The Travelers Companies, Inc. (TRV) 21 Jul 222022 Q2 Earnings call transcript

Good morning, ladies and gentlemen. Welcome to the second quarter results teleconference for Travelers. [Operator Instructions].

As a reminder, this conference is being recorded on July 21, 2022. At this time, I would like to turn the conference over to Ms. President Relations. Vice Senior Goldstein, of Investor Abbe Ms. Goldstein, begin. you may

supplement morning, welcome you. released discussion earlier financial of Thank morning. our webcast Travelers' this release, We our and results. to Good presentation XXXX second press and quarter

on of travelers.com website under All at section. our be Investors materials can these found the

the They Chairman of be Specialty Business Frey, Insurance, Klenk CEO; of CFO; Personal of Greg refer and current the go results discuss questions. market environment. today will then webcast they and the presidents: will business and your of Speaking and financial our and Toczydlowski our Klein as Michael Insurance Insurance. will remarks, Alan Schnitzer, Dan They X to through segment take we Jeff will prepared presentation

the draw over like webcast note call the explanatory presentation. I'd Alan, your at to turn the of to included to Before end the attention I

guarantee risks results statement includes and I'd financial to Schnitzer. recent is Our release, any XX-Q on that presentation those in with update we SEC. may The the a some and forward-looking XX-K mention remarks Reconciliations filed earnings supplement our over website. Investors release in press call to forward-looking future investors factors. turn our undertake forward-looking like other forward-looking included now and section of are the to variety today company the And responses to not from questions, described a and Alan to the materials financial uncertainties differ are statements. cautions We materially our most of any obligation do or Also forward-looking in performance. factors non-GAAP These in in measures. involves or statements. not may our recent in our earnings statements implied and statements press due expressed under Actual

today. Thank Good everyone. us joining morning, Thank you, for you Abbe.

addressing quarter the core benefit $XXX segment, initiatives. year record underlying to in X.X%. XX.X% line investment up of of and prior per were combined $X.X double-digit of commercial solid on industry, income results and These income a businesses. of net strategic a our meaningful issues business on net insurance insurance diversified generating portfolio impacting X Core quarter an are the facing important of bottom-line consolidated diluted return X% in quarter, We by rental including growth our strong the headwinds another equity over share, improved the second personal of very driven number earned top was a profitability results progress million excellent a $X.XX quarter strong report for from all premiums or reflect of pleased result, ratio -- environmental progress billion, industry, contribution and the segments,

at the For underlying businesses. the half commercial was X strong billion, an the particularly first prior continued $X.XX -- We're ahead our of months, pleased core with year for results result. excellent

at by in X X.X% commercial for businesses Looking were both Insurance an the quarter. impacted of Personal the home. prior BI-BSI quarter, Results X combined of and together, the point in year elevated ratio underlying the from auto severity combined improvement

track right our by making in the past the over sheet operations to capital X% with book balance As together addressing after our adjusted Michael, investments the share us shareholders. turning per from issues. hear grow on important value year environmental to in excess you'll we're Excellent enabled business,

including shareholders, million repurchases. returned we $XXX quarter, of capital $XXX share million the of excess During to our

as double grew partners, segments I our of excellent field record by top colleagues strong thanks each our the customers and $X XX% in this net offer mentioned, to and to billion distribution value by we we line, execution growing quarter X premiums written to our the than a Turning franchise to remained XX the renewal quarter. the measures strong Insurance, change In moved was Retention rate fourth quarterly That's premium back XX.X%. from Both included Renewal premium premium highest Renewal digits. XX%. preceding years. the more change up very Business X.X%. grew by XX%. premiums change at change net renewal working of with, going

driven written a businesses. written terms as retention both sign level a premiums of increased we've headline of retention strong change production written shared were strong priority. as rate Insurance, it in and X.X%, segmented a Management that increased premium know We and the XX%. have previously, by excellent. and sequentially to up rental retention meaningfully increased at to a XX%. In as by and to in and net & homeowners net improve higher, net Management pricing strong very premiums Liability premiums returns. in and Surety book auto both of premium business. keeping Also, In business was year-over-year numbers, and Liability a a Specialty XX% continue Surety our execution by high-quality were a We a X% stable Bond was up Underneath driven Insurance, excellent Personal of XX%, is we premiums by change rational new execute market.

