could pose risk to the insurance entities within the holding company system.
As part of these changes, insurance holding company regulations were amended to require insurers who are part of a holding company system to file an enterprise risk report to provide the lead insurance regulator with a summary of the company’s 28 Enterprise Risk Management (ERM) framework, including the material risks within the insurance holding company system that could pose risk to the insurance entities within the holding company system.
Furthermore, the reduction or elimination of the National Flood Insurance Program could result in an increase in the Company’s exposure to flood risk if insurers become required to cover flood risk under certain types of policies. 24 Assessments for Guaranty Funds and Second-Injury Funds and Other Mandatory Assigned Risk and Reinsurance Arrangements.
Furthermore, the reduction or elimination of the National Flood Insurance Program could result in an increase in the Company’s exposure to flood risk if insurers become required to cover flood risk under certain types of policies. Assessments for Guaranty Funds and Second-Injury Funds and Other Mandatory Assigned Risk and Reinsurance Arrangements.
State insurance regulation continues to evolve in response to the changing economic and business environment as well as efforts by regulators internationally to develop a consistent approach to regulation. While the U.S. federal government has not historically regulated the insurance business, the Federal Insurance Office (or FIO) was established within the U.S.
State insurance regulation continues to evolve in response to the changing economic and business environment as well as efforts by regulators internationally to develop a consistent approach to regulation. While the U.S. federal government has not historically regulated the insurance business, the Federal Insurance Office (or FIO), which was established within the U.S.
The treaty only provides coverage for terrorism events in limited circumstances and excludes entirely losses arising from nuclear, biological, chemical or radiological attacks. The treaty only provides coverage for cyber events and civil unrest in limited circumstances and excludes losses arising from communicable disease. The Company’s underlying insurance coverages generally exclude coverage for communicable disease. Catastrophe Bonds .
The treaty only provides coverage for terrorism events in limited circumstances and excludes entirely losses arising from nuclear, biological, chemical or radiological attacks. The treaty only provides coverage for cyber events and civil unrest in limited circumstances and excludes losses arising from communicable disease. The Company’s underlying insurance coverages generally exclude coverage for communicable disease. 17 Catastrophe Bonds .
The Company has not incurred any losses that have resulted or are expected to result in a recovery under the Long Point Re IV agreement since its inception. Personal Insurance Hurricane Catastrophe Excess-of-Loss Reinsurance Treaty.
The Company has not incurred any losses that have resulted or are expected to result in a recovery under the Long Point Re IV agreement since its inception. 18 Personal Insurance Hurricane Catastrophe Excess-of-Loss Reinsurance Treaty.
The outlook for all ratings is stable. 22 INVESTMENT OPERATIONS The 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 outlook for all ratings is stable. INVESTMENT OPERATIONS The 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 Company’s ability or its willingness to manage its catastrophe exposure by raising prices, modifying policy terms, or reducing exposure to certain geographies may be limited due to considerations of public policy, an evolving political environment, and/or changes in general economic conditions.
The Company’s ability or its willingness to manage its catastrophe exposure by raising prices, modifying policy terms, or reducing exposure to certain 24 geographies may be limited due to considerations of public policy, an evolving political environment, and/or changes in general economic conditions.
For statutory reporting, the reserves are reported net of reinsurance recoverables. Additionally, reinsurance balances resulting from reinsurance placed to cover losses on insured events occurring prior to the inception of a reinsurance contract (retroactive reinsurance) are included in reinsurance recoverables for GAAP 20 reporting.
For statutory reporting, the reserves are reported net of reinsurance recoverables. Additionally, reinsurance balances resulting from reinsurance placed to cover losses on insured events occurring prior to the inception of a reinsurance contract (retroactive reinsurance) are included in reinsurance recoverables for GAAP reporting.
Participation in residual market mechanisms has resulted in, and may in the future result in, significant losses or assessments to insurers, including the Company, and, in certain states, those losses or assessments may not be commensurate with the Company’s direct catastrophe exposure in those states.
Participation in residual market mechanisms has resulted in, and may in the future result in, significant losses or assessments to insurers, including the Company, and, in certain states, those losses or assessments may not be commensurate with the Company’s direct catastrophe risk exposure in those states.
Loss reserve development may be related to prior year or current year development. 38 Losses incurred The total losses sustained by an insurance company under a policy or policies, whether paid or unpaid. Incurred losses include a provision for IBNR.
Loss reserve development may be related to prior year or current year development. Losses incurred The total losses sustained by an insurance company under a policy or policies, whether paid or unpaid. Incurred losses include a provision for IBNR.
Umbrella coverage A form of insurance protection against losses in excess of amounts covered by other liability insurance policies or amounts not covered by the usual liability policies. 41 Unassigned surplus The undistributed and unappropriated amount of statutory capital and surplus.
Umbrella coverage A form of insurance protection against losses in excess of amounts covered by other liability insurance policies or amounts not covered by the usual liability policies. Unassigned surplus The undistributed and unappropriated amount of statutory capital and surplus.
While insurance in the United States is regulated on a legal-entity basis, the NAIC has adopted changes to its Model Holding Company Act that some states, including the State of Connecticut, have enacted to allow the insurance commissioner to be 23 designated as the groupwide supervisor (i.e., lead regulator) for the insurance holding company system based upon certain criteria, including the jurisdiction of domicile of the insurance subsidiaries holding the majority of the insurance group’s premiums, assets, or liabilities.
While insurance in the United States is regulated on a legal-entity basis, the NAIC has adopted changes to its Model Holding Company Act that some states, including the State of Connecticut, have enacted to allow the insurance commissioner to be designated as the groupwide supervisor (i.e., lead state commissioner) for the insurance holding company system based upon certain criteria, including the jurisdiction of domicile of the insurance subsidiaries holding the majority of the insurance group’s premiums, assets, or liabilities.
Total capitalization The sum of total shareholders’ equity and debt. Treaty reinsurance The reinsurance of a specified type or category of risks defined in a reinsurance agreement (a “treaty”) between a primary insurer or other reinsured and a reinsurer.
Total capitalization The sum of total shareholders’ equity and debt. 41 Treaty reinsurance The reinsurance of a specified type or category of risks defined in a reinsurance agreement (a “treaty”) between a primary insurer or other reinsured and a reinsurer.
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 twitter.com/travelers .
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 .
The commercial residual market business of National Accounts services approximately 35% of the total workers’ compensation assigned risk market, making the Company one of the largest servicing carriers in the industry. • National Property and Other markets and distributes products and services to a wide customer base, providing traditional and customized insurance programs to a broad range of customer sizes through a large network of agents and brokers.
The commercial residual market business of National Accounts services approximately 36% of the total workers’ compensation assigned risk market, making the Company one of the largest servicing carriers in the industry. • National Property and Other markets and distributes products and services to a wide customer base, providing traditional and customized insurance programs to a broad range of customer sizes through a large network of agents and brokers.
While the covered hazards may be similar to those in the U.S. market, the different legal environments can make the product risks and coverage terms very different from those the Company faces in the United States. Net Retention Policy Per Risk The following discussion reflects the Company’s retention policy with respect to Business Insurance as of January 1, 2024.
While the covered hazards may be similar to those in the U.S. market, the different legal environments can make the product risks and coverage terms very different from those the Company faces in the United States. Net Retention Policy Per Risk The following discussion reflects the Company’s retention policy with respect to Business Insurance as of January 1, 2025.
The treaty covers territory from Virginia to Maine for the period from July 1, 2023 through and including June 30, 2024. Losses from a covered event anywhere in North America and waters contiguous thereto may be used to satisfy the retention. Recoveries under the catastrophe bonds (if any) would be first applied to reduce losses subject to this treaty.
The treaty covers territory from Virginia to Maine for the period from July 1, 2024 through and including June 30, 2025. Losses from a covered event anywhere in North America and waters contiguous thereto may be used to satisfy the retention. Recoveries under the catastrophe bonds (if any) would be first applied to reduce losses subject to this treaty.
This treaty provides up to $160 million part of $200 million of coverage, subject to a $170 million retention, for losses occurring from an earthquake, including fire following and sprinkler leakage, incurred by Personal Insurance from January 1, 2024 through and including December 31, 2024. The treaty covers the United States, its territories, possessions and waters contiguous thereto.
This treaty provides up to $160 million part of $200 million of coverage, subject to a $170 million retention, for losses occurring from an earthquake, including fire following and sprinkler leakage, incurred by Personal Insurance from January 1, 2025 through and including December 31, 2025. The treaty covers the United States, its territories, possessions and waters contiguous thereto.
State insurance departments also conduct periodic examinations of the financial condition and market conduct of insurance companies and require the filing of financial and other reports on a quarterly and annual basis.
State insurance departments also conduct periodic examinations of the financial condition and market conduct of insurance companies and require the filing of various financial and other reports on a quarterly and annual basis.
With approximately 12,500 employees, Claims Services employs a group of professionals with diverse skills, including claim adjusters, appraisers, attorneys, investigators, engineers, accountants, nurses, data and analytics professionals, system specialists and training, management and support personnel. Approved external service providers, such as investigators, attorneys and, when necessary, independent adjusters and appraisers, are available for use as appropriate.
With approximately 12,700 employees, Claims Services employs a group of professionals with diverse skills, including claim adjusters, appraisers, attorneys, investigators, engineers, accountants, nurses, data and analytics professionals, system specialists and training, management and support personnel. Approved external service providers, such as investigators, attorneys and, when necessary, independent adjusters and appraisers, are available for use as appropriate.
Based on preliminary 2023 IRIS ratios calculated by the Company for its lead domestic insurance subsidiaries, in both 2023 and 2022, The Travelers Indemnity Company had results outside the normal range for one IRIS ratio due to the size of its investments in certain non-fixed maturity securities, while Travelers Casualty and Surety Company had results outside the normal range for one IRIS ratio due to the amount of dividends received from its subsidiaries.
Based on preliminary 2024 IRIS ratios calculated by the Company for its lead domestic insurance subsidiaries, in both 2024 and 2023, The Travelers Indemnity Company had results outside the normal range for one IRIS ratio due to the size of its investments in certain non-fixed maturity securities, while Travelers Casualty and Surety Company had results outside the normal range for one IRIS ratio due to the amount of dividends received from its subsidiaries.
The NAIC has an RBC requirement which sets forth minimum capital standards for most U.S.-based property and casualty insurance companies that is intended to raise the level of protection for policyholder obligations. The Company’s U.S. insurance subsidiaries are subject to these NAIC RBC requirements based on laws that have been adopted by individual states.
The NAIC maintains an RBC requirement which sets forth minimum capital standards for most U.S.-based property and casualty insurance companies that is intended to raise the level of protection for policyholder obligations. The Company’s U.S. insurance subsidiaries are subject to these NAIC RBC requirements based on laws that have been adopted by individual states.
In general, these laws and regulations permit investments in federal, state and municipal obligations, corporate bonds, preferred and common equity securities, mortgage loans, real estate, and certain other investments, subject to specified limits and certain other qualifications, depending on the type of investment. At December 31, 2023 and 2022, the Company was in compliance with these laws and regulations.
In general, these laws and regulations permit investments in federal, state and municipal obligations, corporate bonds, preferred and common equity securities, mortgage loans, real estate, and certain other investments, subject to specified limits and certain other qualifications, depending on the type of investment. At December 31, 2024 and 2023, the Company was in compliance with these laws and regulations.
According to A.M. Best, there are approximately 1,100 property and casualty groups in the United States, comprising approximately 2,600 property and casualty companies. Of those groups, the top 150 accounted for approximately 94% of the consolidated industry’s total net written premiums in 2022. The Company competes with both foreign and domestic insurers.
According to A.M. Best, there are approximately 1,100 property and casualty groups in the United States, comprising approximately 2,600 property and casualty companies. Of those groups, the top 150 accounted for approximately 94% of the consolidated industry’s total net written premiums in 2023. The Company competes with both foreign and domestic insurers.
Management does not anticipate regulatory action as a result of the 2023 IRIS ratio results for the lead insurance subsidiaries or their insurance subsidiaries. In all instances in prior years, regulators have been satisfied upon follow-up that no regulatory action was required. Risk-Based Capital (RBC) Requirements.
Management does not anticipate regulatory action as a result of the 2024 IRIS ratio results for the lead insurance subsidiaries or their insurance subsidiaries. In all instances in prior years, regulators have been satisfied upon follow-up that no regulatory action was required. Risk-Based Capital (RBC) Requirements.
Agencies and brokers are serviced by 87 field offices and supported by customer service centers where the Company performs services for agents for a fee and centralized business centers where the Company processes new and renewal business that meet certain underwriting criteria. Business Insurance builds relationships with well-established, independent insurance agencies and brokers.
Agencies and brokers are serviced by 88 field offices and supported by customer service centers where the Company performs services for agents for a fee and centralized business centers where the Company processes new and renewal business that meet certain underwriting criteria. Business Insurance builds relationships with well-established, independent insurance agencies and brokers.
The combined maximum of the 401(k) match and the Paying It Forward savings contribution is 5% of eligible pay, up to a maximum of $7,500; • A Pension Plan that provides annual pay credits from 2% to 6% of eligible pay based on age and years of service, plus quarterly interest credits; • Financial education program, free one on one guidance sessions, on-demand financial webinars and workshops; and • Investment advisory service that provides day-to-day management of employees 401(k) account. 32 Other • Life insurance; • Short- and long-term disability coverages; • Paid time-off, starting at 20 days per year, up to a maximum of 30 days per year based on years of service, plus the ability to purchase up to six additional days per year; • Eight company holidays plus two floating holidays; • Paid parental and adoption leave; • Childcare discounts; • A Legal Services Plan; • An Educational Assistance Program; • A corporate discount program; and • Paid time off for volunteering.
The combined maximum of the 401(k) match and the Paying It Forward savings contribution is 5% of eligible pay, up to a maximum of $7,500; • A Pension Plan that provides annual pay credits from 2% to 6% of eligible pay based on age and years of service, plus quarterly interest credits; • Financial education program, free one on one guidance sessions, on-demand financial webinars and workshops; and • Investment advisory service that provides day-to-day management of employees 401(k) account. 32 Other • Life insurance; • Short- and long-term disability coverages; • Paid time-off, starting at 20 days per year, up to a maximum of 30 days per year based on years of service, plus the ability to purchase up to six additional days per year; • Designated Company holidays plus floating holiday(s); • Paid parental and adoption leave; • Childcare discounts; • A Legal Services Plan; • An Educational Assistance Program; • A corporate discount program; and • Paid time off for volunteering.
At Lloyd’s, International competes with other syndicates operating in the Lloyd’s market as well as international and domestic insurers in the various markets where the Lloyd’s operation writes business worldwide, with an emphasis on short-tail insurance lines. Competition is based on price, product and service.
At Lloyd’s, International competes with other syndicates operating in the Lloyd’s market as well as international and domestic insurers in the various markets where the Lloyd’s operation writes business worldwide, with an emphasis on short-tail insurance lines. Competition is based on price, product, distribution partnerships and service.
Geographic Distribution The following table shows the geographic distribution of Business Insurance’s direct written premiums for the year ended December 31, 2023: Location % of Total Domestic: California 13.1 % New York 8.6 Texas 7.6 Illinois 4.4 Florida 4.0 Pennsylvania 3.8 New Jersey 3.8 Georgia 3.0 All other domestic (1) 47.0 Total Domestic 95.3 International: Canada 2.0 All other international 2.7 Total International 4.7 Total Business Insurance 100.0 % ___________________________________________ (1) No other single state accounted for 3.0% or more of Business Insurance’s direct written premiums in 2023.
Geographic Distribution The following table shows the geographic distribution of Business Insurance’s direct written premiums for the year ended December 31, 2024: Location % of Total Domestic: California 13.2 % New York 8.2 Texas 7.6 Illinois 4.3 Florida 4.1 Pennsylvania 3.7 New Jersey 3.7 Georgia 3.1 All other domestic (1) 47.6 Total Domestic 95.5 International: Canada 1.7 All other international 2.8 Total International 4.5 Total Business Insurance 100.0 % ___________________________________________ (1) No other single state accounted for 3.0% or more of Business Insurance’s direct written premiums in 2024.
Many state insurance regulatory laws contain provisions that require advance approval by state agencies of any change in control of an insurance company that is domiciled, or, in some cases, having substantial business in a state such that the insurance company is deemed to be commercially domiciled in that state.
Many state insurance regulatory laws contain provisions that require prior approval by state agencies of any change in control of an insurance company that is domiciled, or, in some cases, having substantial business in a state such that the insurance company is deemed to be commercially domiciled in that state.
(2) No other single state accounted for 3.0% or more of the Company’s consolidated direct written premiums written in 2023. Catastrophe Exposure The Company’s property and casualty insurance operations expose it to claims arising out of catastrophes.
(2) No other single state accounted for 3.0% or more of the Company’s consolidated direct written premiums written in 2024. Catastrophe Exposure The Company’s property and casualty insurance operations expose it to claims arising out of catastrophes.
Geographic Distribution The following table shows the geographic distribution of Personal Insurance’s direct written premiums for the year ended December 31, 2023: Location % of Total Domestic: Texas (1) 11.7 % New York 8.7 California 6.9 Georgia 5.2 Pennsylvania 4.6 Florida 4.2 New Jersey 4.1 Virginia 3.7 Maryland 3.5 Colorado 3.4 Massachusetts 3.3 Illinois 3.0 All other domestic (2) 33.7 Total Domestic 96.0 International: Canada 4.0 Total International 4.0 Total Personal Insurance 100.0 % ___________________________________________ (1) The percentage for Texas includes business written by the Company through a fronting agreement with another insurer.