You'll Greg, hear results. shortly from more and segment Michael our about Jeff

investments. Turning to

net reliable fixed million and portfolio another income high-quality from the after quarter of results portfolio. investment income our for of income returns our portfolio $XXX generated nonfixed strong tax Our quarter, from reflecting

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served higher. allocation. rate municipal invested also where XX% have income in estimated or well invested AA- high relatively munis, bonds That in Virtually municipal corporate default XX,XXX. Inside years many us sets is to holdings $XX fixed with are our all the our Our we as We're within compared an Even to that, over investment about philosophy been out meaningfully allocation municipal has we're portfolio of X,XXX issuers bond billion only rated of through discriminating. cycles. securities. lower than bonds. many apart. market has and of asset different starts us More It

A are curated underweight portfolio Our overweight meaningful bond level investment of BBB of corporate that, credit. And discipline. the AA all same Virtually and is meaningfully credits we within it and is grade. with

During the foreseeable and economic times and sometimes a key up doesn't those spreads lead widen market increases, of graceful to and volatility is sometimes unforeseeable quality credit in allow distress, when of repositioning times, portfolio. a the for

true So we over well to has stay the served us that strategy decades.

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yield. we in alternative our of reach for don't class, investments terms asset In

strategies, private equity general sectors and well is Our across diversified portfolio partners.

of funds and entirely Our way is unlevered. risk assets. the higher And little and high estate quality own hedge we in have real

our forward. higher we see see also equity going interest ongoing we from recent will from benefit that short-term near-term Although declines tailwinds and rates returns headwinds potential in markets, potentially the

You'll rise NII. our hear rates about outlook our interest all from in positively for how income shortly we everything Dan tower. the do, recent fixed impacts with Like starts

industry-low each our results executing at team like wisdom work. world-class their worked strategic of has reinforces this, years. is I'm a performance by investment on guided we're always benefiting grateful we long our up, action, for executing for of other to transform half year, of have our confident the To that That volatility. as years in part things our investment and first in history of experience average our excellent by successfully of building responsible investments called of sum about approach. perspective position-making with the contributed around particularly decades outlook, from have on the deliver for to authority I'm a variety that, time. call well to of us shareholder to long-term portfolio. Dan. to over value an an the remain our income our With We We pleased supported macroeconomic Those and with times turn returns. philosophy. conditions bring the reminded of XX But investment returns returns I'm industry-leading a It over for positioned excellent and of and fixed with industry-leading outlook improving

quarter Core in Alan. quarter. results cat These the on level typical of income and second high return the especially were core you, very second losses, seasonality was $XXX strong, is the considering us equity for which X.X%. was Thank for million

returns losses that the remember level prior core included from income income declined very cat year from portfolio. While record a the of benign year quarter, non-fixed the prior quarter and

losses. pretax second On second Our were treaty. million relative losses for retention of modeled quarter catastrophe estimates a $X higher property year-over-year, the And the aggregate catastrophe our qualifying outsized our billion toward of they basis, were aggregate include year-to-date to of not accumulated quarter. $XXX while results $XXX we've XOL million cats on

Jeff getting slightly We strategic to expense productivity and Our underlying prior combination the were improved that focus We a ratio expected. an the make ratio ratio ratio our to more around underlying and on significant time line driven after-tax points XX% year like of to to underlying and than reported sooner we to in personal the of had had generated by in million of by was At down now be little the Greg, investments provide minutes. segment's underlying year full XX basis initiatives, Business Bond the XX.X%. earned that in year but and quarter top combined last growth. in this from expecting expense few Michael down levels Specialty in continue efficiency from XX.X% a same be an will and & quarter. the year, strong expected Improvements we the premium $XXX more on results Insurance been than second detail more offset XX% ratio gain in each record level underwriting combined of insurance. combined both increase

was moved Business year net operations. With the Fixed the home. from prior to Turning Bond investment approximately PYD number of $XXX in & million both in was second portfolio million nonfixed offset including again impact quarter. the lower outlook expected, partially the modest had average income and quarter. the $XXX was $XXX were by income less NII again interest than year favorable for income favorable higher had million auto million PYD $XX favorable and net by liability our of than development fourth third are favorable Surety. results in of of fixed in $XX during earnings workers' favorable rates development. reserve from quarter, favorable of experience than Insurance a our assets after that comp invested then million maturity of driven short-term We and Specialty, tax prior higher in in We years total to $XXX across raising an were net general the million. net the NII in returns we including quarter net XX% increase movement After-tax record In by quarter Personal reserves, yields were but driven $XXX and by having during better-than-expected runoff to last second decreased PYD with quarter. CMP strong, for higher loss securities as the Fidelity more pleased as benefit movement offset in million they quarter year to Insurance, quarter. in pretax year's better-than-expected accident prior In in of the

about basis New money rates as what portfolio. is the are than embedded higher XX XXX points in of June

to and the partnerships NII real reported So that results portfolio hedge are on equities, continue for and to should over improve our lag. gradually grow. generally funds turns portfolio continues to the us private as Recall as X-quarter a estate

with during first expect While about second the X/X we directionally QX. next half that in the non-fixed correlated, Accordingly, the of which down not quarter. broader was occurring that quarter. Through the impact returns results decline S&P of XXX our our were follow the perfectly significantly XX% nonfixed year, income income down to equity markets,

$X.X result, rates quarter. we levels, than Interest Turning company the June $X.X our billion to billion. widen billion continued unrealized loss tax $X.X during increased billion cash liquidity to at of capital management. and the the or investment and after as increased of after a holding were very $X.X XX. March spreads from And XX at to tax at were net capital strong. All better Operating our flows again quarter ended target quarter with approximately ratios for

per we've million. statutory Alan we and losses gains changes We from surplus not book Adjusted income from or and our to end, investments of have our million and up $XXX investment share, at discussed unrealized dividends in impact income unrealized regularly hold was repurchases as share comprising returned The remains, year quarter high. up losses, quarter regulatory maturity. million to prior quality We very which ago. $XXX $XXX.XX X.X% As on in quarters, manage excludes this value discussed, the how do fixed shareholders portfolio. losses unrealized investment changes capital investment fixed gains gains requirements. and and net $XXX of of our year-end impact capital X.X% of portfolio a in our little And generally

renewed authorization repurchase noting X-year term. facility early approximately from Board We the $X capacity Directors. billion that a billion recent also in worth our of share under we have of $X our credit June, for It's remaining most

While unchanged, and to terms, the and credit group primarily consistent lower still us time of annual was our In financial of and costs conditions. pricing rising operating of our other and strong we banks terms. tightening strength, the undrawn fiscal through also of performance a size improving terms very facility borrowing the discipline reduced cost participating favorable facility obtain the while enable

cat IV details You Point cat we our the provided we're had XX expiration million Page with bond, Similarly, results. and second expired webcast $XXX to upon $XXX prior cat of issued all The Specific coverage. uninterrupted quarter, a on the The X-year in the bonds. presentation, recently amount new can coverage our pleased million. of bond, see new during the terms providing Re available Long are of worth bonds shown Ltd coverage of increases the the very XX-Q.

a our reasonable consistent in when find harder the increase of line a some on Here rate the time and to attain to by. come reinsurance underwriting enabled capacity at of you'll the outperformance Page XX market disciplined again, our us property and presentation, finding renewals. price parts Also coverage online structure as program. a with price did webcast The on reinsurance is see we're expiring we're main direct consistent of generally property And was obtaining increase. summary of in our our while X July the It expected, some line program the writing. increases reinsurance we premiums cat the with are

by the Northeast also attachment $XXX our So that adverse of we $XXX on $X.XX the worth $XXX million, impact It's to million no there's million, above part noting under point. margins. same increased coverage property treaty billion

profitability growth So to sum over that, all it turn solid call up, for we had an business which excellent quarter future outlook X NII, discussion of with double-digit underwriting our in well And a the for income I'll for insurance. returns. premium improved bodes Greg of with an and fixed to segments, all

financial XXXX Insurance continues in Business the have with in a Dan. execution quarter another strong marketplace. of Thanks, terms both to terrific and results

X year strong underlying underlying reserve underwriting income. $XXX up prior ratio favorable quarter's by driven strong from and net and historically all the $X.X was benefited renewal XX%. up by the resulting the year the once focus retention, and premium activity for increase higher of was combined of as and income were development the very expense the quarter lines Net of loss XX.X% X% segment written ratio about and the in property year billion which were driven combination efficiency. Premiums both The of prior The from quarter Second elevated business, quarter, quarter. premiums earned in million, higher productivity benefit from ratio domestic reaching reflecting improvement quarter second leverage high. change better on again well the higher our as about premiums benefits an earned than prior of flat the about in underlying higher of XXXX markets of was strategic to current of from point pricing loss

up X.X%, at the production was exposure domestic was RPC from strong quarter the X%. again growth and change change XX.X% renewal XX%. very to of points of premium almost which strong. Turning of Renewal for was quarter. Retention once rate exceptionally includes first X.X

with results $XXX was our in quarter. production New the the premium strong pleased and business for marketplace. We're these million about execution