Geographic Distribution The following table shows the geographic distribution of Personal Insurance’s direct written premiums for the year ended December 31, 2024: Location % of Total Domestic: Texas (1) 11.3 % New York 8.7 California 6.9 Georgia 4.7 Pennsylvania 4.7 Florida 4.1 New Jersey 3.9 Maryland 3.7 Virginia 3.5 Colorado 3.5 Massachusetts 3.5 Illinois 3.0 Connecticut 3.0 All other domestic (2) 31.5 Total Domestic 96.0 International: Canada 4.0 Total International 4.0 Total Personal Insurance 100.0 % ___________________________________________ (1) The percentage for Texas includes business written by the Company through a fronting agreement with another insurer.
Catastrophes include hurricanes, tornadoes and other windstorms, earthquakes, hail, wildfires, severe winter weather, floods, tsunamis, volcanic eruptions, solar flares and other naturally-occurring events. Catastrophes can also be man-made, such as terrorist attacks and other intentionally destructive acts, including those involving nuclear, biological, chemical and radiological events, cyber events, civil unrest, explosions and destruction of infrastructure.
Catastrophe Reinsurance Catastrophes include hurricanes, tornadoes and other windstorms, earthquakes, hail, wildfires, severe winter weather, floods, tsunamis, volcanic eruptions, solar flares and other naturally-occurring events. Catastrophes can also be man-made, such as terrorist attacks and other destructive acts including those involving cyber events, nuclear, biological, chemical and radiological events, civil unrest, explosions and destruction of infrastructure.
United States field claim management teams located in 16 claim centers and 55 satellite and specialty-only offices in 42 states are organized to maintain focus on the specific claim characteristics unique to the businesses within the Company’s business segments.
United States field claim management teams located in 16 claim centers and 56 satellite and specialty-only offices in 42 states are organized to maintain focus on the specific claim characteristics unique to the businesses within the Company’s business segments.
In addition, sales and service are provided to customers through five contact centers. Principal markets for Personal Insurance products are spread throughout the contiguous United States. In selecting new independent agencies to distribute its products, Personal Insurance considers many factors, including financial stability, staff experience, customer facing online and digital capabilities and operating and marketing plans.
In addition, sales and service are provided to customers through contact centers. Principal markets for Personal Insurance products are spread throughout the contiguous United States. In selecting new independent agencies to distribute its products, Personal Insurance considers many factors, including financial stability, staff experience, lead sources, customer facing online and digital capabilities and operating and marketing plans.
Business Insurance also includes Simply Business, a leading provider of small business insurance policies primarily in the United Kingdom, and Business Insurance Other, which primarily comprises the Company’s asbestos and environmental liabilities, and the assumed reinsurance and certain other runoff operations.
Business Insurance also includes Simply Business, a leading provider of small business insurance policies primarily in the United Kingdom, and Business Insurance Other, which primarily comprises the Company’s asbestos and environmental liabilities and other runoff operations, including certain assumed reinsurance arrangements.
See “Item 1A—Risk Factors—The intense competition that we face, including with respect to attracting and retaining employees, and the impact of innovation, technological change and changing customer preferences on the insurance industry and the markets in which we operate, could harm our ability to maintain or increase our business volumes and our profitability.” International International competes with numerous international and domestic insurers in Canada, the United Kingdom, the Republic of Ireland, and in Brazil and Colombia through joint ventures.
See “Item 1A—Risk Factors—The intense competition that we face, including with respect to attracting and retaining employees, and the impact of innovation, technological change and changing customer preferences on the insurance industry and the markets in which we operate, could harm our ability to maintain or increase our business volumes and our profitability.” International International competes with numerous international and domestic insurers in Canada, the United Kingdom, the Republic of Ireland, and in Brazil through a joint venture.
For a discussion of the risks to the Company’s claims-paying and financial strength ratings, see the risk factor entitled “A downgrade in our claims-paying and financial strength ratings could adversely impact our business volumes, adversely impact our ability to access the capital markets and increase our borrowing costs” included in “Part I—Item 1A—Risk Factors.” 21 Claims — Paying Ratings The following table summarizes the current claims-paying (or financial strength) ratings for each of the Company’s rated entities as of February 15, 2024, including the position of each rating in the applicable agency’s rating scale.
For a discussion of the risks to the Company’s claims-paying and financial strength ratings, see the risk factor entitled “A downgrade in our claims-paying and financial strength ratings could adversely impact our business volumes, adversely impact our ability to access the capital markets and increase our borrowing costs” included in “Part I—Item 1A—Risk Factors.” 21 Claims — Paying Ratings The following table summarizes the current claims-paying (or financial strength) ratings for each of the Company’s rated entities as of February 13, 2025, including the position of each rating in the applicable agency’s rating scale.
The Company’s managing agency (Travelers Syndicate Management Limited) (TSML) of its Lloyd’s syndicate (Syndicate 5000 at Lloyd’s) is also regulated by the PRA and the FCA, which have delegated certain regulatory responsibilities to the Council of Lloyd’s.
The Company’s managing agency (Travelers Syndicate Management Limited, or TSML) of its Lloyd’s syndicate (Syndicate 5000 at Lloyd’s) is also regulated by the PRA and the FCA, which have delegated certain regulatory responsibilities to the 26 Council of Lloyd’s.
(2) No other single state accounted for 3.0% or more of Personal Insurance’s direct written premiums in 2023. 15 Competition Domestic Although national companies (including international companies doing business in the U.S.) write the majority of this business, Personal Insurance also faces competition from many regional and local companies.
(2) No other single state accounted for 3.0% or more of Personal Insurance’s direct written premiums in 2024. Competition Domestic Although national companies (including international companies doing business in the U.S.) write the majority of this business, Personal Insurance also faces competition from many regional and local companies.
Reserves on Statutory Accounting Basis At December 31, 2023, 2022 and 2021, claims and claim adjustment expense reserves (net of reinsurance) prepared in accordance with U.S. generally accepted accounting principles (GAAP reserves) were $87 million higher, $91 million higher and $99 million higher, respectively, than those reported in the Company’s respective annual financial reports filed with insurance regulators, which are prepared in accordance with statutory accounting practices (statutory reserves).
Reserves on Statutory Accounting Basis At December 31, 2024, 2023 and 2022, claims and claim adjustment expense reserves (net of reinsurance) prepared in accordance with U.S. generally accepted accounting principles (GAAP reserves) were $93 million higher, $87 million higher and $91 million higher, respectively, than those reported in the Company’s respective annual financial reports filed with insurance regulators, which are prepared in accordance with statutory accounting practices (statutory reserves).
This treaty covers the accumulation of certain property losses arising from one or multiple occurrences for the period January 1, 2024 through and including December 31, 2024.
This treaty covers the accumulation of certain property losses arising from one or multiple occurrences for the period January 1, 2025, through and including December 31, 2025.
Geographic Distribution The following table shows the geographic distribution of the Company’s consolidated direct written premiums for the year ended December 31, 2023: Location % of Total Domestic: California 10.4 % Texas (1) 9.1 New York 8.4 Florida 4.2 Pennsylvania 4.1 Illinois 3.8 Georgia 3.8 New Jersey 3.7 Massachusetts 3.1 All other domestic (2) 44.1 Total Domestic 94.7 International: Canada 3.0 All other international 2.3 Total International 5.3 Consolidated total 100.0 % ___________________________________________ (1) The percentage for Texas includes business written by the Company through a fronting agreement with another insurer.
Geographic Distribution The following table shows the geographic distribution of the Company’s consolidated direct written premiums for the year ended December 31, 2024: Location % of Total Domestic: California 10.5 % Texas (1) 9.0 New York 8.2 Florida 4.1 Pennsylvania 4.1 Illinois 3.7 Georgia 3.6 New Jersey 3.6 Massachusetts 3.1 All other domestic (2) 45.0 Total Domestic 94.9 International: Canada 2.8 All other international 2.3 Total International 5.1 Consolidated total 100.0 % ___________________________________________ (1) The percentage for Texas includes business written by the Company through a fronting agreement with another insurer.
This treaty provides up to $500 million part of $1.00 billion of coverage for a single event, subject to a $1.75 billion retention (i.e., for every dollar of loss between $1.75 billion and $2.75 billion, this treaty provides 50 cents of coverage), for homeowners property losses arising from a hurricane or tropical storm for the period from July 1, 2023 through and including June 30, 2024.
This treaty provides up to $500 million part of $1.00 billion of coverage for a single event, subject to a $2.00 billion retention (i.e., for every dollar of loss between $2.00 billion and $3.00 billion, this treaty provides 50 cents of coverage), for homeowners property losses arising from a hurricane or tropical storm for the period from July 1, 2024 through and including June 30, 2025.
Middle Market generally provides these products to mid-sized businesses through Commercial Accounts, as well as to targeted industries through Construction , Technology & Life Sciences , Public Sector Services and Oil & Gas, and additionally, provides mono-line umbrella and excess coverage insurance through Excess Casualty.
Middle Market generally provides these products to mid-sized businesses through Commercial Accounts, as well as to targeted industries through Construction , Technology & Life Sciences , Public Sector Services and Energy, and additionally, provides mono-line umbrella and excess coverage insurance through Excess Casualty.
International • International , through its operations in Canada, the United Kingdom and the Republic of Ireland, provides property and casualty insurance and risk management services to several customer groups, including, among others, those in the technology, manufacturing and public services industry sectors.
International • International , through its operations in Canada, the United Kingdom and the Republic of Ireland, provides property and casualty insurance and risk management services to several customer groups, including, among others, those in the technology, manufacturing, public services and commercial real estate industry sectors.
Companies compete on the basis of price, product offerings, the level of claim and risk management services provided, the ease and speed of doing business and stability of the insurer.
Companies compete on the basis of price, product offerings, distribution partnerships, the level of claim and risk management services provided, the ease and speed of doing business and stability of the insurer.
The Company conducts reviews of its risk and catastrophe coverages on a regular basis and makes changes as it deems appropriate. The following discussion summarizes the Company’s catastrophe reinsurance coverage at January 1, 2024. 17 Corporate Catastrophe Excess-of-Loss Reinsurance Treaty.
The Company conducts reviews of its risk and catastrophe coverages on a regular basis and makes changes as it deems appropriate. The following discussion summarizes the Company’s catastrophe reinsurance coverage at January 1, 2025. Corporate Catastrophe Excess-of-Loss Reinsurance Treaty.
Regulators in countries where the Company has operations are working with the International Association of Insurance Supervisors (IAIS) (and with the NAIC, the Federal Reserve and FIO in the U.S.) to consider changes to insurance company supervision, including group supervision and group capital requirements.
Regulators in countries where the Company has operations are working with the International Association of Insurance Supervisors (IAIS) (and with the NAIC, the Federal Reserve and FIO in the U.S.) to consider changes to insurance company supervision, including group supervision and group capital requirements as described above.
Virgin Islands and the Northern Mariana Islands and are subject to regulation in both the various states and jurisdictions in which the subsidiaries are legally domiciled and in which the subsidiaries transact business.
Virgin Islands, American Samoa and the Northern Mariana Islands and are subject to regulation in both the various states and jurisdictions in which the subsidiaries are legally domiciled and in which the subsidiaries transact business.
The following table shows the geographic distribution of the Company’s employees as of December 31, 2023: Location % of Total Domestic: Connecticut 22.1 % New York 6.8 Minnesota 6.7 Texas 6.6 California 5.2 Florida 4.1 Massachusetts 3.5 Georgia 3.4 Illinois 3.0 All other domestic (1) 28.7 Total Domestic 90.1 International: Canada 5.3 United Kingdom 4.4 All other international 0.2 Total International 9.9 Consolidated total 100.0 % ___________________________________________ (1) No other single state accounted for 3.0% or more of the Company’s employees as of December 31, 2023.
The following table shows the geographic distribution of the Company’s employees as of December 31, 2024: Location % of Total Domestic: Connecticut 22.1 % New York 6.7 Minnesota 6.7 Texas 6.6 California 5.2 Florida 4.0 Massachusetts 3.6 Georgia 3.5 Illinois 3.0 All other domestic (1) 28.6 Total Domestic 90.0 International: Canada 5.3 United Kingdom 4.5 All other international 0.2 Total International 10.0 Consolidated total 100.0 % ___________________________________________ (1) No other single state accounted for 3.0% or more of the Company’s employees as of December 31, 2024.
Net Retention Policy Per Risk The following discussion reflects the Company’s retention policy with respect to Bond & Specialty Insurance as of January 1, 2024.
Net Retention Policy Per Risk The following discussion reflects the Company’s retention policy with respect to Bond & Specialty Insurance as of January 1, 2025.
For surety, where limits are often significant, Bond & Specialty Insurance generally retains up to $132.5 million probable maximum loss (PML) per principal, after reinsurance, but may retain higher amounts based on the type of obligation, credit quality and other credit risk factors.
For surety, where limits are often significant, Bond & Specialty Insurance generally retains up to $160.0 million probable maximum loss (PML) per principal, after reinsurance, but may retain higher amounts based on the type of obligation, credit quality and other credit risk factors.
The GCC utilizes an aggregation of the available capital/financial resources and the required regulatory capital of a group’s subsidiaries, using the NAIC RBC requirements to identify available and required capital for the group’s U.S. insurance subsidiaries and the local jurisdictional capital requirements for insurance subsidiaries outside of the U.S.
The GCC utilizes an aggregation of the available capital/financial resources and the required regulatory capital of a group’s subsidiaries (known as an Aggregation Method), using the NAIC RBC requirements to identify available and required capital for the group’s U.S. insurance subsidiaries and the local jurisdictional capital requirements for insurance subsidiaries outside of the U.S.
For third-party liability, Business Insurance generally limits its net retention, through the use of reinsurance, to a maximum of $21.2 million per insured, per occurrence, subject further to a significant aggregate annual deductible. For property exposures, Business Insurance generally limits its net retention, through the use of reinsurance, to a maximum amount per risk of $20.0 million per occurrence.
For third-party liability, Business Insurance generally limits its net retention, through the use of reinsurance, to a maximum of $6.7 million per insured, per occurrence, subject further to a significant aggregate annual deductible. For property exposures, Business Insurance generally limits its net retention, through the use of reinsurance, to a maximum amount per risk of $20.0 million per occurrence.
Insurance company investments must comply with applicable laws and regulations which prescribe the kind, quality, and concentration of investments.
Investment Regulation . Insurance company investments must comply with applicable laws and regulations which prescribe the kind, quality, and concentration of investments.
In addition to the day-to-day ERM activities within the Company’s operations, key internal risk management functions include, among others, the Management and Operating Committees (comprised of the Company’s Chief Executive Officer and the other most senior members of management); the Enterprise, Segment and Function (including Catastrophe, Cyber, etc.) Risk Committees of management; the Executive Crisis Management Team; the Committee on Climate, Energy and the Environment; and the Credit Committee.
In addition to the day-to-day ERM activities within the Company’s operations, key internal risk management functions include, among others, the Management and Operating Committees (comprised of the Company’s Chief Executive Officer and the other most senior members of management); the Enterprise, Segment and Function (including Catastrophe, Cyber, etc.) Risk Committees of management; the Executive Crisis Management Team; the Sustainability Committee; and the Credit Committee.
Additionally, the NAIC adopted changes to its Model Holding Company Act to require certain insurance groups to file a Group Capital Calculation to allow the groupwide supervisor (lead state) to evaluate the risks and available capital on a groupwide basis in addition to the risk-based capital requirements currently imposed on a legal-entity basis.
Additionally, in response to international efforts to establish capital standards on a groupwide basis, the NAIC adopted changes to its Model Holding Company Act to require certain insurance groups to file a Group Capital Calculation to allow the groupwide supervisor (lead state) to evaluate the risks and available capital on a groupwide basis in addition to the risk-based capital requirements currently imposed on a legal-entity basis.
Debt Ratings The following table summarizes the current debt, trust preferred securities and commercial paper ratings of the Company and its subsidiaries as of February 15, 2024. The table also presents the position of each rating in the applicable agency’s rating scale. A.M.
Debt Ratings The following table summarizes the current debt, trust preferred securities and commercial paper ratings of the Company and its subsidiaries as of February 13, 2025. The table also presents the position of each rating in the applicable agency’s rating scale. A.M.
Surety bonds are generally provided for construction performance; legal matters, such as appeals; trustees in bankruptcy and probate; and other performance obligations. • General Liability. Provides coverage for specialized liability exposures as described above in more detail in the “Business Insurance” section of this report, as well as transactional liability coverages. • Other.
Surety bonds are generally provided for construction performance; legal matters, such as appeals; compliance and licensing; and other performance obligations. • General Liability. Provides coverage for specialized liability exposures as described above in more detail in the “Business Insurance” section of this report, as well as transactional liability coverages. • Other.
Therefore, the maximum recovery under the treaty would be $3.5 billion, or 78%, of the total $4.5 billion limit. Qualifying losses for each occurrence are after a $100 million deductible. The treaty covers all of the Company’s exposures in North America and all waters contiguous thereto.