Given book in terms in deliberate the levels. as gains in several across continue rate execution while our to retention price years to and uncertainty we're The portfolio the continuing the given the environment. we segmented rate significant quarter the current increases thrilled as of headwinds well high-quality conditions, produce historically improvements and and achieved reflect improvements profitability in strong the persisting for

execute growth. to we pricing, granular management to and points, careful profitable achieve will of always, sub-limits continue As deductibles, our exclusions attachment limits,

retention X strong businesses, over quarter. individual premium while year of the the for in at select, prior up renewal XX% was change from X% was points As

business up New BOP product. year continued from driven our prior was success quarter the of the X% by X.X

Business contributing for levels In business industry-leading addition improved renewal new retention new with to very this through to margins To change year. XX% XX%, was in as XX%. while renewal Select, was of premium X.X% continued strong business exposure at X%. over momentum well first terrific nearly profitability Underneath In growth the the in pleased Market, change as of historically the quarter from is of first while RPC had also the up, growth. the growth, BOP product half high Insurance up Middle contributing a sum Overall in the improvement rate to X.X remained remained at segmentation. point we're

while to With drive to and that, future. investing the continued to for capabilities commercial Jeff. enhance deliver to and the turn products We digitize I'll relevant over transaction and develop leadership, data sophisticated our results call in strong the analytics growth profitable

Segment prior XX% prior prior level lines. a the reserve million, bottom excellent underwriting an & higher and of by Bond higher underlying net both top was the favorable income. year combined X.X up a year on The an development terrific points quarter Greg. underlying Specialty from ratio quarter. was driven of income improvement XX.X%, had year and the Thanks, quarter $XXX from

domestic We're that premiums Net all of that the In very remains in Turning line. a are new quarter Liability, quarter businesses. posted in we drove XX% top following double-digit larger to retention to growth renewal X-point grew we bond exceptional straight a strong premium we Surety increased Domestic the a quarters. Management contributions business prior year pleased change the driven written in the while our from strong quarter. pleased record also improvement average X from X.X% premiums. high XX% with XX% by

and for business turn the results Specialty market-leading partners. to across over call our Michael. excellent our services So were bottom-line And I'll products this now both & Bond top and the terrific reflecting and quarter, of distribution execution customers our value and to

Thanks, Jeff, and good morning, everyone.

second of the Insurance combined ratio quarter, Personal XXX%. For reported a

pressure for higher ratio to in combined pandemic. still quarter. losses XXX.X%, renewal increase year combined to of lower the automobile, quarter reserve loss other, favorable losses a Net development. losses prior comparison total, of & in quarter in driven While The not underlying ratio lower year quarter, prior highest the -- homeowners were X-point than and replacement to reflects quarter costs. XX% us year compared the ratio, points a impacted ratio a in also the nearly second experiencing of severity second increase inflationary The underlying industry unusual is we In low points prior was out loss also domestic the both included premium typically XX activity, a both changes XXX.X% quarter. it the were the catastrophes. but for second automobile lesser past of Catastrophe the prior weather-related and by to quarters. the by X level loss in prior quarter increase line an catastrophe quarter to the the combined elevated claim automobile and XX.X loss increased premiums year quarter's the about relative not for for it's that elevated reflected ratio underwriting to extent, lower the combined results higher vehicle and few was been have our related and and a grew points and the in frequency year this has underlying generate automobile in assumption In and increase reflects the higher result Other. comparison written and a quarter repair with an Homeowners that prior To year combined the higher

of the higher to Our environmental primary inflation is response pricing. challenge

actions are remain over rates and our to few achieve the pleased with increase ability confident to past increases. quarters in further We our

the will As and rate XXX% we earn Homeowners take have our ratio for In quarter and actions the to indicated it in points Other, hail combined time into fully second was combined of underlying and primarily results. quarters, severe catastrophes comparable quarter ratio past some XX quarter. The the events across the included regions XX.X%, to was in wind from several year for U.S. prior

offset loss related of experience a current to items, that included year to to and elevated labor to severity but price was comparison including loss the non-weather continue various higher quarter a as combination benefits increases, material that earned prior a of by We pricing. quarter losses severity related as well largely -- a

quarterly to production. Turning

achieving continue in increases. make progress excellent We to pricing

For renewal automobile, up full the points XXXX. change was X first premium domestic from a of quarter X.X%,

to the continue and renewal premium We increase by RPC reach fourth quarter. double digits expect to changes

X.X to XX.X%. insured The was a increase rate. and premium first homeowners in increased both from high renewal change increased from quarter For domestic of and record points values premium change about the other, higher renewal

our focus While not profitability, our in distracted invest success. from sustain continuing we're is primary improving to to on capabilities

on artificial performing transforming, continue remain of build for enhance simplifying imagery customers. This just aerial our new -- for the how underwriting part and example, our agency improve profitability on business over confident we selection while risk the introduced future. both to ability the while one in we example to intelligence-enabled and to our time quarter, in expertise property and agenda. For we continuing innovation as the sophistication process our advance focus risk to With is performing our quoting of

over the turn I'll Now Abbe. to back call

ready are Q&A. Thank open up for to you, and we

Instructions]. [Operator

from from comes question Michael first Stanley. Phillips Morgan Your

on see your to question activity question rate It agree just later little like bit for kind peers then if to of and if of little first you maybe trend. auto, has below loss wanted a auto. been than take bit a that. personal with And that. still feels so, X-part guess hold I I

on your Just good profitability of the do current how new in some taking there. you business book view You're auto?

is current the prior you So the others guys. the guess then actions I profitability just from confidence case to that's And seen book? -- And not how that of be for we've I period development. in going just guess some

Sure.

So I'll take the rate activity question. period This is prior Michael about Klein, and then development. Dan will probably talk

So much Michael, quarter I think X we've last talked about X. the every for rate pretty or

said in As remarks, prepared are we pleased headline numbers bigger have who certainly our some with I we're than have. my rate progress. There reported peers

aggregate, digits get we is to filing confident active on I -- we're to digits mentioned, think incorporate the talked marketplace at largely continue front, will into look we point for to the rate and our new double or with fourth our rate rate levels our to the increase activity in headline line with industry, in about filing in a quarter. ability rate Again, there's have. RPC that And bigger little pricing if compare of where the our we when not our broader the personal be than overall But increase levels outlook the continue Although into and couple in bit very double continue have in -- we're the indications. marketplace, overall to and of our auto particular numbers peers as the we a exceed ahead in industry average. data

continue X% before. of look business, the profitability to RPC to from to make than we prior quarter. we're PIF the responding the decelerate it the terms quarter And And is the to is year progress. More it at So a putting from you the improve is of and starting quarter that marketplace. growth, XXX drive now was up new this about as increase rate in into

the trajectory to on. we're sort to priority drive continue profitability. And is So improve that's again, of the to pricing

PYD. it to to about turn I'll talk Dan over Now

it's Mike, Dan.

but I'd question, you were I and guess bring personal So accident on 'XX favorability frequency PYD largely back seeing we seeing to when the 'XX talking in favorability are driven years auto. about we

seeing severity favorability favorability workers' our some We also uncertainty of And the we of environment. we results, time that things claims be. and talked some in in the auto. that might in line. favorability We're of in were claims comp the uncertainty commercial talked in around ultimate recognizing fact we And PI, of but non-COVID about the seeing were some are at the we seeing said claims that in we was those there about higher And severity. that were the specifically one was at speeds what more happening

level pretty said that reserving and we we so possible. to allowing additional And XXXX that order make that our consistently we being for cautious in the in in in XXXX we of were uncertainty were sure was felt

to And out. so at least bear seems out so far, the way playing things that are

just want also headline which on a getting talked It's comment this we as again. to are lot auto carriers conversation of premium look we the other about important, pricing we've in had people about went Michael number at when is personal And conversation, this today. add rate Klein in the our one change premium that never is I that Michael, And the back other And get and was that some Yes. talk the negative. history. didn't much renewal back negative. change past, about renewal to then

guess, is I matters, point I the would the question. Thanks starting the for point that So add.

Yes.