Therefore, the maximum recovery under the treaty would be $3.7 billion, or 92%, of the total $4.0 billion limit. Qualifying losses for each occurrence are after a $100 million deductible. The treaty covers all of the Company’s exposures in North America and all waters contiguous thereto.
Although the retrospectively rated feature of the policy substantially reduces insurance risk for the Company, it introduces additional credit risk to the Company. Premiums receivable from holders of retrospectively rated policies totaled approximately $48 million at December 31, 2023.
Although the retrospectively rated feature of the policy substantially reduces insurance risk for the Company, it introduces additional credit risk to the Company. Premiums receivable from holders of retrospectively rated policies totaled approximately $46 million at December 31, 2024.
At December 31, 2023, contractholder payables on unpaid losses within the deductible layer of large deductible policies were approximately $3.27 billion, and the associated receivables (net of allowance for expected credit losses) were approximately $3.25 billion. Business Insurance also utilizes retrospectively rated policies for a portion of its business, primarily for workers’ compensation coverage.
At December 31, 2024, contractholder payables on unpaid losses within the deductible layer of large deductible policies were approximately $3.19 billion, and the associated receivables (net of allowance for expected credit losses) were approximately $3.17 billion. Business Insurance also utilizes retrospectively rated policies for a portion of its business, primarily for workers’ compensation coverage.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn particular: • Many state and local governments have from time to time operated under deficits or projected deficits, particularly during and after a financial market disruption or economic downturn. The severity and duration of these deficits could have an adverse impact on the collectability and valuation of our municipal bond portfolio.
Biggest changeA significant portion of our fixed maturity investment portfolio is invested in obligations of states, municipalities and political subdivisions. This municipal bond portfolio could be subject to default or impairment. In particular: • Many state and local governments have from time to time operated under deficits or projected deficits, particularly during and after a financial market disruption or economic downturn.
These additional liabilities or increases in estimates, or a range of either, could vary significantly from period to period and could materially and adversely affect our results of operations and/or our financial position.
These additional liabilities or increases in estimates, or a range of either, could vary significantly from period to period and could materially and adversely affect our results of operations and/or our financial position.
If our controls, or the controls of our joint ventures or recently acquired businesses, are not effective (including with respect to the prevention or identification of misconduct by employees or others with whom we do business), it could lead to financial loss, unanticipated risk exposure (including underwriting, credit and investment risk), errors in financial reporting, litigation, regulatory proceedings or damage to our reputation.
If our controls, or the controls of our joint ventures or recently acquired businesses, are not effective (including with respect to the prevention or identification of misconduct by employees or others with whom we do business), it could lead to financial loss, unanticipated risk exposure (including underwriting, credit and investment risk), errors in financial reporting, litigation, regulatory proceedings and/or damage to our reputation.
These variables can be affected by both internal and external events, such as: changes in claims handling procedures, including automation; adverse changes in loss cost trends, including inflationary pressures, technology or other changes that may impact medical, auto and home repair costs (e.g., more costly technology in vehicles, labor shortages, supply chain disruptions, higher costs of used vehicles and parts, and increased demand and decreased supply for raw materials, all of which results in increased severity of claims); economic conditions, including general and wage inflation; legal trends, including adverse changes in the tort environment that have continued to persist at elevated levels for a number of years (e.g., increased and more aggressive attorney involvement in insurance claims, increased litigation, expanded theories of liability, higher jury awards, lawsuit abuse and third-party litigation finance, among others); labor shortages, which can result in companies hiring less experienced workers; higher interest rates, which can result in higher post-judgment interest costs; and legislative changes, among others.
These variables can be affected by both internal and external events, such as: changes in claims handling procedures, including automation; adverse changes in loss cost trends, including inflationary pressures, technology or other changes that may impact medical, auto and home repair costs (e.g., more costly technology in vehicles, labor shortages, supply chain disruptions, higher costs of used vehicles and parts, and increased demand 44 and decreased supply for raw materials, all of which results in increased severity of claims); economic conditions, including general and wage inflation; legal trends, including adverse changes in the tort environment that have continued to persist at elevated levels for a number of years (e.g., increased and more aggressive attorney involvement in insurance claims, increased litigation, expanded theories of liability, higher jury awards, lawsuit abuse and third-party litigation finance, among others); labor shortages, which can result in companies hiring less experienced workers; higher interest rates, which can result in higher post-judgment interest costs; and legislative changes, among others.
COVID-19 presented, and any future pandemics (including new variants of COVID-19) could present, the following risks, among others: inflation; supply chain disruption; labor shortages; backlogs in the court system (which increase the time and costs to resolve claims); legal and regulatory demands for rate refunds; behavioral changes can result in the increased frequency and severity of claims, such as driving at faster speeds; medical conditions such as “long-COVID” and other claims in our workers compensation line; litigation seeking business interruption coverage; reduced earned premiums; higher claim and claim adjustment expenses in certain lines of business; adverse legislative or regulatory actions; operational disruptions; increased general and administrative expenses; financial market disruption; and an economic downturn.
COVID-19 presented, and any future pandemics (including new variants of COVID-19) could present, the following risks, among others: inflation; supply chain disruption; labor shortages; backlogs in the court system (which increase the time and costs to resolve claims); legal and regulatory demands for rate refunds; behavioral changes that can result in the increased frequency and severity of claims, such as driving at faster speeds; medical conditions such as “long-COVID” and other claims in our workers compensation line; litigation seeking business interruption coverage; reduced earned premiums; higher claims and claim adjustment expenses in certain lines of business; adverse legislative or regulatory actions; operational disruptions; increased general and administrative expenses; financial market disruption; and an economic downturn.
For a further discussion of risks that can impact us as a result of financial market disruption or an economic downturn, see “During or following a period of financial market disruption or an economic downturn, our business could be materially and adversely affected” above and “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook.” 53 Technology and Intellectual Property Risks Our business success and profitability depend, in part, on effective information technology systems and on continuing to develop and implement improvements in technology, particularly as our business processes become more digital.
For a further discussion of risks that can impact us as a result of financial market disruption or an economic downturn, see “During or following a period of financial market disruption or an economic downturn, our business could be materially and adversely affected” above and “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook.” Technology and Intellectual Property Risks Our business success and profitability depend, in part, on effective information technology systems and on continuing to develop and implement improvements in technology, particularly as our business processes become more digital.
For example, our competitive position could be impacted if we are unable to deploy, in a cost effective and competitive manner, technology such as artificial intelligence and machine learning 50 that collects and analyzes a wide variety of data points (so-called “big data” analysis) to make underwriting or other decisions, or if our competitors collect and use data which we do not have the ability to access or use or deploy artificial intelligence to create efficiencies in ways that we do not.
For example, our competitive position could be impacted if we are unable to deploy, in a cost effective and competitive manner, technology such as artificial intelligence and machine learning that collects and analyzes a wide variety of data points (so-called “big data” analysis) to make underwriting or other decisions, or if our competitors collect and use data which we do not have the ability to access or use or deploy artificial intelligence to create efficiencies in ways that we do not.
See also “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook.” The value of our fixed maturity and short-term investments is also subject to the risk that certain investments may default or become impaired due to a deterioration in the financial condition of one or more issuers of the securities held in our portfolio, or due to a deterioration in the financial condition of an insurer that guarantees an issuer’s payments of such investments.
See also “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook.” The value of our fixed maturity and short-term investments is also 47 subject to the risk that certain investments may default or become impaired due to a deterioration in the financial condition of one or more issuers of the securities held in our portfolio, or due to a deterioration in the financial condition of an insurer that guarantees an issuer’s payments of such investments.
Like other global companies, our computer systems are regularly subject to and will continue to be the target of computer viruses, malware or other malicious codes (including ransomware), unauthorized access, cyber-attacks or other computer-related penetrations. The Company, like other property and casualty insurers, may be under greater threat from cybercriminals seeking sensitive personal or other insurance-related information.
Like other global companies, our computer systems are regularly subject to and will continue to be the target of computer viruses, malware or other malicious codes (including ransomware), unauthorized access, cyber-attacks or other computer- 54 related penetrations. The Company, like other property and casualty insurers, may be under greater threat from cybercriminals seeking sensitive personal or other insurance-related information.
Catastrophes can also be man-made, such as terrorist attacks and other intentionally destructive acts including those involving cyber events, nuclear, biological, chemical and radiological events, civil unrest, explosions and destruction of infrastructure. The incidence and severity of catastrophes are inherently unpredictable, and it is possible that both the frequency and severity of natural and man-made catastrophic events could increase.
Catastrophes can also be man-made, such as terrorist attacks and other destructive acts including those involving cyber events, nuclear, biological, chemical and radiological events, civil unrest, explosions and destruction of infrastructure. The incidence and severity of catastrophes are inherently unpredictable, and it is possible that both the frequency and severity of natural and man-made catastrophic events could increase.
Resulting legislative or regulatory actions or litigation could result in negative publicity and/or generate adverse rules or findings, such as curtailing the use of important underwriting criteria, or other data or methodologies, which could materially and adversely affect our results of operations. Future pandemics (including new variants of COVID-19), could materially affect our results of operations, financial position and/or liquidity.
Resulting legislative or regulatory actions or litigation could result in negative publicity and/or generate adverse rules or findings, such as curtailing the use of important underwriting criteria, or other data or methodologies, which could materially and adversely affect our results of operations. 53 Future pandemics (including new variants of COVID-19), could materially affect our results of operations, financial position and/or liquidity.
It is possible that the filing of other direct actions against insurers, including us, could be made in the future. We also continue to receive claims from policyholders who allege that they are liable for injury or damage arising out of their alleged disposition of toxic substances.
It is possible that the filing of other direct actions against insurers, including us, could be made in the future. 45 We also continue to receive claims from policyholders who allege that they are liable for injury or damage arising out of their alleged disposition of toxic substances.
Although the reinsurer is liable to us to the extent of the reinsurance, we remain liable as the direct insurer on all risks reinsured. As a result, reinsurance arrangements do not eliminate our obligation to pay claims. Accordingly, we are subject 48 to credit risk with respect to our ability to recover amounts due from reinsurers.
Although the reinsurer is liable to us to the extent of the reinsurance, we remain liable as the direct insurer on all risks reinsured. As a result, reinsurance arrangements do not eliminate our obligation to pay claims. Accordingly, we are subject to credit risk with respect to our ability to recover amounts due from reinsurers.
Similarly, comparative rating technology has impacted competition in personal lines and is now being used to access comparative rates for small commercial business as well, and that trend is likely to continue and may accelerate. In recent years, there have been new entrants into the small commercial business, and this trend may continue.
Similarly, comparative rating technology has impacted competition in personal lines and is now being used to access comparative rates for small commercial business as well, and that 50 trend is likely to continue and may accelerate. In recent years, there have been new entrants into the small commercial business, and this trend may continue.
The Company has been, and continues to be, involved in litigation involving insurance coverage issues pertaining to asbestos and environmental claims. The Company believes that some court decisions have interpreted the insurance coverage to be 45 broader than the original intent of the insurers and policyholders. These decisions continue to be inconsistent and vary from jurisdiction to jurisdiction.
The Company has been, and continues to be, involved in litigation involving insurance coverage issues pertaining to asbestos and environmental claims. The Company believes that some court decisions have interpreted the insurance coverage to be broader than the original intent of the insurers and policyholders. These decisions continue to be inconsistent and vary from jurisdiction to jurisdiction.
Our business activities outside the United States may also subject us to currency risk and, in some markets, it may be difficult to 52 effectively hedge that risk, or we may choose not to hedge that risk. In addition, in some markets, we invest as part of a joint venture with a local counterparty.
Our business activities outside the United States may also subject us to currency risk and, in some markets, it may be difficult to effectively hedge that risk, or we may choose not to hedge that risk. In addition, in some markets, we invest as part of a joint venture with a local counterparty.
In addition, increases in the value and geographic concentration of insured property, the number of policyholders exposed to certain events and the effects of inflation could increase the severity of claims resulting 43 from a catastrophe.
In addition, increases in the value and geographic concentration of insured property, the number of policyholders exposed to certain events and the effects of inflation could increase the severity of claims resulting from a catastrophe.
Recent changes in the inflationary environment have impacted medical labor and materials costs, the potential persistency of which could result in future loss costs which are higher than our current expectations.
Changes in the inflationary environment in recent years have impacted medical labor and materials costs, the potential persistency of which could result in future loss costs which are higher than our current expectations.
If we do not effectively develop, implement and monitor our vendor relationships, if third party providers do not perform as anticipated or experience financial difficulties, if we experience technological or other problems with a transition, or if vendor relationships relevant to our business process functions are terminated, we may not realize expected productivity improvements 54 or cost efficiencies and may experience operational difficulties, increased costs and a loss of business .
If we do not effectively develop, implement and monitor our vendor relationships, if third party providers do not perform as anticipated or experience financial difficulties, if we experience technological or other problems with a transition to a new vendor, or if vendor relationships relevant to our business process functions are terminated, we may not realize expected productivity improvements or cost efficiencies and may experience operational difficulties, increased costs and a loss of business .
For a discussion of loss reserves by product line, including examples of common factors that can affect reserves, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates—Claims and Claim Adjustment Expense Reserves.” Our business could be harmed because of our potential exposure to asbestos and environmental claims and related litigation.
For a discussion of loss reserves by product line, including examples of common factors that can affect reserves, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates—Claims and Claim Adjustment Expense Reserves.” Our business could be harmed because of our continued exposure to asbestos and environmental claims and related litigation.
We face potential exposure to mass tort claims, including claims related to exposure to potentially harmful products or substances, such as perfluoroalkyl and polyfluoroalkyl substances (PFAS), talc, opioids and lead.
We face exposure to mass tort claims, including claims related to exposure to potentially harmful products or substances, such as perfluoroalkyl and polyfluoroalkyl substances (PFAS), talc, opioids and lead.
For certain businesses, we give third parties binding authority to write business on our behalf, and in the case of Fidelis, we assume a percentage of its business under a reinsurance agreement, which exposes us to additional risks, including with respect to certain products, risks and geographies we do not normally cover.
For certain businesses, we give third parties binding authority to write direct and indirect business on our behalf, and in the case of Fidelis, we assume a percentage of its business under a reinsurance agreement, which exposes us to additional risks, including with respect to certain products, risks and geographies we do not normally cover.
In addition, system development projects may not deliver the benefits or perform as expected, or may be replaced or become obsolete more quickly than expected, which could result in operational difficulties, additional costs or accelerated recognition of expenses. Attracting and retaining technology personnel has also become significantly more challenging in recent periods.
In addition, system development projects may not deliver the benefits or perform as expected, or may be replaced or become obsolete more quickly than expected, which could result in operational difficulties, additional costs or accelerated recognition of expenses. Attracting and retaining technology personnel has also become significantly more challenging in recent years.
We continue to receive a significant number of asbestos claims. Factors underlying these claim filings include continued intensive advertising by lawyers seeking asbestos claimants and the continued focus by plaintiffs on defendants, such as manufacturers of talcum powder, who were not traditionally primary targets of asbestos litigation.
We continue to receive a significant number of asbestos claims. Factors underlying these claim filings include continued intensive advertising by lawyers seeking asbestos claimants and the continued focus by plaintiffs on defendants, such as manufacturers of talcum powder, who were not traditionally sued and/or primary targets of asbestos litigation.
We also invest a portion of our assets in equity securities, private equity limited partnerships, hedge funds and real estate partnerships, as well as strategic investments in private and/or public companies. From time to time, we may also invest in other types of non-fixed maturity investments, including investments with exposure to commodity price risk.
We also invest a portion of our assets in equity securities, private equity limited partnerships, hedge funds and, as noted above, real estate partnerships, as well as strategic investments in private and/or public companies. From time to time, we may also invest in other types of non-fixed maturity investments, including investments with exposure to commodity price risk.
Traditional insurance industry participants, technology companies, “InsurTech” start-up companies, some of which are supported by traditional insurance industry participants, and others are focused on using technology and innovation to simplify and improve the customer experience, increase efficiencies, redesign products, alter business or distribution models and effect other potentially disruptive changes in the insurance industry.
Traditional insurance industry participants, technology companies, “InsurTech” companies, some of which are supported by traditional insurance industry participants, and others are focused on using technology and innovation to simplify and improve the customer experience, increase efficiencies, redesign products, alter business or distribution models and effect other potentially disruptive changes in the insurance industry.
Climate studies by government agencies, academic institutions, catastrophe modeling organizations and other groups indicate that an increase in the frequency and/or intensity of hurricanes, heavy precipitation events and associated river, urban and flash flooding, sea level rise, droughts, heat waves and wildfires has occurred, and can be expected into the future.
Climate studies by government agencies, academic institutions, catastrophe modeling organizations and other groups indicate that an increase in the frequency and/or intensity of hurricanes, hail and severe convective storms, heavy precipitation events and associated river, urban and flash flooding, sea level rise, droughts, heat waves and wildfires has occurred, and can be expected into the future.
In addition, we conduct business in Brazil and Colombia through joint ventures, and throughout other parts of the world, including as a corporate member of Lloyd’s and through our quota share agreement with Fidelis. We may also explore opportunities in other countries.
In addition, we conduct business in Brazil through a joint venture, and throughout other parts of the world, including as a corporate member of Lloyd’s and through our quota share agreement with Fidelis. We may also explore opportunities in other countries.