Perfect. Okay. very Yes. helpful. That's

your mix you're recently kind in or in in of of comp, permanent slower Second, past claims of Has change might claims been fact switching of type or versus on either that rates seeing year? switching then impact gears temporary mix comp. so change there closure completely the by gears any that the mix either -- the faster partial sources

Michael, is this Greg.

haven't any mix seen material change. We real

the Of we a we pandemic, certain of went course, as claims. had through mix

we at isn't if real any there And claim change. you material so our pre-pandemic, today to look normalize as that, mix

Your comes Scott from Alex next Sachs. question from Goldman

you've we're then some hoping your parts and look least interested some margins was got seeing. in changes and those at be we overall inflation I CPI we margin can costs, of pieces for you for getting just you just could and that improvement. the be I for quantifiable understanding comment underwriting it business we'd obviously about the which on unfolding. renewal But by to at Certainly, further us can there's think loss think aren't impacted and how outlook just see insurance rate that

Alan. it's Alex,

Greg. we don't a and combined outlook But overall me pricing of good you Let where -- look from if with me give make underlying it The equal, And then say broad very underlying place. being I'll would at it's in we our and good me ratio starting measures. other a all turn over comment, we're at is the ahead BI place. things start loss today, to on overall start just trend. just starting loss pretty is let is And those which a let

would earns And in, that so as we there. some expect improvement from

things with caveat just the that me Let same. never are all

And this out level property for activity. it calling calling so ago quarter, of elevated property And just we favorable couple out loss some quarters we're loss of example, when a activity. was were

trend run rate where and at again, we a good So pricing is episodic. that better pretty word, outlook, of and think be factors we always stuff little is, look of lack to the where we consider loss we place for But think is a we when going look is would a kind positive. to that from be the at

the impactful as is you're there think going about talking insured you around just much line you the that values exposure follow-up how to can -- pretty in the the on insured units see the things. personal side But coming up. do invest I'd how be insurance I growth? business lines my here? the interested business. sorry, values are helping The growth of well. expect I of question, mentioned when higher higher the And for be for nicely We audits sort top mean And

Yes. Alex, both and exposure and this the this the get value right and Greg. conditions right are looking clearly, our at business in is Yes, underwriters constantly renewal. to to insurance to new insured trying on values environment and terms the

up do the have managing personal been an of the side so environment. the very the inflationary that, to insurance side. side. we're actively on we make guard And protection sure That's an that active that And that's on similar keeps transactional with inflation Select, to flow more lever

very side. an for management So on us active insurance lever business much the

question next Greg Raymond Peters James. comes from from Your

question approach recession or later was you and might or areas a where is think as pass. to to And specialty first this talk be related bond could had next. perform about I'm projecting strategize around The a of the year that, and what might I pressure then if management come to and indeed to be domestic might insurance the anticipating of wondering is change seems just the recession? if sort either were business And you you you I market how of to this your if there company how might curious

care distribution take the and We if free question. Thanks We of do. general for partners. we're going comments I feel me to of care And to our communities. scratch our take let couple But make follow of we a what We a serve serve customers. employees. the edge. up our our just do don't in We recession,

And so us. it's as usual perspective, from for business that

Now output of we the the ensure economy.

top to interruption. we've But continue we've that's productivity efficiency everybody. positions line, impact and And financial positioned. resources to strength and our done work well. investments some expect business we'd going to The impact us make and we're got pretty improve the in to the So well without

business. shared sensitivity, as very my remarks, the prepared investment -- high-quality credit portfolio terms I of as in is quality, is our credit high In surety

you'd maybe some relief the the maybe get in any top I is on So commercial a some trend. loss on least only at other line. I make expect businesses, guess if the would again, you pressure But history in point recession guide,

say the time. We we all long the term. the So that run for business

And how a really to et can well think we'll We need do differently. we positioned perform lot you not economic cetera. various see crisis, and over look just very just do recession, including fine. we the we're there's years, and So through financial cycles

sort actual that Got nonfixed it. area of portfolio investment income the a S&P of the be down sense, Well, fourth I the some versus Dan, and performance the half what in second market? in context like regarding in negative Is of the it's in us you the market going fact year? of piece. you was your just down, the this that you worse, marks just quarter, considering guess, give this year-to-date. is mentioned income, might comments about dramatic XX% it you in broader conceivable talked look Or it saying can might And to the third turn your the of think

Yes.

think underwritten. I a portfolio that it's is And very hard to got predict. individually we've

equity directionally, to correlated. slowdown that's it's least But weakness in say And not be you some the if of we'd why in we perfectly expect strength. the see see to markets, so at level going

portfolio have, of rarely, pretty negative But the markets back that some. a all the we when over although of the in disruption we then back, second of times or XXXX like first seen at of We period time the got short in came COVID. did onset quarter extreme and in alternative returns

a if go. less So of how a we're robust in to expect our it we're over or not for NII we've this But even it markets, again, long to doing for And alternative than the whether look give done term, really better than really long has broader significant in forecast at be you most. probably the might term. we a results position low downturn

question from Fargo. Wells Your Elyse Greenspan next comes from

BI margin. My first color looking to on get I'm question, the

guys higher You pricing. out called earned

impact out both called also the on losses. quarter? I current elevated Could You get of the those property of

Yes. Elyse, it's Dan.

pricing to quarters, somewhere change of earned without talking directionally, to not So that recent down all we've going of about X reconciliation, going being the That's fine a level point. been around quickly. benefit very in

that as the -- come price last to you'd quarters but down, the came come time to basis takes written premium down. over earned written few As expect down,

would expected that ballpark. that stable sort we was of other sort way margins piece what of to year imply still the a that's with And X So property going relative the from ago, relatively the point. the about

Okay. my question. And second then

on to in you had in and higher that assumptions Business loss inflation your see movements quarter's of was the guys any said trend probably range You within in last call Did X%. guys talked X.X% Insurance about the inflation second quarter?

We say a activity trend in long over was I'll No, -- two, Elyse, something time. of consistent quarter we generally you the period One, loss that. two evaluate we saw is things. with But loss didn't. the

quarter. was not think the -- expected. consistent typically to a So with around question, what loss But I we your in be activity responsive gyrate saw particular typically to we doesn't

from Tunis comes Ryan question from next Your Autonomous.

in the how of we rate written acceleration BI, interpret Just should from XX? XX to

little up auto, it's adequacy. a in the focused they've just our price lines. GL and color and our right underwriters Greg. on Ryan, they're by rate quarter. quarter. It led you terms give prior come And that the I'll renewal bit that lines that account every the broadly risk, based at primary Yes, was look property conditions across for many And right got the sure of making get to from to

one pricing So -- on and of returns pricing our increase weather, about, great much on out there. headwinds still that in in feel But better based place about terms years. industry few the we talked are past a cetera, the and are we've hand, those over et and that inflation in

So headline a it's number level. aggregate an at

little And a have the on hopefully, going quarter. for be on to of accounts color up that that bit rate focused are -- continue to you the making it. that the gives adequacy that sure come Our renewal underwriters

What guess? frequency a are been now? gas just about you the right of impacting And But you It's frequency trends. some like I then for curious are discussion how curious thinking are There's Michael, perspective, that summer, of just observing, are what lower. seeing from frequency? you prices sort

miles question than Thanks we miles bigger a your has employment question. prices Ryan. driven things. our to and gas in I a for specific prices, think driven I talked We don't data little gas quarter, gas this One, do. about prices. we bit the actually say sensitivity to would on last Sure, huge see two think impact on

second months upswing the saw the And last relief observing. year quarter. then the were driving think really based important in levels about month impact still the we seen behavior frequency, really, frequency terms we're because comments change data the X driving two slight still ago or driving One, isn't X, are depressed. so we've So price over and I this of of showed in on of favorable again, quarter last

quarter guide But a pre-pandemic in and year-over-year. we say terms is And normal claim pre-pandemic frequency, towards so bad remains or driving approaching normal would levels. they'll -- space of of return in it that behavior

comes from Your Meyer Shields next question from KBW.

loss high overall. through thinking the question overall really could inflation I about that we've broadly how first how guess you're was seen medical selection? take us and trend impacts you inflation hoping I that lagging potentially

comments a inflation. couple on Yes. Meyer, medical of

two, long-term to the on environment, you very comp like to the GL, benign. shared recent immune as So reserving a from workers' Having trends given take approach that continue long-term cautious when it before, can I'd lines lines. broader those be, certainly inflation we it very imagine said say, watch And we've the closely. and while impacts medical inflationary that, isn't relatively whole we

impact costs. is The make types got inflation and that medical a you to of other inflation thing distinction loss between the

chronic GL, workers' headline impact that impact those of for costs. types of lower the We're subset and medical of increasing -- of accidents. treating for other not that driven inflation we've cost workers' comp, We're We're are treating got treating injuries. CPI. workers' diseases. example, So inflation workplace medical comp medical comp a And practices by could fee that than example, workers' and medical management those are GL Also terms the mitigate at costs. and in loss schedules components

narrative a inflation. little bit medical that's So of Hopefully, a there's on responsible.