Our estimated deductible under the program is $3.48 billion for 2024. For a further description of the Terrorism Risk Insurance Program, see note 6 of the notes to the consolidated financial statements. Because of the risks set forth above, catastrophes could materially and adversely affect our results of operations, financial position and/or liquidity.
Our estimated deductible under the program is $3.85 billion for 2025. For a further description of the Terrorism Risk Insurance Program, see note 6 of the notes to the consolidated financial statements. Because of the risks set forth above, catastrophes could materially and adversely affect our results of operations, financial position and/or liquidity.
Examples of such claims and coverage issues include, but are not limited to: • judicial expansion of policy coverage and the impact of new or expanded theories of liability; • plaintiffs targeting insurers in purported class action litigation relating to claims handling and other practices; • claims relating to construction defects, which often present complex coverage and damage valuation questions; • claims related to data and network security breaches, information system failures or cyber events, including cases where coverage was not intended to be provided; • the assertion of “public nuisance” or similar theories of liability, pursuant to which plaintiffs, including governmental entities, seek to recover monies spent to respond to harm caused to members of the public, abate hazards to public health and safety and/or recover expenditures purportedly attributable to a “public nuisance,” such as litigation against manufacturers or distributors of lead paint, opioids, perfluoroalkyl and polyfluoroalkyl substances (PFAS) and other allegedly harmful products, and entities that caused or contributed to harm to the environment; • claims related to liability, business interruption or workers’ compensation arising out of infectious disease or pandemic; • claims related to vaccine mandates; • claims relating to abuse by an employee or a volunteer of an insured; • claims that link health issues to particular causes (for example, cumulative traumatic head injury from sports or other causes), resulting in liability or workers’ compensation claims; • claims alleging that one or more of our underwriting criteria have a disparate impact on persons belonging to a protected class in violation of the law, including the Fair Housing Act; 46 • claims arising out of modern techniques and practices used in connection with the extraction of natural resources, such as hydraulic fracturing or wastewater injection; • claims arising out of the use of personal property in commercial transactions, such as ride or home sharing; • claims against fiduciaries of retirement plans, including allegations regarding excessive fees; • claims under laws protecting biometric data; • claims relating to unanticipated consequences of current or new technologies or business models or processes, including as a result of related behavioral changes; • claims relating to changing climate conditions, including claims alleging that our policyholders cause or contribute to changing climate conditions; and • bankruptcies of policyholders, which can lead to inflated numbers and values of claims.
Examples of such claims and coverage issues include, but are not limited to: • judicial expansion of policy coverage and the impact of new or expanded theories of liability; • plaintiffs targeting insurers in purported class action litigation relating to claims handling and other practices; • claims relating to construction defects, which often present complex coverage and damage valuation questions; • claims related to data and network security breaches, information system failures or cyber events, including cases where coverage was not intended to be provided; • the assertion of “public nuisance” or similar theories of liability, pursuant to which plaintiffs, including governmental entities, seek to recover monies spent to respond to harm caused to members of the public, abate hazards to public health and safety and/or recover expenditures purportedly attributable to a “public nuisance,” such as litigation against manufacturers or distributors of lead paint, opioids, perfluoroalkyl and polyfluoroalkyl substances (PFAS) and other allegedly harmful products, and entities that caused or contributed to harm to the environment; 46 • claims related to liability, business interruption or workers’ compensation arising out of infectious disease or pandemic; • claims related to vaccine mandates; • claims relating to abuse by an employee or a volunteer of an insured; • claims that link health issues to particular causes (for example, cumulative traumatic head injury from sports or other causes), resulting in liability or workers’ compensation claims; • claims arising out of modern techniques and practices used in connection with the extraction of natural resources, such as hydraulic fracturing or wastewater injection; • claims arising out of the use of personal property in commercial transactions, such as ride or home sharing; • claims against fiduciaries of retirement plans, including allegations regarding excessive fees; • claims under laws protecting biometric and other personal data; • claims relating to consequences of current or new technologies, including generative AI or addictive software, or business models or processes, including as a result of related behavioral changes; • claims relating to changing climate conditions, including claims alleging that our policyholders cause or contribute to changing climate conditions; and • bankruptcies of policyholders or other insurers, which can lead to inflated numbers and values of claims.
We have in the past, and may in the future, depending on changes in circumstances, such as economic and market conditions and relative asset valuations, make changes to the mix of investments in our investment portfolio as part of our ongoing efforts to seek appropriate risk-adjusted returns. These changes may impact the duration, volatility and risk of our investment portfolio.
We have in the past, and may in the future, depending on changes in circumstances, such as economic and market conditions and relative asset valuations, make changes to the mix of investments in our investment portfolio as part of our ongoing efforts to seek appropriate risk-adjusted returns.
Further, we may not have sufficient resources to respond to claims arising from a high frequency of high-severity natural catastrophes and/or of man-made catastrophic events involving conventional means or claims arising out of one or more man-made catastrophic events involving “unconventional” means, such as nuclear, biological, chemical or radiological events.
Further, we may not have sufficient resources to respond to claims arising from a high frequency of high-severity natural catastrophes and/or of man-made catastrophic events involving conventional means or claims arising out of one or more man-made catastrophic events involving cyber, nuclear, biological, chemical or radiological means.
Insurance regulators may also increase the statutory capital and surplus requirements for our insurance subsidiaries or, as has happened recently in certain states, reject or delay rate increases or other changes to terms and conditions due to the economic environment or other factors and/or expand FAIR plans or similar residual market mechanisms.
Insurance regulators may also increase the statutory capital and surplus requirements for our insurance subsidiaries or, as has happened recently in certain states, reject or delay rate increases or other changes to terms and conditions due to the economic environment or other factors and/or expand FAIR plans or similar residual market mechanisms, including with respect to commercial lines.
Investment returns are an important part of our overall profitability. Fixed maturity and short-term investments comprised approximately 93% of the carrying value of our investment portfolio as of December 31, 2023. Changes in interest rates affect the carrying value of our fixed maturity investments and returns on our fixed maturity and short-term investments.
Investment returns are an important part of our overall profitability. Fixed maturity and short-term investments comprised approximately 94% of the carrying value of our investment portfolio as of December 31, 2024. Changes in interest rates affect the carrying value of our fixed maturity investments and returns on our fixed maturity and short-term investments.
For example, changes to state law regarding workers’ compensation insurance could impact the demand for our products, and the legalization of cannabis in certain states has, 55 according to some studies, resulted in more automobile accidents.
For example, changes to state law regarding workers’ compensation insurance or to requirements for other insurance products could impact the demand for our products, and the legalization of cannabis in certain states has, according to some studies, resulted in more automobile accidents.
Further, there has been a trend of increased consolidation by agents and brokers, which could impact our relationships with, and fees paid to, some agents and brokers, and/or otherwise negatively impact the pricing or distribution of our products.
Further, there has been a trend of increased consolidation by agents and brokers, and increased financing of agents and brokers by private equity firms, which could impact our relationships with, and fees paid to, some agents and brokers, and/or otherwise negatively impact the pricing or distribution of our products.
Disruptions to electrical power supplies have also increased losses arising from natural events, a dynamic which may become more frequent as dependency on electricity increases and/or if the reliability of the electric grid decreases.
Disruptions to electrical power supplies have also increased losses arising from natural events, a dynamic which may become more frequent as dependency on electricity increases and/or if the reliability of the electric grid decreases. Disruptions to electrical power supplies could result from non-natural events as well, including cyber events.
For example, in recent periods, the effects of inflation, including as a result of post-event demand surge, have increased catastrophe losses, and this could continue in the future.
For example, in recent years, the effects of inflation, including as a result of post-event demand surge, have increased catastrophe losses, and this could occur again in the future.
Our efforts or the efforts of agents and brokers with respect to new products or markets, alternate distribution channels, changes to commission terms as well as changes in the way agents and brokers utilize data and technology, including in ways that may be in direct competition with us, could adversely impact our business relationship with independent agents and brokers who currently market our products, resulting in a lower volume and/or profitability of business generated from these sources. 51 In certain markets, brokers increasingly have been packaging portfolios of risks together and offering them to fewer carriers.
Our efforts or the efforts of agents and brokers with respect to new products or markets, alternate distribution channels, changes to commission terms as well as changes in the way agents and brokers utilize data and technology, including in ways that may be in direct competition with us, could adversely impact our business relationship with independent agents and brokers who currently market our products, resulting in a lower volume and/or profitability of business generated from these sources.
Loss reserve estimation difficulties also differ significantly by product line due to differences in claim complexity, the volume of claims, the potential severity of individual claims, the determination of occurrence date for a claim and lags in reporting of events to insurers, among other factors.
Loss reserve estimation difficulties also differ significantly by product line due to differences in claim complexity, the volume of claims, the potential severity of individual claims, the determination of occurrence date for a claim and lags in reporting of events to insurers, among other factors. Inflation in recent years significantly increased our loss costs in our personal and commercial businesses.
An important part of our business is written through less than a dozen such intermediaries, including the agency affiliate of GEICO, with whom we have had a distribution arrangement for homeowners’ business since 1995.
We market our insurance products primarily through independent agents and brokers. An important part of our business is written through less than a dozen such intermediaries, including the agency affiliate of GEICO, with whom we have had a distribution arrangement for homeowners’ business since 1995.
A portion of our premiums from outside of the United States is generated in Canada, a substantial portion of which consists of automobile premiums from the province of Ontario, which is a highly regulated market that can result in rate inadequacy.
A portion of our premiums from outside of the United States is generated in Canada, a substantial portion of which consists of automobile premiums from the provinces of Ontario and Alberta, which are highly regulated markets that can result in rate inadequacy.
Because of the risks set forth above, the value of our investment portfolio could decrease, we could experience reduced net investment income and we could experience realized and/or unrealized investment losses, which could materially and adversely affect our results of operations, financial position and/or liquidity.
These changes may impact the duration, diversification, volatility, and risk of our investment portfolio. 48 Because of the risks set forth above, the value of our investment portfolio could decrease, we could experience reduced net investment income and we could experience realized and/or unrealized investment losses, which could materially and adversely affect our results of operations, financial position and/or liquidity.
Our exposure to the above credit risks could materially and adversely affect our results of operations. A downgrade in our claims-paying and financial strength ratings could adversely impact our business volumes, adversely impact our ability to access the capital markets and increase our borrowing costs. Claims-paying and financial strength ratings are important to an insurer’s competitive position.
See note 17 of the notes to the consolidated financial statements. Our exposure to the above credit risks could materially and adversely affect our results of operations. A downgrade in our claims-paying and financial strength ratings could adversely impact our business volumes, adversely impact our ability to access the capital markets and increase our borrowing costs.
For example, over the past few years, a number of states have enacted legislation allowing victims of sexual molestation to file or proceed with claims that otherwise would have been time-barred and additional states are considering similar legislative changes.
For example, over the past decade, a number of states have enacted legislation allowing victims of sexual molestation to file or proceed with claims that otherwise would have been time-barred, which have resulted in, and are expected to continue to result in, significant claims payments by the Company, and additional states are considering similar legislative changes.
A downgrade in one or more of our ratings could negatively impact our business volumes or make it more difficult or costly for us to access the capital markets or borrow money.
Claims-paying and financial strength ratings are important to an insurer’s competitive position. A downgrade in one or more of our ratings could negatively impact our business volumes or make it more difficult or costly for us to access the capital markets or borrow money.
If we fail to appropriately price the risks we insure or fail to change our pricing models to appropriately reflect our experience, or if our claims experience is more frequent or severe than our underlying risk assumptions, for example due to inflation, changing climate conditions, legislative or regulatory changes, changes in behavior such as distracted or faster driving or a more aggressive tort environment, our profit margins may be negatively affected.
In addition, as the number of third-party models increases, it becomes more difficult to validate, manage and integrate such models as they evolve over time, and the risk associated with assimilating the output from such models into our decisions increases. 52 If we fail to appropriately price the risks we insure or fail to change our pricing models to appropriately reflect our experience, or if our claims experience is more frequent or severe than our underlying risk assumptions, for example due to inflation, changing climate conditions, legislative or regulatory changes, changes in behavior such as distracted or faster driving or a more aggressive tort environment, our profit margins may be negatively affected.
Moreover, certain policyholders purchase retrospectively rated policies (i.e., where premiums are adjusted after the policy period based on the actual loss experience of the policyholder during the policy period). Retrospectively rated policies expose us to additional credit risk to the extent that the adjusted premium is greater than the original premium.
Moreover, certain policyholders purchase retrospectively rated policies (i.e., where premiums are adjusted after the policy period based on the actual loss experience of the policyholder during the policy period).
In these and other situations, agents and brokers have an increased influence over policy language and compensation structure which, if we participate on that basis, could adversely impact our ability to profitably manage underwriting risk.
In certain markets, brokers increasingly have been packaging portfolios of risks together and offering them to fewer carriers or segmenting individual risks among many carriers. In these and other situations, agents and brokers have an increased influence over policy language and compensation structure which, if we participate on that basis, could adversely impact our ability to profitably manage underwriting risk.
See “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Catastrophe Modeling” and “—Changing Climate Conditions.” In addition, for newer and rapidly evolving products, such as cyber insurance, the lack of historical loss experience increases the level of uncertainty related to the product, and as a result, the inherent potential for unexpected material economic loss.
See “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Catastrophe Modeling” and “—Changing Climate Conditions.” In addition, for newer and rapidly evolving products, such as cyber insurance, limited historical loss experience and the potential for a widespread cyber event decrease the efficacy of modeling tools and increase the level of uncertainty related to the product, and as a result, the inherent potential for unexpected material economic loss. 43 The extent of losses from a catastrophe is a function of the total amount of insured exposure affected by the event, the severity of the event and the coverage provided.
The risk of cyber-attacks could be exacerbated by geopolitical tensions, including hostile actions taken by nation-states and terrorist organizations. In addition, new technology, such as artificial intelligence, could create unforeseen exposures or coverage issues under the policies we write and aggravate claims fraud and cybercrime.
In addition, new technology, such as artificial intelligence, could create unforeseen exposures or coverage issues under the policies we write and aggravate claims fraud and cybercrime.
In accordance with industry practice, when policyholders purchase insurance policies from us through independent agents and brokers, the premiums relating to those policies are often paid to the agents and brokers for payment to us. In most jurisdictions, the premiums will be deemed to have been paid to us whether or not they are actually received by us.
For example, we may not be able to obtain collateral and any collateral obtained may subsequently have little or no value. In accordance with industry practice, when policyholders purchase insurance policies from us through independent agents and brokers, the premiums relating to those policies are often paid to the agents and brokers for payment to us.
Our outsourcing of certain technology and business process functions to third parties may expose us to increased risk related to data and cyber security, service disruptions or the effectiveness of our control system. These risks could increase as additional functions move to the cloud and as dependencies and interconnections with the third parties with whom we do business increase.
Our outsourcing of certain technology and business process functions to third parties exposes us to increased risk related to data and cyber security, service disruptions and the effectiveness of our control system.
Consequently, we assume a degree of credit risk associated with amounts due from independent agents and brokers. 49 We are also exposed to credit risk related to certain guarantee or indemnification arrangements that we have with third parties. See note 17 of the notes to the consolidated financial statements.
In most jurisdictions, the premiums will be deemed to have been paid to us whether or not they are actually received by us. Consequently, we assume a degree of credit risk associated with amounts due from independent agents and brokers. We are also exposed to credit risk related to certain guarantee or indemnification arrangements that we have with third parties.
Regulatory and Compliance Risks 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.
If we cannot successfully redesign an infringing product, service or technology (or procure a substitute version), this could have a material adverse effect on our business and ability to compete. 55 Regulatory and Compliance Risks 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.
This dynamic has also impacted our agents, brokers, regulators, vendors and other business partners. If we and our business partners are not able to successfully attract, train, retain and motivate our respective employees, our business, financial results and reputation could be materially and adversely affected.
If we and our business partners are not able to successfully attract, train, retain and motivate our respective employees, our business, financial results and reputation could be materially and adversely affected. 51 Disruptions to our relationships with our independent agents and brokers or our inability to manage effectively a changing distribution landscape could adversely affect us .
During an economic downturn, fixed maturity and short-term investments could be subject to a higher risk of default, and our non-fixed income investments could be negatively impacted as well. 47 A significant portion of our fixed maturity investment portfolio is invested in obligations of states, municipalities and political subdivisions. This municipal bond portfolio could be subject to default or impairment.
Such defaults and impairments could reduce our net investment income and result in realized investment losses. During an economic downturn, fixed maturity and short-term investments could be subject to a higher risk of default, and our non-fixed income investments could be negatively impacted as well.
This competition has increased in recent periods and, with the increase in remote work, is taking place on a broader geographic scale. In addition, the competition for talent and the difficulty in attracting and retaining employees has also increased due to the retirement of members of the “baby boomer” generation.
This competition has continued in recent periods and, with the ability for employees to work remotely, is taking place on a broad geographic scale. In addition, the competition for talent and the difficulty in attracting and retaining employees has also increased due to retirements. This dynamic has also impacted our agents, brokers, regulators, vendors and other business partners.
If any of our software vendors or licensors are faced with infringement claims, we may lose our ability to use such software until the dispute is resolved. If we cannot successfully redesign an infringing product, service or technology (or procure a substitute version), this could have a material adverse effect on our business and ability to compete.
If any of our software vendors or licensors are faced with infringement claims, we may lose our ability to use such software until the dispute is resolved.
Residual markets have resulted in, and may in the future result in, significant losses or assessments to insurers, including us. In addition, legislative, regulatory and legal actions have sought to expand insurance coverage for catastrophe claims beyond the original intent of the policies, prevent the application of deductibles or limit other rights of insurers.
In addition, legislative, regulatory and legal actions have sought to expand insurance coverage for catastrophe claims beyond the original intent of the policies, prevent the application of deductibles or limit other rights of insurers. We may not be able to adjust terms or adequately raise prices to offset the costs of catastrophes. See “Item 1—Business—U.S.
See “Competition” sections of the discussion on business segments in “Item 1—Business.” Technological change can impact us in other ways as well. For example, rapid changes in the sophistication and use of certain types of cyber-attacks, such as ransomware and social engineering attacks, on our insureds have increased the frequency and severity of losses under our policies.
See “Competition” sections of the discussion on business segments in “Item 1—Business.” Technological change can impact us in other ways as well.
The impact of many of these items on ultimate costs for loss reserves could be material and is difficult to estimate. For example, the ongoing backlog of cases in the courts has resulted in claims being unresolved for longer periods of time, which the Company believes has contributed, and will continue to 44 contribute, to increased loss costs.
The impact of many of these items on ultimate costs for loss reserves could be material and is difficult to estimate.
Inflation in recent periods has significantly increased our loss costs in our personal and commercial businesses. Inflation higher than at the levels that the Company anticipates could continue to negatively impact our loss costs in future periods.
Inflation higher than at the levels that the Company anticipates could negatively impact our loss costs in future periods. It is possible that, among other things, potential actions taken by the federal government, such as tax reform or changes in international trade regulation, including tariffs, could lead to higher than anticipated inflation.
Our efforts to mitigate the credit risk that we have to our insureds may not be successful. For example, we may not be able to obtain collateral and any collateral obtained may subsequently have little or no value.
Retrospectively rated policies expose us to additional credit risk to the extent that the adjusted premium is greater than the original premium. 49 Our efforts to mitigate the credit risk that we have to our insureds may not be successful.
Removed
The extent of losses from a catastrophe is a function of the total amount of insured exposure affected by the event, the severity of the event and the coverage provided.
Added
Residual markets have resulted in, and may in the future result in, significant losses or assessments to insurers, including us. For example, it is expected that the January 2025 California wildfires will result in assessments to insurers from the California FAIR Plan.
Removed
We may not be able to adjust terms or adequately raise prices to offset the costs of catastrophes. See “Item 1—Business—U.S.
Added
The severity and duration of these deficits could have an adverse impact on the collectability and valuation of our municipal bond portfolio.
Removed
Such defaults and impairments could reduce our net investment income and result in realized investment losses.
Added
For example, rapid changes in the sophistication and use of certain types of cyber-attacks, such as ransomware and social engineering attacks, as well as other cyber incidents impacting our insureds, have increased the frequency and severity of losses under our policies. The risk of cyber-attacks could be exacerbated by geopolitical tensions, including hostile actions taken by nation-states and terrorist organizations.
Removed
Disruptions to our relationships with our independent agents and brokers or our inability to manage effectively a changing distribution landscape could adversely affect us . We market our insurance products primarily through independent agents and brokers.
Added
These risks could increase as additional functions move to the cloud and as dependencies and interconnections with the third parties with whom we do business increase and become more complex, particularly as those third parties incorporate new technologies, such as artificial intelligence.
Removed
In addition, as the number of third-party models increases, it becomes more difficult to validate, manage and integrate such models as they evolve over time, and the risk associated with assimilating the output from such models into our decisions increases.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRisk Management The Company maintains cybersecurity policies and standards which align with the International Organization for Standardization (ISO) 27001 standard and the National Institute of Standards and Technology (NIST) Cybersecurity Framework. The Company’s cybersecurity policies and standards have been developed in collaboration with groups across the enterprise, such as Legal, Compliance and each of its business segments.
Biggest changeThe Company’s cybersecurity policies and standards have been developed in collaboration with groups across the enterprise, such as Legal, Compliance, Technology, and each of its business segments. The Company’s policies include, for example, Information and System Use policies for employee and non-employee system users.
The team also conducts reassessments of its third-party risk assessments, the frequency of which is determined based on a risk assessment and rating process. Where appropriate, the Company seeks to incorporate contractual language with third-party service providers that includes clear terms involving the collection, use, sharing and retention of user data, as well as compliance with appropriate security terms.
The team also conducts reassessments of its third-party service providers, the frequency of which is determined based on a risk assessment and rating process. Where appropriate, the Company seeks to incorporate contractual language with third-party service providers that includes clear terms involving the collection, use, sharing and retention of user data, as well as compliance with appropriate security terms.
The CISO has over 20 years of cybersecurity and information security risk compliance and threat analysis experience. Prior to joining the Company in 2023, 57 the CISO served as Chief Security Officer for a national telecommunications service provider.
The CISO has over 20 years of cybersecurity and information security risk compliance and threat analysis experience. Prior to joining the Company in 2023, the CISO served as Chief Security Officer for a national telecommunications service provider.
To maintain the robustness of the framework, from time-to-time the Company conducts cybersecurity tabletop testing exercises. As part of the Company’s supplier risk management program, using a risk-based approach, the Cybersecurity team conducts formal risk assessments with respect to certain of the Company’s third-party service providers. The assessment process addresses aspects of the service providers’ data security controls and policies.
As part of the Company’s supplier risk management program, using a risk-based approach, the Cybersecurity team conducts formal risk assessments with respect to certain of the Company’s third-party service providers. The assessment process addresses aspects of the service providers’ data security controls and policies.
In addition, the Company regularly self-assesses against its internal policies, using its internal risk assessment process and a variety of frameworks, such as the New York Department of Financial Services Cybersecurity Requirements for Financial Services Companies, the Insurance Data Security Model Law as adopted and modified by various states and the Payment Card Industry Data Security Standard. 56 As the workforce, the work environment and the threat landscape continue to evolve, the Company seeks to evaluate related risks and implement appropriate controls.
In addition, the Company regularly self-assesses against its internal policies, using its internal risk assessment process and a variety of frameworks, such as the New York Department of Financial Services Cybersecurity Requirements for Financial Services Companies, the Insurance Data Security Model Law as adopted and modified by various states and the Payment Card Industry Data Security Standard.
The Company has a Security Incident Response Framework in place. The framework is a set of coordinated procedures and tasks that the Company’s Incident Response team, under the direction of the CISO, executes with the goal of ensuring timely and effective resolution of cybersecurity incidents.
The Framework is a set of coordinated procedures and tasks that the Company’s Incident Response team, under the direction of the CISO, executes with the goal of ensuring timely and effective resolution of cybersecurity incidents. To maintain the robustness of the Framework, from time-to-time the Company conducts cybersecurity tabletop testing exercises.
In addition to its internal cybersecurity team, the Company uses internal and external auditors and, as appropriate, third-party consultants, service providers and assessors to review and test its processes.
These systems are designed, implemented and maintained with the goal of identifying, assessing and managing cybersecurity risks. In addition to its internal cybersecurity team, the Company uses internal and external auditors and, as appropriate, third-party consultants, service providers and assessors to review and test its processes.
The Company uses technologies and tools, as appropriate, to enhance cybersecurity, such as multifactor authentication, encryption, firewalls, intrusion detection and prevention systems, endpoint detection and response, vulnerability scanning, penetration testing, patch management and identity and access management systems. These systems are designed, implemented and maintained with the goal of identifying, assessing and managing cybersecurity risks.
These policies reinforce the data privacy and protection sections of the Company’s Code of Business Conduct and Ethics. The Company uses technologies and tools, as appropriate, to enhance cybersecurity, such as multifactor authentication, encryption, firewalls, intrusion detection and prevention systems, endpoint detection and response, vulnerability scanning, penetration testing, patch management and identity and access management systems.
The Company also provides regular targeted training on topics such as phishing and secure application development, among others. In addition to online training, employees are provided with cybersecurity related information through a number of different methods, including event-triggered awareness campaigns, recognition programs, security presentations, intranet articles, videos, system-generated communications, email publications and various simulation exercises.
In addition to online training, employees are provided with cybersecurity information through a number of different methods, including awareness campaigns, gamified activities, recognition programs, security presentations, intranet articles, videos, system-generated communications, email publications and various simulation exercises. 57 The Company has a Security Incident Response Framework (Framework) in place.
The Company also tracks industry and government intelligence sources for information about evolving cyber threats and deploys updates to its systems, as appropriate. The Company’s Cybersecurity team monitors and investigates suspicious events. Risk Assessment The Company performs an annual cybersecurity risk and control assessment as part of the Enterprise Risk Management team’s risk assessment processes.
For example, the Company participates in threat intelligence information-sharing networks, such as the Financial Services Information Sharing and Analysis Center (FS-ISAC). The Company also tracks industry and government intelligence sources for information about evolving cyber threats and deploys updates to its systems, as appropriate. The Company’s Cybersecurity team monitors and investigates suspicious events.
Item 1C. CYBERSECURITY Risk management and strategy The Company has implemented technologies and tools to evaluate its cybersecurity protections and maintain a cyber risk management strategy related to its technology infrastructure that includes monitoring emerging cybersecurity threats and assessing appropriate responsive measures.
CYBERSECURITY Risk management and strategy The Company has implemented technologies and tools to evaluate its cybersecurity protections and maintain a cyber risk management strategy related to its technology infrastructure that includes monitoring emerging cybersecurity threats and assessing appropriate responsive measures. 56 Risk Identification The Company’s Chief Information Security Officer (“CISO”) and Cybersecurity team are actively engaged within the cybersecurity community in order to monitor emerging trends and developments and share best practices for identifying and mitigating cyber threats.
The CISO and the Company’s Chief Technology and Operations Officer review and approve the cybersecurity assessment.
Risk Assessment The Company performs an annual cybersecurity risk and control assessment as part of the Enterprise Risk Management team’s risk assessment processes. The CISO and the Chief Financial Officer of the Company’s Technology group review and approve the cybersecurity assessment.
Removed
Risk Identification The Company’s Chief Information Security Officer (“CISO”) and Cybersecurity team are actively engaged within the cybersecurity community in order to monitor emerging trends and developments and share best practices for identifying and mitigating cyber threats. For example, the Company participates in threat intelligence information-sharing networks, such as the Financial Services Information Sharing and Analysis Center (FS-ISAC).
Added
The Company’s Chief Technology and Operations Officer reviews and approves the list of emerging, strategic and transformative risks upon which the Enterprise Risk Management team’s cybersecurity risk and control assessment processes are based.
Removed
The Company’s policies include, for example, Information and System Use policies for employee and non-employee system users. These policies reinforce the data privacy and protection sections of the Company’s Code of Business Conduct and Ethics.
Added
As the workforce, the work environment and the threat landscape continue to evolve, the Company seeks to evaluate related risks and implement appropriate controls. Risk Management The Company maintains cybersecurity policies and standards which align with the International Organization for Standardization (ISO) 27001 standard and the National Institute of Standards and Technology (NIST) Cybersecurity Framework.
Added
The Company also provides regular targeted training on topics such as artificial intelligence (AI) related risks, phishing and secure application development, among others.
Added
Additionally, our Procurement group has a framework to help identify and mitigate supplier risks, as well as enable management to make risk informed decisions.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Biggest changeThe Company owns six buildings in Hartford, Connecticut. The Company also owns buildings located in other areas of Connecticut; Norcross, Georgia; St. Paul, Minnesota; and Omaha, Nebraska. In the opinion of the Company’s management, the Company’s properties are adequate and suitable for its business as presently conducted and are adequately maintained.
Biggest changeThe Company owns six buildings in Hartford, Connecticut. The Company also owns buildings located in Windsor, Connecticut; Norcross, Georgia; St. Paul, Minnesota; and Omaha, Nebraska. In the opinion of the Company’s management, the Company’s properties are adequate and suitable for its business as presently conducted and are adequately maintained.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+0 added−2 removed7 unchanged
Biggest changeThe 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, in private transactions or otherwise.
Biggest changePeriod Beginning Period Ending Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions) Oct. 1, 2024 Oct. 31, 2024 233,172 $ 253.16 226,727 $ 5,232 Nov. 1, 2024 Nov. 30, 2024 439,128 $ 257.36 437,099 $ 5,120 Dec. 1, 2024 Dec. 31, 2024 314,959 $ 254.38 314,646 $ 5,040 Total 987,259 $ 255.41 978,472 $ 5,040 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, in private transactions or otherwise.
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 capital levels appropriate for the Company’s business operations, changes in levels of written premiums, funding of the Company’s qualified pension plan, capital requirements of the Company’s operating subsidiaries, legal requirements, regulatory constraints, other investment opportunities (including mergers and acquisitions and related financings), market conditions, changes in tax laws (including the Inflation Reduction Act) and other factors.
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 capital levels appropriate for the Company’s business operations, changes in levels of written premiums, funding of the Company’s qualified pension plan, capital requirements of the Company’s operating 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 dividends paid to shareholders in 2023 and 2022 and the declaration and payment of future dividends, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Financing Activities—Dividends.” 58 SHAREHOLDER RETURN PERFORMANCE GRAPH The following graph shows a five-year comparison of the cumulative total return to shareholders for the Company’s common stock and the common stock of companies included in the S&P 500 Index and the S&P 500 Property & Casualty Insurance Index, which the Company believes is the most appropriate comparative index.
For information regarding dividends paid to shareholders in 2024 and 2023 and the declaration and payment of future dividends, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Financing Activities—Dividends.” 59 SHAREHOLDER RETURN PERFORMANCE GRAPH The following graph shows a five-year comparison of the cumulative total return to shareholders for the Company’s common stock and the common stock of companies included in the S&P 500 Index and the S&P 500 Property & Casualty Insurance Index, which the Company believes is the most appropriate comparative index.
(2) Assumes $100 invested in common shares of The Travelers Companies, Inc. on December 31, 2018. (3) Companies in the S&P 500 Property & Casualty Insurance Index as of December 31, 2023 were the following: The Travelers Companies, Inc., Chubb Limited, Cincinnati Financial Corporation, The Progressive Corporation, The Allstate Corporation, Loews Corporation (CNA), W.R.
(2) Assumes $100 invested in common shares of The Travelers Companies, Inc. on December 31, 2019. (3) Companies in the S&P 500 Property & Casualty Insurance Index as of December 31, 2024 were the following: The Travelers Companies, Inc., Chubb Limited, Cincinnati Financial Corporation, The Progressive Corporation, The Allstate Corporation, Loews Corporation (CNA), W.R.
Berkley Corporation, Arch Capital Group Limited and The Hartford Financial Services Group, Inc. Returns of each of the companies included in this index have been weighted according to their respective market capitalizations.
Berkley Corporation, Arch Capital Group Limited, The Hartford Financial Services Group, Inc., Erie Indemnity Company and Assurant, Inc. Returns of each of the companies included in this index have been weighted according to their respective market capitalizations.
These shares consisted of shares retained to cover payroll withholding taxes in connection with the vesting of restricted stock unit awards and performance share awards, and shares used by employees to cover the price of certain stock options that were exercised.
These shares consisted of shares retained to cover payroll withholding taxes in connection with the vesting of restricted stock unit awards and performance share awards, and shares used by employees to cover the exercise price, as well as the related payroll withholding taxes, with respect to certain stock options that were exercised.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common stock is traded on the New York Stock Exchange under the symbol “TRV.” The number of holders of record of the Company’s common stock was 31,097 as of February 12, 2024.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common stock is traded on the New York Stock Exchange under the symbol “TRV.” The number of holders of record of the Company’s common stock was 29,387 as of February 7, 2025.
From January 1, 2007, the year prior to the financial crisis, through 59 December 31, 2023, the Company’s cumulative return to shareholders was 437% as compared to 372% for the S&P 500 Index and 336% for the S&P 500 Property & Casualty Insurance Index.
From January 1, 2007, the year prior to the financial crisis, through 60 December 31, 2024, the Company’s cumulative return to shareholders was 591% as compared to 490% for both the S&P 500 Index and the S&P 500 Property & Casualty Insurance Index.
The Company acquired 5,455 shares for a total cost of approximately $907,000 during the three months ended December 31, 2023 that were not part of the publicly announced share repurchase authorization.
The Company acquired 8,787 shares for a total cost of $2 million during the three months ended December 31, 2024 that were not part of the publicly announced share repurchase authorizations.
As of December 31, 2018 2019 2020 2021 2022 2023 The Travelers Companies, Inc. $ 100.00 $ 117.01 $ 123.27 $ 140.50 $ 171.99 $ 178.75 S&P 500 Index 100.00 131.47 155.65 200.29 163.98 207.04 S&P 500 Property & Casualty Insurance Index 100.00 125.87 133.84 157.27 186.95 207.04 ________________________________________ (1) The cumulative total return to shareholders is a concept used to compare the performance of a company’s stock over time.
As of December 31, 2019 2020 2021 2022 2023 2024 The Travelers Companies, Inc. $ 100.00 $ 105.36 $ 120.08 $ 146.99 $ 152.77 $ 196.72 S&P 500 Index 100.00 118.39 152.34 124.73 157.48 196.85 S&P 500 Property & Casualty Insurance Index 100.00 106.33 124.95 148.53 164.49 222.43 ________________________________________ (1) The cumulative total return to shareholders is a concept used to compare the performance of a company’s stock over time.
Removed
Period Beginning Period Ending Total number of shares purchased Average price paid per share (1) Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions) Oct. 1, 2023 Oct. 31, 2023 3,502 $ 143.00 — $ 6,105 Nov. 1, 2023 Nov. 30, 2023 1,404 $ 52.02 — $ 6,105 Dec. 1, 2023 Dec. 31, 2023 351,997 $ 185.72 351,448 $ 6,040 Total 356,903 $ 184.78 351,448 $ 6,040 ___________________________________________ (1) The average price paid per share includes the impact of the 1% federal excise tax imposed on share repurchase activity, net of any shares issued, as part of the Inflation Reduction Act of 2022.
Removed
During months when the value of shares issued exceeds the fair value of any shares repurchased, the reduction of the excise tax results in a reduction of the overall cost of shares repurchased.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeLosses Incurred / Unfavorable (Favorable) Prior Year Reserve Development for the Year Ended December 31, Estimated Ultimate Losses at December 31, (in millions, pre-tax and net of reinsurance) (1) 2023 2022 2021 2023 2022 2021 2021 PCS Serial Number: 15 — Winter storm (14) (13) 228 201 215 228 17 — Winter storm (39) (25) 508 444 483 508 29 — Severe wind storms (2) (12) 105 91 93 105 60 — Hurricane Ida 26 (81) 417 362 336 417 76 — Tornado outbreak (8) (18) 131 105 113 131 2022 PCS Serial Number: 33 — Severe wind and hail storms 1 137 n/a 138 137 n/a 35 — Severe wind and hail storms — 184 n/a 184 184 n/a 43 — Severe wind and hail storms (6) 122 n/a 116 122 n/a 61 — Hurricane Ian (76) 227 n/a 151 227 n/a 73 — Winter storm 158 512 n/a 670 512 n/a 2023 PCS Serial Number: 25 — Severe wind and hail storms 153 n/a n/a 153 n/a n/a 32 — Severe wind and hail storms 140 n/a n/a 140 n/a n/a 33 — Severe wind and hail storms 199 n/a n/a 199 n/a n/a 35 — Severe wind and hail storms 140 n/a n/a 140 n/a n/a 38 — Severe wind and hail storms 110 n/a n/a 110 n/a n/a 42 — Severe wind and hail storms 133 n/a n/a 133 n/a n/a 48 — Severe wind and hail storms 150 n/a n/a 150 n/a n/a 49 — Severe wind and hail storms 133 n/a n/a 133 n/a n/a 51 — Severe wind and hail storms 265 n/a n/a 265 n/a n/a 63 — Severe wind and hail storms 125 n/a n/a 125 n/a n/a 75 — Severe wind and hail storms 190 n/a n/a 190 n/a n/a ___________________________________________ n/a: not applicable.
Biggest changeLosses Incurred / Unfavorable (Favorable) Prior Year Reserve Development for the Year Ended December 31, Estimated Ultimate Losses at December 31, (in millions, pre-tax and net of reinsurance) (1) 2024 2023 2022 2024 2023 2022 2022 PCS Serial Number: 33 — Severe wind and hail storms (4) 1 137 134 138 137 35 — Severe wind and hail storms (3) — 184 181 184 184 43 — Severe wind and hail storms 1 (6) 122 117 116 122 61 — Hurricane Ian (1) (76) 227 150 151 227 73 — Winter storm 11 158 512 681 670 512 2023 PCS Serial Number: 25 — Severe wind and hail storms (6) 153 n/a 147 153 n/a 32 — Severe wind and hail storms (5) 140 n/a 135 140 n/a 33 — Severe wind and hail storms (10) 199 n/a 189 199 n/a 35 — Severe wind and hail storms — 140 n/a 140 140 n/a 38 — Severe wind and hail storms 3 110 n/a 113 110 n/a 42 — Severe wind and hail storms 4 133 n/a 137 133 n/a 48 — Severe wind and hail storms (6) 150 n/a 144 150 n/a 49 — Severe wind and hail storms 2 133 n/a 135 133 n/a 51 — Severe wind and hail storms (34) 265 n/a 231 265 n/a 63 — Severe wind and hail storms 5 125 n/a 130 125 n/a 75 — Severe wind and hail storms (17) 190 n/a 173 190 n/a 2024 PCS Serial Number: 26 — Severe wind and hail storms 261 n/a n/a 261 n/a n/a 39 — Severe wind and hail storms 250 n/a n/a 250 n/a n/a 42 — Severe wind and hail storms 161 n/a n/a 161 n/a n/a 44 — Severe wind and hail storms 171 n/a n/a 171 n/a n/a 45 — Severe wind and hail storms 159 n/a n/a 159 n/a n/a 46 — Severe wind and hail storms 182 n/a n/a 182 n/a n/a 61 — Severe wind and hail storms 144 n/a n/a 144 n/a n/a 77 — Hurricane Helene 733 n/a n/a 733 n/a n/a ___________________________________________ 66 n/a: not applicable.
The increase in income before income taxes primarily reflected the pre-tax impacts of (i) higher underwriting margins excluding catastrophe losses and prior year reserve development (“underlying underwriting margins”), (ii) higher net investment income and (iii) lower net realized investment losses, partially offset by (iv) higher catastrophe losses and (v) lower net favorable prior year reserve development.
The increase in income before income taxes primarily reflected the pre-tax impacts of (i) higher underwriting margins excluding catastrophe losses and prior year reserve development (“underlying underwriting margins”), (ii) higher net investment income, (iii) higher net favorable prior year reserve development and (iv) lower net realized investment losses, partially offset by (v) higher catastrophe losses.
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.
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.
Workers’ compensation reserves are typically analyzed in three components: indemnity losses, medical losses and claim adjustment expenses. 108 Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required workers’ compensation reserves (beyond those included in the general discussion section) include: Indemnity risk factors • Time required to recover from the injury • Degree of available transitional jobs • Degree of legal involvement • Changes in the interpretations and processes of the administrative bodies that oversee workers’ compensation claims • Future wage inflation for states that index benefits • Changes in the administrative policies of second injury funds Medical risk factors • Changes in the cost of medical treatments (including prescription drugs) and underlying fee schedules (“inflation”) • Availability of medical providers and medical wage impacts • Frequency of visits to health providers • Number of medical procedures given during visits to health providers • Types of health providers used • Type of medical treatments received • Use of preferred provider networks and other medical cost containment practices • Availability of new medical processes and equipment • Changes in the use of pharmaceutical drugs, including drugs for pain management • Degree of patient responsiveness to treatment General workers’ compensation risk factors • Frequency of reopening claims previously closed • Mortality trends of injured workers with lifetime benefits and medical treatment • Changes in statutory benefits, including due to presumption laws • The impact, if any, of potential future changes to government health insurance legislation Workers’ compensation book of business risk factors • Product mix • Injury type mix • Changes in underwriting standards Unanticipated changes in risk factors can affect reserves.
Workers’ compensation reserves are typically analyzed in three components: indemnity losses, medical losses and claim adjustment expenses. 109 Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required workers’ compensation reserves (beyond those included in the general discussion section) include: Indemnity risk factors • Time required to recover from the injury • Degree of available transitional jobs • Degree of legal involvement • Changes in the interpretations and processes of the administrative bodies that oversee workers’ compensation claims • Future wage inflation for states that index benefits • Changes in the administrative policies of second injury funds Medical risk factors • Changes in the cost of medical treatments (including prescription drugs) and underlying fee schedules (“inflation”) • Availability of medical providers and medical wage impacts • Frequency of visits to health providers • Number of medical procedures given during visits to health providers • Types of health providers used • Type of medical treatments received • Use of preferred provider networks and other medical cost containment practices • Availability of new medical processes and equipment • Changes in the use of pharmaceutical drugs, including drugs for pain management • Degree of patient responsiveness to treatment General workers’ compensation risk factors • Frequency of reopening claims previously closed • Mortality trends of injured workers with lifetime benefits and medical treatment • Changes in statutory benefits, including due to presumption laws • The impact, if any, of potential future changes to government health insurance legislation Workers’ compensation book of business risk factors • Product mix • Injury type mix • Changes in underwriting standards Unanticipated changes in risk factors can affect reserves.
This is supplemented with detailed custom analyses where needed. 107 Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required commercial automobile reserves (beyond those included in the general discussion section) include: Bodily injury and property damage liability risk factors • Trends in jury awards • Changes in the underlying court system • Changes in case law • Litigation trends • Increases in attorney involvement in, or impact on, claims • Frequency of claims with payment capped by policy limits • Change in average severity of accidents, or proportion of severe accidents, including the impact of inflation • Changes in auto safety technology • Subrogation opportunities • Changes in claim handling philosophies • Frequency of visits to health providers • Number of medical procedures given during visits to health providers • Types of health providers used • Types of medical treatments received • Changes in cost of medical treatments • Degree of patient responsiveness to treatment Commercial automobile book of business risk factors • Changes in policy provisions (e.g., deductibles, policy limits, endorsements, etc.) • Changes in mix of insured vehicles (e.g., long haul trucks versus local and smaller vehicles, fleet risks versus non-fleets) • Changes in underwriting standards Unanticipated changes in risk factors can affect reserves.
This is supplemented with detailed custom analyses where needed. 108 Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required commercial automobile reserves (beyond those included in the general discussion section) include: Bodily injury and property damage liability risk factors • Trends in jury awards • Changes in the underlying court system • Changes in case law • Litigation trends • Increases in attorney involvement in, or impact on, claims • Frequency of claims with payment capped by policy limits • Change in average severity of accidents, or proportion of severe accidents, including the impact of inflation • Changes in auto safety technology • Subrogation opportunities • Changes in claim handling philosophies • Frequency of visits to health providers • Number of medical procedures given during visits to health providers • Types of health providers used • Types of medical treatments received • Changes in cost of medical treatments • Degree of patient responsiveness to treatment Commercial automobile book of business risk factors • Changes in policy provisions (e.g., deductibles, policy limits, endorsements, etc.) • Changes in mix of insured vehicles (e.g., long haul trucks versus local and smaller vehicles, fleet risks versus non-fleets) • Changes in underwriting standards Unanticipated changes in risk factors can affect reserves.
Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required International and other reserves (beyond those included in the general discussion section, and in the Personal Automobile, Homeowners, General Liability, Commercial Property, Commercial Automobile and Surety discussions above) include: International and other risk factors • Changes in claim handling procedures, including those of the primary carriers • Changes in policy provisions or court interpretation of such provision • Economic trends • New theories of liability • Trends in jury awards • Changes in the propensity to sue • Changes in statutes of limitations • Changes in the underlying court system • Distortions from losses resulting from large single accounts or single issues • Changes in tort law • Changes in claim adjuster office structure (causing distortions in the data) • Changes in foreign currency exchange rates 113 International and other book of business risk factors • Changes in policy provisions (e.g., deductibles, policy limits, endorsements, “claims-made” language) • Changes in underwriting standards • Product mix (e.g., size of account, industries insured, jurisdiction mix) Unanticipated changes in risk factors can affect reserves.
Examples of common risk factors, or perceptions thereof, that could change and, thus, affect the required International and other reserves (beyond those included in the general discussion section, and in the Personal Automobile, Homeowners, General Liability, Commercial Property, Commercial Automobile and Surety discussions above) include: International and other risk factors • Changes in claim handling procedures, including those of the primary carriers • Changes in policy provisions or court interpretation of such provision • Economic trends • New theories of liability • Trends in jury awards • Changes in the propensity to sue • Changes in statutes of limitations • Changes in the underlying court system • Distortions from losses resulting from large single accounts or single issues • Changes in tort law • Changes in claim adjuster office structure (causing distortions in the data) • Changes in foreign currency exchange rates 114 International and other book of business risk factors • Changes in policy provisions (e.g., deductibles, policy limits, endorsements, “claims-made” language) • Changes in underwriting standards • Product mix (e.g., size of account, industries insured, jurisdiction mix) Unanticipated changes in risk factors can affect reserves.
As compared to natural catastrophes, modeling for man-made catastrophes, such as terrorism and cyber events, is even more difficult and less reliable, and for some events (both natural and man-made), models are either in early stages of development and, therefore, not widely adopted, or are not available. 86 For more information about the Company’s exposure to catastrophe losses, see “Item 1A—Risk Factors—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 our results of operations, our financial position and/or liquidity, and could adversely impact our ratings, our ability to raise capital and the availability and cost of reinsurance” and “Item 1A—Risk Factors—We may be adversely affected if our pricing and capital models provide materially different indications than actual results.” CHANGING CLIMATE CONDITIONS Severe weather events over the last two decades underscore the unpredictability of climate trends.
As compared to natural catastrophes, modeling for man-made catastrophes, such as terrorism and cyber events, is even more difficult and less reliable, and for some events (both natural and man-made), models are either in early stages of development and, therefore, not widely adopted, or are not available. 87 For more information about the Company’s exposure to catastrophe losses, see “Item 1A—Risk Factors—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 our results of operations, our financial position and/or liquidity, and could adversely impact our ratings, our ability to raise capital and the availability and cost of reinsurance” and “Item 1A—Risk Factors—We may be adversely affected if our pricing and capital models provide materially different indications than actual results.” CHANGING CLIMATE CONDITIONS Severe weather events over the last two decades underscore the unpredictability of climate trends.
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, in private transactions or otherwise. The authorizations do not have a stated expiration date.
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, in private transactions or otherwise. The authorizations do not have a 94 stated expiration date.
Asbestos reserves also include amounts related to certain policyholders with whom the Company has entered into permanent settlement agreements, which are based on the expected payout for each policyholder under the applicable agreement. 75 Additionally, a portion of the asbestos reserves relates to assumed reinsurance contracts primarily consisting of reinsurance of excess coverage, including various pool participations.
Asbestos reserves also include amounts related to certain policyholders with whom the Company has entered into permanent settlement agreements, which are based on the expected payout for each policyholder under the applicable agreement. Additionally, a portion of the asbestos reserves relates to assumed reinsurance contracts, primarily consisting of reinsurance of excess coverage, including various pool participations.
Historically, the one-year change in the reserve estimate for this product line (excluding Personal Insurance Other, which for statutory reporting purposes is included with other lines of business) over the last nine years has varied from -28% to 3% (averaging -7%) for the Company, and from -5% to 2% (averaging -1%) for the industry overall.
Historically, the one-year change in the reserve estimate for this product line (excluding Personal Insurance Other, which for statutory reporting purposes is included with other lines of business) over the last nine years has varied from -28% to 3% (averaging -7%) for the Company, and from -3% to 2% (averaging -1%) for the industry overall.
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.
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 85 investments, the net unrealized investment loss is not expected to meaningfully impact the Company’s assessment of capital adequacy or liquidity.
For more information regarding the Company’s investments in commercial mortgage-backed securities, see note 3 of the notes to the consolidated financial statements. 83 Equity Securities, Real Estate and Short-Term Investments See note 1 of the notes to the consolidated financial statements for further information about these invested asset classes.
For more information regarding the Company’s investments in commercial mortgage-backed securities, see note 3 of the notes to the consolidated financial statements. Equity Securities, Real Estate and Short-Term Investments See note 1 of the notes to the consolidated financial statements for further information about these invested asset classes.
Historically, the one-year change in the reserve estimate for this product line, excluding estimated asbestos and environmental amounts, over the last nine years has varied from -5% to 4% (averaging 0%) for the Company, and from -3% to 1% (averaging 0%) for the industry overall.
Historically, the one-year change in the reserve estimate for this product line, excluding estimated asbestos and environmental amounts, over the last nine years has varied from -5% to 4% (averaging 0%) for the Company, and from -3% to 3% (averaging 0%) for the industry overall.
Based on the proprietary and third-party models utilized by the Company, the tables below set forth, as of December 31, 2023, the probabilities that estimated losses, comprising claims and allocated claim adjustment expenses (but excluding unallocated claim adjustment expenses), from a single event occurring in a one-year timeframe will equal or exceed the indicated loss amounts (expressed in dollars, net of tax, and as a percentage of the Company’s common equity).
Based on the proprietary and third-party models utilized by the Company, the tables below set forth, as of December 31, 2024, the probabilities that estimated losses, comprising claims and allocated claim adjustment expenses (but excluding unallocated claim adjustment expenses), from a single event occurring in a one-year timeframe will equal or exceed the indicated loss amounts (expressed in dollars, net of tax, and as a percentage of the Company’s common equity).
Actuarial techniques that rely on a stable pattern of loss development are generally not applicable to low frequency, high severity claims. 109 Surety has certain components that are generally considered short tail coverages with short reporting lags, although large individual construction and commercial surety contracts can result in a long settlement tail, based on the length and complexity of the construction project(s) or commercial transaction being bonded.
Actuarial techniques that rely on a stable pattern of loss development are generally not applicable to low frequency, high severity claims. 110 Surety has certain components that are generally considered short tail coverages with short reporting lags, although large individual construction and commercial surety contracts can result in a long settlement tail, based on the length and complexity of the construction project(s) or commercial transaction being bonded.
In addition to the regulatory restrictions on the amount of dividends that can be paid by the Company’s U.S. insurance subsidiaries, the maximum amount of dividends that may be paid to the Company’s shareholders is also limited, to a lesser degree, by certain covenants contained in its line of credit agreement with a syndicate of financial institutions that require the 97 Company to maintain a minimum consolidated net worth as described in note 9 of the notes to the consolidated financial statements.
In addition to the regulatory restrictions on the amount of dividends that can be paid by the Company’s U.S. insurance subsidiaries, the maximum amount of dividends that may be paid to the Company’s shareholders is also limited, to a lesser degree, by certain covenants contained in its line of credit agreement with a syndicate of financial institutions that require the 98 Company to maintain a minimum consolidated net worth as described in note 9 of the notes to the consolidated financial statements.
It is possible that changes in economic conditions, the supply chain, the labor market and geopolitical tensions, 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.
It is possible that changes in economic conditions, the supply chain, international trade, the labor market and geopolitical tensions, 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.
Thus, in almost all cases, it is impossible to discretely measure the effect of a single risk factor and construct a meaningful sensitivity expectation. 103 In order to provide information on reasonably possible reserving changes by product line, the historical changes in year-end claims and claim adjustment expense reserves over a one-year period are provided for the U.S. product lines.
Thus, in almost all cases, it is impossible to discretely measure the effect of a single risk factor and construct a meaningful sensitivity expectation. 104 In order to provide information on reasonably possible reserving changes by product line, the historical changes in year-end claims and claim adjustment expense reserves over a one-year period are provided for the U.S. product lines.
While an environment of higher interest rates during 2022 and 2023 resulted in significant net unrealized investment losses, the net unrealized loss 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 high-quality fixed maturity investments to maturity.
While an environment of higher interest rates during 2023 and 2024 resulted in significant net unrealized investment losses, the net unrealized loss 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 high-quality fixed maturity investments to maturity.
The exact boundary points of these ranges are more qualitative than quantitative in nature, as no clear line of demarcation exists to determine when the set of underlying assumptions for an estimation method switches from being reasonable to unreasonable. 100 As a result, the Company does not believe that the endpoints of these ranges are or would be comparable across companies.
The exact boundary points of these ranges are more qualitative than quantitative in nature, as no clear line of demarcation exists to determine when the set of underlying assumptions for an estimation method switches from being reasonable to unreasonable. 101 As a result, the Company does not believe that the endpoints of these ranges are or would be comparable across companies.
The reserves associated with large claims are then analyzed utilizing various methods, such as: 102 • Estimating the number of large claims and their average values based on historical trends from prior accident periods, adjusted for the current environment and supplemented with actual data for the accident year analyzed to the extent available. • Utilizing individual claim adjuster estimates of the large claims, combined with continual monitoring of the aggregate accuracy of such claim adjuster estimates.
The reserves associated with large claims are then analyzed utilizing various methods, such as: 103 • Estimating the number of large claims and their average values based on historical trends from prior accident periods, adjusted for the current environment and supplemented with actual data for the accident year analyzed to the extent available. • Utilizing individual claim adjuster estimates of the large claims, combined with continual monitoring of the aggregate accuracy of such claim adjuster estimates.
The Company’s year-to-year changes are driven by, and are based on, observed events during the year. The Company believes that its range of historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line. Commercial multi-peril reserves (excluding asbestos and environmental reserves) represent approximately 9% of the Company’s total claims and claim adjustment expense reserves.
The Company’s year-to-year changes are driven by, and are based on, observed events during the year. The Company believes that its range of historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line. Commercial multi-peril reserves (excluding asbestos and environmental reserves) represent approximately 10% of the Company’s total claims and claim adjustment expense reserves.
The Company’s year-to-year changes are driven by, and are based on, observed events during the year. The Company believes that its range of historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line. General liability reserves (excluding asbestos and environmental) represent approximately 23% of the Company’s total claims and claim adjustment expense reserves.
The Company’s year-to-year changes are driven by, and are based on, observed events during the year. The Company believes that its range of historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line. General liability reserves (excluding asbestos and environmental) represent approximately 24% of the Company’s total claims and claim adjustment expense reserves.
If the Company is unable to 87 implement risk-based pricing, modify policy terms or reduce exposures to the extent necessary to address rising losses related to catastrophes and smaller scale weather events (should those increased losses occur), its business may be adversely affected. See “Item 1—Business—Regulation—U.S.
If the Company is unable to 88 implement risk-based pricing, modify policy terms or reduce exposures to the extent necessary to address rising losses related to catastrophes and smaller scale weather events (should those increased losses occur), its business may be adversely affected. See “Item 1—Business—Regulation—U.S.
Product lines with greater claim complexity, such as for certain surety and construction exposures, have inherently greater estimation uncertainty. 101 Actuaries have to exercise a considerable degree of judgment in the evaluation of all these factors in their analysis of reserves. The human element in the application of actuarial judgment is unavoidable when faced with material uncertainty.
Product lines with greater claim complexity, such as for certain surety and construction exposures, have inherently greater estimation uncertainty. 102 Actuaries have to exercise a considerable degree of judgment in the evaluation of all these factors in their analysis of reserves. The human element in the application of actuarial judgment is unavoidable when faced with material uncertainty.
As an indicator of the causal effect that a change in one or more risk factors could have on reserves for commercial multi-peril (excluding asbestos and environmental), a 1% increase (decrease) in incremental paid loss development for each future calendar year could result in a 1.3% increase (decrease) in claims and claim adjustment expense reserves.
As an indicator of the causal effect that a change in one or more risk factors could have on reserves for commercial multi-peril (excluding asbestos and environmental), a 1% increase (decrease) in incremental paid loss development for each future calendar year could result in a 1.4% increase (decrease) in claims and claim adjustment expense reserves.
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 by historical standards during 2024.
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 by historical standards during 2025.
As an indicator of the causal effect that a change in one or more risk factors could have on reserves for International and other (excluding asbestos and environmental), a 1% increase (decrease) in incremental paid loss development for each future calendar year could result in a 1.3% increase (decrease) in claims and claim adjustment expense reserves.
As an indicator of the causal effect that a change in one or more risk factors could have on reserves for International and other (excluding asbestos and environmental), a 1% increase (decrease) in incremental paid loss development for each future calendar year could result in a 1.4% increase (decrease) in claims and claim adjustment expense reserves.
At December 31, 2023, 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 has no senior notes or junior subordinated debentures maturing until April 2026, at which time $200 million of senior notes will mature.
At December 31, 2024, 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 has no senior notes or junior subordinated debentures maturing until April 2026, at which time $200 million of senior notes will mature.
Due to the subjective nature of the Company’s analysis and estimates of future cash flows, along with the judgment that must be applied in the analysis, it is possible that the Company could reach a different conclusion whether or not to impair a security 114 if it had access to additional information about the issuer.
Due to the subjective nature of the Company’s analysis and estimates of future cash flows, along with the judgment that must be applied in the analysis, it is possible that the Company could reach a different conclusion whether or not to impair a security 115 if it had access to additional information about the issuer.
Year-to-year comparisons between 2022 and 2021 have been omitted from this Form 10-K, but may be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Year-to-year comparisons between 2023 and 2022 have been omitted from this Form 10-K, but may be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
In cases where the Company did not receive a release from the claimant, the amount due from 88 the life insurance company related to the structured settlement is included in the Company’s consolidated balance sheet as a reinsurance recoverable and the related claim cost is included in the liability for claims and claim adjustment expense reserves, as the Company retains the contingent liability to the claimant.
In cases where the Company did not receive a release from the claimant, the amount due from the life insurance company related to the structured settlement is included in the Company’s consolidated balance sheet as a reinsurance recoverable and the related claim cost is included in the liability for claims and claim adjustment expense reserves, 89 as the Company retains the contingent liability to the claimant.
As an indicator of the causal effect that a change in one or more risk factors could have on reserves for fidelity and surety, a 1% increase (decrease) in incremental paid loss development for each future calendar year could result in a 1.5% increase (decrease) in claims and claim adjustment expense reserves.
As an indicator of the causal effect that a change in one or more risk factors could have on reserves for fidelity and surety, a 1% increase (decrease) in incremental paid loss development for each future calendar year could result in a 1.7% increase (decrease) in claims and claim adjustment expense reserves.
The timing and actual number of shares to be repurchased in the future will depend on a variety of additional factors, including the Company’s financial position, earnings, share price, catastrophe losses, maintaining capital levels appropriate for the Company’s business operations, changes in levels of written premiums, funding of the Company’s qualified pension plan, capital requirements of the Company’s operating subsidiaries, legal requirements, regulatory constraints, other investment opportunities (including mergers and acquisitions and related financings), market conditions, changes in tax laws (including the Inflation Reduction Act) and other factors.
The timing and actual number of shares to be repurchased in the future will depend on a variety of additional factors, including the Company’s financial position, earnings, share price, catastrophe losses, maintaining capital levels appropriate for the Company’s business operations, changes in levels of written premiums, funding of the Company’s qualified pension plan, capital requirements of the Company’s operating subsidiaries, legal requirements, regulatory constraints, other investment opportunities (including mergers and acquisitions and related financings), market conditions, changes in tax laws and other factors.
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 at December 31, 2023.
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 at December 31, 2024.
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 at December 31, 2023.
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 at December 31, 2024.
Historically, the one-year change in the reserve estimate for this product line over the last nine years has varied from -4% to 3% (averaging -1%) for the Company, and from -2% to 4% (averaging 0%) for the industry overall. The Company’s year-to-year changes are driven by, and are based on, observed events during the year.
Historically, the one-year change in the reserve estimate for this product line over the last nine years has varied from -5% to 3% (averaging -1%) for the Company, and from -2% to 4% (averaging 1%) for the industry overall. The Company’s year-to-year changes are driven by, and are based on, observed events during the year.
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 capital levels appropriate for the Company’s business operations, changes in levels of written premiums, funding of the Company’s qualified pension plan, capital requirements of the Company’s operating subsidiaries, legal requirements, regulatory constraints, other investment opportunities (including mergers and acquisitions and related financings), market conditions, changes in tax laws (including the Inflation Reduction Act) and other factors.
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 capital levels appropriate for the Company’s business operations, changes in levels of written premiums, funding of the Company’s qualified pension plan, capital requirements of the Company’s operating subsidiaries, legal requirements, regulatory constraints, other investment opportunities (including mergers and acquisitions and related financings), market conditions, changes in tax laws and other factors.
Included in 90 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.
Included in other investments are private equity, hedge fund and real estate partnerships that are accounted for under the equity method of 91 accounting and typically report their financial statement information to the Company one month to three months following the end of the reporting period.
The current target allocations for plan assets are 55% to 65% equity securities and 20% to 40% fixed income securities, with the remainder allocated to short-term securities. For 2024, the Company plans to apply an expected long-term rate of return on plan assets of 7.00%, comparable with 2023.
The current target allocations for plan assets are 55% to 65% equity securities and 20% to 40% fixed income securities, with the remainder allocated to short-term securities. For 2025, the Company plans to apply an expected long-term rate of return on plan assets of 7.00%, comparable with 2024.
This recent accident year uncertainty is relevant to property because 112 weather-related events in the second half of the year may not be completely resolved until the following year. Reserve estimates associated with catastrophes, including wildfires in recent years, may take even longer to resolve.
This recent accident year uncertainty is relevant to property because 113 weather-related events in the second half of the year may not be completely resolved until the following year. Reserve estimates associated with catastrophes, including wildfires in recent years, may take even longer to resolve.
Borrowers of these securities provide collateral equal to at least 102% of the market value of the loaned securities plus accrued interest. The Company did not incur any investment losses in its securities lending program for the years ended December 31, 2023 and 2022.
Borrowers of these securities provide collateral equal to at least 102% of the market value of the loaned securities plus accrued interest. The Company did not incur any investment losses in its securities lending program for the years ended December 31, 2024 and 2023.
Additionally, the amounts are as of December 31, 2023, reflect the reinsurance program in place at January 1, 2024, are net of reinsurance, after-tax, and exclude unallocated claim adjustment expenses, which historically have been less than 10% of loss estimates.
Additionally, the amounts are as of December 31, 2024, reflect the reinsurance program in place at January 1, 2025, are net of reinsurance, after-tax, and exclude unallocated claim adjustment expenses, which historically have been less than 10% of loss estimates.
In the event that the life insurance company fails to make the required annuity payments, the Company would be required to make such payments. The following table presents the Company’s top five groups by structured settlements at December 31, 2023 (in millions). Also included is the A.M.
In the event that the life insurance company fails to make the required annuity payments, the Company would be required to make such payments. The following table presents the Company’s top five groups by structured settlements at December 31, 2024 (in millions). Also included is the A.M.
Property and casualty insurance market conditions are expected to remain competitive during 2024 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.
Property and casualty insurance market conditions are expected to remain competitive during 2025 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.
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. At December 31, 2023, the Company had no open U.S. Treasury futures contracts. The Company regularly evaluates its investment alternatives and mix.
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. At December 31, 2024, the Company had no open U.S. Treasury futures contracts. The Company regularly evaluates its investment alternatives and mix.
Historically, the one-year change in the reserve estimate for this product line, excluding estimated asbestos and environmental amounts, over the last nine years has varied from -4% to 6% (averaging 0%) for the Company, and from -2% to 3% (averaging 0%) for the industry overall.
Historically, the one-year change in the reserve estimate for this product line, excluding estimated asbestos and environmental amounts, over the last nine years has varied from -4% to 6% (averaging 1%) for the Company, and from -2% to 3% (averaging 1%) for the industry overall.
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. 63 Net Realized Investment Gains (Losses) The following table sets forth information regarding the Company’s net pre-tax realized investment gains (losses).
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. 64 Net Realized Investment Gains (Losses) The following table sets forth information regarding the Company’s net pre-tax realized investment gains (losses).
The following table presents the amount of losses recorded by the Company for significant catastrophes that occurred in 2023, 2022 and 2021, the amount of net unfavorable (favorable) prior year reserve development recognized in 2023 and 2022 for catastrophes that occurred in 2022 and 2021, and the estimate of ultimate losses for those catastrophes at December 31, 2023, 2022 and 2021.
The following table presents the amount of losses recorded by the Company for significant catastrophes that occurred in 2024, 2023 and 2022, the amount of net unfavorable (favorable) prior year reserve development recognized in 2024 and 2023 for catastrophes that occurred in 2023 and 2022, and the estimate of ultimate losses for those catastrophes at December 31, 2024, 2023 and 2022.
The table includes $544 million of short-term securities which have the highest ratings issued by external rating agencies for short-term issuances. For purposes of this table, the short-term securities, which are rated “A-1+” and/or “P-1,” are included as “Aaa” rated securities.
The table includes $631 million of short-term securities which have the highest ratings issued by external rating agencies for short-term issuances. For purposes of this table, the short-term securities, which are rated “A-1+” and/or “P-1,” are included as “Aaa” rated securities.
Approximately 33% 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).
Approximately 30% 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).
The Company may choose to accelerate the timing within 2024 and/or increase the amount of dividends from its insurance subsidiaries in 2024, which could result in certain dividends being subject to approval by the Connecticut Insurance Department prior to payment.
The Company may choose to accelerate the timing within 2025 and/or increase the amount of dividends from its insurance subsidiaries in 2025, which could result in certain dividends being subject to approval by the Connecticut Insurance Department prior to payment.
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 at December 31, 2023.
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 at December 31, 2024.
The Company does not have a minimum funding requirement for the qualified domestic pension plan for 2024 and does not anticipate having a minimum funding requirement in 2025. The Company has significant discretion in making contributions above those necessary to satisfy the minimum funding requirements.
The Company does not have a minimum funding requirement for the qualified domestic pension plan for 2025 and does not anticipate having a minimum funding requirement in 2026. The Company has significant discretion in making contributions above those necessary to satisfy the minimum funding requirements.
The Company believes that its range of historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line. Commercial automobile reserves represent approximately 9% of the Company’s total claims and claim adjustment expense reserves. The Company’s change in reserve estimate for this product line was 4% for 2023, 0% for 2022 and -2% for 2021.
The Company believes that its range of historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line. Commercial automobile reserves represent approximately 9% of the Company’s total claims and claim adjustment expense reserves. The Company’s change in reserve estimate for this product line was 0% for 2024, 4% for 2023 and 0% for 2022.
Item 7. 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 for the years ended December 31, 2023 and 2022, including year-to-year comparisons between 2023 and 2022.
Item 7. 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 for the years ended December 31, 2024 and 2023, including year-to-year comparisons between 2024 and 2023.
Refer to the “Net Investment Income” section of the “Consolidated Results of Operations” discussion for a description of the factors contributing to the increase in the Company’s consolidated net investment income in 2023 as compared with 2022.
Refer to the “Net Investment Income” section of the “Consolidated Results of Operations” discussion for a description of the factors contributing to the increase in the Company’s consolidated net investment income in 2024 as compared with 2023.
Refer to the “Net Investment Income” section of the “Consolidated Results of Operations” discussion for a description of the factors contributing to the increase in the Company’s consolidated net investment income in 2023 as compared with 2022.
Refer to the “Net Investment Income” section of the “Consolidated Results of Operations” discussion for a description of the factors contributing to the increase in the Company’s consolidated net investment income in 2024 as compared with 2023.
Refer to the “Net Investment Income” section of the “Consolidated Results of Operations” discussion for a description of the factors contributing to the increase in the Company’s consolidated net investment income in 2023 compared with 2022.
Refer to the “Net Investment Income” section of the “Consolidated Results of Operations” discussion for a description of the factors contributing to the increase in the Company’s consolidated net investment income in 2024 compared with 2023.
The Company’s change in reserve estimate for this product line related to the last nine accident years, which excludes the impacts of increases in asbestos and environmental reserves, the extension of the statute of limitations for childhood sexual molestation claims and increases in reserves in the Company’s runoff operations, was 4% for 2023, 2% for 2022 and 1% for 2021.
The Company’s change in reserve estimate for this product line related to the last nine accident years, which excludes the impacts of increases in asbestos and environmental reserves, the extension of the statute of limitations for childhood sexual molestation claims and increases in reserves in the Company’s runoff operations, was 4% for 2024, 4% for 2023 and 2% for 2022.
The 2023 change primarily reflected better than expected loss experience for accident years 2021 and prior. The 2022 change primarily reflected better than expected loss experience for accident years 2021 and prior. The 2021 change primarily reflected better than expected loss experience for accident years 2020 and prior. Fidelity and Surety Fidelity is generally considered a short tail coverage.
The 2024 change primarily reflected better than expected loss experience for accident years 2022 and prior. The 2023 change primarily reflected better than expected loss experience for accident years 2021 and prior. The 2022 change primarily reflected better than expected loss experience for accident years 2021 and prior. Fidelity and Surety Fidelity is generally considered a short tail coverage.
Historically, the one-year change in the reserve estimate for this product line over the last nine years has varied from -36% to -10% (averaging -21%) for the Company, and from -21% to 0% (averaging -14%) for the industry overall. The Company’s year-to-year changes are driven by, and are based on, observed events during the year.
Historically, the one-year change in the reserve estimate for this product line over the last nine years has varied from -36% to -10% (averaging -20%) for the Company, and from -21% to 0% (averaging -13%) for the industry overall. The Company’s year-to-year changes are driven by, and are based on, observed events during the year.
The Company’s ratio of debt-to-total capital excluding after-tax net unrealized investment losses included in shareholders’ equity of 22.3% at December 31, 2023 was within the Company’s target range of 15% to 25%. Credit Agreement . The Company is a party to a five-year, $1.0 billion revolving credit agreement with a syndicate of financial institutions that expires on June 15, 2027.
The Company’s ratio of debt-to-total capital excluding after-tax net unrealized investment losses included in shareholders’ equity of 20.3% at December 31, 2024 was within the Company’s target range of 15% to 25%. Credit Agreement . The Company is a party to a five-year, $1.0 billion revolving credit agreement with a syndicate of financial institutions that expires on June 15, 2027.
Based on its funded status at December 31, 2023, the Company does not currently anticipate making a voluntary contribution to the qualified domestic pension plan in 2024.
Based on its funded status at December 31, 2024, the Company does not currently anticipate making a voluntary contribution to the qualified domestic pension plan in 2025.
Many components of general liability are not subject to material latency or claim complexity risks and hence have materially 104 less uncertainty than the previously mentioned components.
Many components of general liability are not subject to material latency or claim complexity risks and hence have materially 105 less uncertainty than the previously mentioned components.
Each of the Company’s U.S. insurance subsidiaries had policyholders’ surplus at December 31, 2023 significantly above the level at which any RBC regulatory action would occur.
Each of the Company’s U.S. insurance subsidiaries had policyholders’ surplus at December 31, 2024 significantly above the level at which any RBC regulatory action would occur.
Climate studies by government agencies, academic institutions, catastrophe modeling organizations and other groups indicate that an increase in frequency and/or intensity of hurricanes, heavy precipitation events and associated river, urban and flash flooding, sea level rise, droughts, heat waves and wildfires has occurred, and can be expected into the future.
Climate studies by government agencies, academic institutions, catastrophe modeling organizations and other groups indicate that an increase in frequency and/or intensity of hurricanes, hail and severe convective storms, heavy precipitation events and associated river, urban and flash flooding, sea level rise, droughts, heat waves and wildfires has occurred, and can be expected into the future.
Cash Requirements from Contractual and Other Obligations The following table summarizes, as of December 31, 2023, the Company’s future payments under material contractual obligations and estimated claims and claim-related payments. The table includes only liabilities at December 31, 2023 that are expected to be settled in cash.
Cash Requirements from Contractual and Other Obligations The following table summarizes, as of December 31, 2024, the Company’s estimated future payments under material contractual obligations and estimated claims and claim-related payments. The table includes only obligations at December 31, 2024 that are expected to be settled in cash.
The Company’s change in reserve estimate for this product line (excluding Personal Insurance Other) was -9% for 2023, -2% for 2022 and -9% for 2021. The 2023 change primarily reflected better than expected loss experience for catastrophe and non-catastrophe losses for accident years 2017 through 2022.
The Company’s change in reserve estimate for this product line (excluding Personal Insurance Other) was -12% for 2024, -9% for 2023 and -2% for 2022. The 2024 change primarily reflected better than expected loss experience for catastrophe and non-catastrophe losses for accident years 2017 through 2023.
Net environmental reserves were $382 million, $371 million and $321 million at December 31, 2023, 2022 and 2021, respectively. UNCERTAINTY REGARDING ADEQUACY OF ASBESTOS AND ENVIRONMENTAL RESERVES As a result of the processes and procedures discussed above, management believes that the reserves carried for asbestos and environmental claims are appropriately established based upon known facts, current law and management’s judgment.
Net environmental reserves were $380 million, $382 million and $371 million at December 31, 2024, 2023 and 2022, respectively. UNCERTAINTY REGARDING ADEQUACY OF ASBESTOS AND ENVIRONMENTAL RESERVES As a result of the processes and procedures discussed above, management believes that the reserves carried for asbestos and environmental claims are appropriately established based upon known facts, current law and management’s judgment.
Each of the Company’s foreign insurance subsidiaries had capital significantly above their respective regulatory requirements at December 31, 2023. 98 Off-Balance Sheet Arrangements The Company has entered into certain contingent obligations for guarantees related to selling businesses to third parties, certain investments, certain insurance policy obligations of former insurance subsidiaries and various other indemnifications.
Each of the Company’s foreign insurance subsidiaries had capital significantly above their respective regulatory requirements at December 31, 2024. 99 Off-Balance Sheet Arrangements The Company has entered into certain contingent obligations for guarantees related to selling businesses to third parties, certain investments, certain insurance policy obligations of former insurance subsidiaries and various other indemnifications.
Dollars (in billions) Likelihood of Exceedance (1) Single U.S. and Canadian Hurricane Single U.S. and Canadian Earthquake 2.0% (1-in-50) $ 1.8 $ 0.7 1.0% (1-in-100) $ 2.1 $ 1.1 0.4% (1-in-250) $ 2.7 $ 2.1 0.1% (1-in-1,000) $ 6.9 $ 3.1 85 Percentage of Common Equity (2) Likelihood of Exceedance Single U.S. and Canadian Hurricane Single U.S. and Canadian Earthquake 2.0% (1-in-50) 6 % 2 % 1.0% (1-in-100) 8 % 4 % 0.4% (1-in-250) 10 % 7 % 0.1% (1-in-1,000) 25 % 11 % ___________________________________________ (1) An event that has, for example, a 2% likelihood of exceedance is sometimes described as a “1-in-50 year event.” As noted above, however, the probabilities in the table represent the likelihood of losses from a single event equaling or exceeding the indicated threshold loss amount in a one-year timeframe, not over a multi-year timeframe.
Dollars (in billions) Likelihood of Exceedance (1) Single U.S. and Canadian Hurricane Single U.S. and Canadian Earthquake 2.0% (1-in-50) $ 2.0 $ 0.7 1.0% (1-in-100) $ 2.4 $ 1.2 0.4% (1-in-250) $ 3.7 $ 2.0 0.1% (1-in-1,000) $ 9.0 $ 3.2 86 Percentage of Common Equity (2) Likelihood of Exceedance Single U.S. and Canadian Hurricane Single U.S. and Canadian Earthquake 2.0% (1-in-50) 6 % 2 % 1.0% (1-in-100) 8 % 4 % 0.4% (1-in-250) 12 % 6 % 0.1% (1-in-1,000) 29 % 10 % ___________________________________________ (1) An event that has, for example, a 2% likelihood of exceedance is sometimes described as a “1-in-50 year event.” As noted above, however, the probabilities in the table represent the likelihood of losses from a single event equaling or exceeding the indicated threshold loss amount in a one-year timeframe, not over a multi-year timeframe.
These securities in an unrealized loss position represented less than 1% of both the amortized cost and fair value of the fixed maturity portfolio at December 31, 2023 and accounted for 1.2% of the total gross pre-tax unrealized investment loss in the fixed maturity portfolio at December 31, 2023.
These securities in an unrealized loss position represented less than 1% of both the amortized cost and fair value of the fixed maturity portfolio at December 31, 2024 and accounted for less than 1% of the total gross pre-tax unrealized investment loss in the fixed maturity portfolio at December 31, 2024.
The Company’s change in reserve estimate for this product line related to the last nine accident years, which excludes the impacts of increases in asbestos and environmental reserves and increases in reserves in the Company’s runoff operations, was 0% for 2023, -2% for 2022 and 0% for 2021.
The Company’s change in reserve estimate for this product line related to the last nine accident years, which excludes the impacts of increases in asbestos and environmental reserves and increases in reserves in the Company’s runoff operations, was 1% for 2024, 0% for 2023 and -2% for 2022.
In addition to fixed maturities noted in the foregoing table, the Company has exposure totaling $289 million to private equity limited partnerships and real estate partnerships (both of which are included in other investments in the Company’s consolidated balance sheet) whose primary investing focus is across Europe. The Company has unfunded commitments totaling $190 million to these partnerships.
In addition to fixed maturities noted in the foregoing table, the Company has exposure totaling $279 million to private equity limited partnerships and real estate partnerships (both of which are included in other investments in the Company’s consolidated balance sheet) whose primary investing focus is across Europe. The Company has unfunded commitments totaling $168 million to these partnerships.
For example, on the basis described below the tables, the Company estimates that there is a one percent chance that the Company’s loss from a single U.S. and Canadian hurricane in a one-year timeframe would equal or exceed $2.1 billion, or 8% of the Company’s common equity at December 31, 2023.
For example, on the basis described below the tables, the Company estimates that there is a one percent chance that the Company’s loss from a single U.S. and Canadian hurricane in a one-year timeframe would equal or exceed $2.4 billion, or 8% of the Company’s common equity at December 31, 2024.
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 91 increase in shareholders’ equity.
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 92 increase in shareholders’ equity.
The U.S. insurance subsidiaries paid dividends of $1.17 billion and $2.90 billion during 2023 and 2022, respectively. Pension and Other Postretirement Benefit Plans The Company sponsors a qualified non-contributory defined benefit pension plan (the qualified domestic pension plan), which covers substantially all U.S. domestic employees and provides benefits primarily under a cash balance formula.
The U.S. insurance subsidiaries paid dividends of $2.00 billion and $1.17 billion during 2024 and 2023, respectively. Pension and Other Postretirement Benefit Plans The Company sponsors a qualified non-contributory defined benefit pension plan (the qualified domestic pension plan), which covers substantially all U.S. domestic employees and provides benefits primarily under a cash balance formula.
The Company believes that its range of historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line. Personal automobile reserves represent approximately 8% of the Company’s total claims and claim adjustment expense reserves. The Company’s change in reserve estimate for this product line was 0% for 2023, 0% for 2022 and -4% for 2021.
The Company believes that its range of historical outcomes is illustrative of reasonably possible one-year changes in reserve estimates for this product line. Personal automobile reserves represent approximately 8% of the Company’s total claims and claim adjustment expense reserves. The Company’s change in reserve estimate for this product line was -5% for 2024, 0% for 2023 and 0% for 2022.
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.” The Company’s results of operations may be impacted by a number of other factors, including an economic slowdown, a recession, financial market volatility, a shutdown of the U.S. government, disruption in the banking sector, supply chain disruptions, monetary and fiscal policy measures, heightened geopolitical tensions, fluctuations in interest rates and foreign currency exchange rates, the political and regulatory environment, changes to the U.S.
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.” 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, fluctuations in interest rates and foreign currency exchange rates, the political and regulatory environment, changes to the U.S.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInvested assets denominated in the Canadian dollar comprised approximately 4.1% and 4.2% of the total invested assets at December 31, 2023 and 2022, respectively. Invested assets denominated in the British Pound Sterling comprised approximately 2.4% and 2.2% of total invested assets at December 31, 2023 and 2022, respectively.
Biggest changeInvested assets denominated in the Canadian dollar comprised approximately 3.8% and 4.1% of the total invested assets at December 31, 2024 and 2023, respectively. Invested assets denominated in the British Pound Sterling comprised approximately 2.4% of total invested assets at both December 31, 2024 and 2023.
The Company does not currently anticipate significant changes in its primary market risk exposures or in how those exposures are managed in future reporting periods based upon what is known or expected to be in effect in future reporting periods. 116 SENSITIVITY ANALYSIS Sensitivity analysis is defined as the measurement of potential loss in future earnings, fair values or cash flows of market sensitive instruments resulting from one or more selected hypothetical changes in interest rates and other market rates or prices over a selected period of time.
The Company does not currently anticipate significant changes in its primary market risk exposures or in how those exposures are managed in future reporting periods based upon what is known or expected to be in effect in future reporting periods. 117 SENSITIVITY ANALYSIS Sensitivity analysis is defined as the measurement of potential loss in future earnings, fair values or cash flows of market sensitive instruments resulting from one or more selected hypothetical changes in interest rates and other market rates or prices over a selected period of time.
Durations on tax-exempt securities are adjusted for the fact that the yields on such securities do not normally move in lockstep with changes in the U.S. Treasury curve. Fixed maturity portfolio durations are calculated on a market value-weighted basis, including accrued interest, using holdings as of December 31, 2023 and 2022.
Durations on tax-exempt securities are adjusted for the fact that the yields on such securities do not normally move in lockstep with changes in the U.S. Treasury curve. Fixed maturity portfolio durations are calculated on a market value-weighted basis, including accrued interest, using holdings as of December 31, 2024 and 2023.
For debt, the change in fair value is determined by calculating hypothetical December 31, 2023 and 2022 ending prices based on yields adjusted to reflect a 100 basis point change, comparing such hypothetical ending prices to actual ending prices, and multiplying the difference by the par or securities outstanding.
For debt, the change in fair value is determined by calculating hypothetical December 31, 2024 and 2023 ending prices based on yields adjusted to reflect a 100 basis point change, comparing such hypothetical ending prices to actual ending prices, and multiplying the difference by the par or securities outstanding.
Invested assets denominated in other currencies at December 31, 2023 and 2022 were not material. There were no other significant changes in the Company’s primary market risk exposures or in how those exposures were managed for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Invested assets denominated in other currencies at December 31, 2024 and 2023 were not material. There were no other significant changes in the Company’s primary market risk exposures or in how those exposures were managed for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Market risk is directly influenced by the volatility and liquidity in the markets in which the related underlying assets are traded. The following is a discussion of the Company’s primary market risk exposures and how those exposures are managed as of December 31, 2023.
Market risk is directly influenced by the volatility and liquidity in the markets in which the related underlying assets are traded. The following is a discussion of the Company’s primary market risk exposures and how those exposures are managed as of December 31, 2024.
At December 31, 2023 and 2022, approximately 7.2% and 7.0%, respectively, of the Company’s invested assets were denominated in foreign currencies. The Company’s exposure to equity price risk is not significant. The Company has no direct commodity risk and is not a party to any credit default swaps.
At December 31, 2024 and 2023, approximately 6.8% and 7.2%, respectively, of the Company’s invested assets were denominated in foreign currencies. The Company’s exposure to equity price risk is not significant. The Company has no direct commodity risk and is not a party to any credit default swaps.
The sensitivity analysis model used by the Company produces a loss in fair value of market sensitive instruments of approximately $2.58 billion and $2.68 billion based on a 100 basis point increase in interest rates at December 31, 2023 and 2022, respectively.
The sensitivity analysis model used by the Company produces a loss in fair value of market sensitive instruments of approximately $3.06 billion and $2.58 billion based on a 100 basis point increase in interest rates at December 31, 2024 and 2023, respectively.
The Company’s market risk sensitive instruments, including derivatives, are primarily entered into for purposes other than trading. The carrying value of the Company’s investment portfolio at December 31, 2023 and 2022 was $88.81 billion and $80.45 billion, respectively, of which 87% and 89%, respectively, was invested in fixed maturity securities.
The Company’s market risk sensitive instruments, including derivatives, are primarily entered into for purposes other than trading. The carrying value of the Company’s investment portfolio at December 31, 2024 and 2023 was $94.22 billion and $88.81 billion, respectively, of which 89% and 87%, respectively, was invested in fixed maturity securities.
The Company’s analysis indicates that a hypothetical 10% reduction in the value of foreign denominated investments would be expected to produce a loss in fair value of approximately $638 million and $563 million at December 31, 2023 and 2022, respectively. 117
The Company’s analysis indicates that a hypothetical 10% reduction in the value of foreign denominated investments would be expected to produce a loss in fair value of approximately $643 million and $638 million at December 31, 2024 and 2023, respectively. 118

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