specifically then than respond No, costs? Michael. for how is -- changes, And to other home replacement rising average very the quick that premiums helpful. do actual side, question rate per a Within on policy

Meyer. Yes,

So of and in the right, operate those combination, home, a really, values. insured RPC is

it more you're of with the in call that how AIL they the getting the terms impact is have respond, actually basis. on a RPC a and is renewal annual RPC time to which remarks I combination you our looking frequently my increased prepared home in we're rate part limit just year, one that and deeper into why mentioned this renewals on a typically annual so data factors, cost environment, In inflation second we're on increased We increased we of rate basis annual of blend actually of increase -- change and share that and is premium an this in of what step And rise. guess And we updated process. change that seeing limit. I that's our why number value. in it at increased home regular replacement evaluate a continue the And update in

Okay.

it's that understanding I'm broadly sounds like neutral, margin correctly. So it if

say What the and the to both seeing. are we're rate the I that would responsive is inflation increased limit

question next from comes Your from UBS. Meredith Brian

Dan, said the non-cat business clarification. Just kind kind X the first, on about quarter. of of in last you point quick insurance losses quarter, than one weather better

that you I basis maybe points basis trend. XX it points imply that said XXX quarter, was below second typical below quarter? quarter think last was this Would second

than last the non-cat what Brian, we they're we it's in year, about said as we out, what X.X would have are better said underlying point about you in property the points expected we think if This -- about year, year that losses than would second expected. that quarter. have No. we we the worse pointed last actually said X what

number. number swing a of loss north mix, underlying losses, that segmentation in X think us frequently think, other individually actually down the which other the were quarter. bigger And a got actually as neutral things, big, was none property -- in benefited the there And ratio that of the think are quarters, I of So in there then back there's points. to

makes improvement That see that to all Is there. growth you. other just Workers' at in that a continue just insurance one. you're quick this growth one then Got premium compensated And just sense. exposure nice seeing point?

Yes. Brian, Greg. it's

that growth. the exposure most part, of absolutely some For strong the is

You increases economy. the payrolls can certainly relate across to in the

line. drivers that's So that of of one the that in key

next of Shanker Bank Your Josh from question America. comes from

have you a the XQ and that year. reason half to back be at in should I investment there back the these weak we the half lag XXXX. were guys been in income in so that hey, at first point markets saying, you particularly I think thought Do And results weaker. us duly look strong more XX-K, have would this things? than be was Obviously, the the quarter looking any the of think would the variable warned at the year we this not careful, I about have XQ about is X-month of time? when have when

to any We sort there's commentary. of think lag. say on are X-quarter don't I generally, Dan. a change it's Josh, No, things our about historical

pretty market. pretty alternative, not We some quarter the We we're if We've did individual holdings strong But transportation the again, energy the holdings that well. lockstep. to necessarily consider that in of did some well. investments follow broader from pretty context within had Second you well. going got had an estate was did quarter. it in Real that pretty

opposed So you're it's going to be a what's of our that's seeing really any to what pattern. function as And change of inside actually in portfolio. the live

at a when on even loss is And getting, All be you premium renewal the you you're guess at look home are renewal that line? that auto do trend were you a you hope do or rates premium that when rates of the rates. I the lagging and trend? matching will know And least sort change right. the think auto kind or of on excess in obviously what at doing of earned book matching rate indicator then getting net book you the look and you When I When the what for you -- maybe guess Michael.

relatively Josh, mean numbers long-term relative it's in loss environment question, Great we're the inflation that environment of of we pretty business. are this terms and a Yes. -- in really in hard unprecedented and the mean in Unfortunately, cost you -- pick conversation I a trend. those really personal a your environment. there's lines can statistic. could I answer have one I one think to to around what view of

at think, been in double low the You XXXX highest since look body I can it's CPI, is digits. work

You up prices. Manheim Used The can look there. right, lumber Vehicle stayed Index prices, it at year last and percent shingles XX-plus was

is exceed when going loss understand last. really on point it's put hard will elevated to how to So we a the this rate inflation long fully until trend

picking our so that's that standpoint, on And focus isn't that point. really why from

is underwriting latest is need. continuing it's further data we and incorporate see the processes, to the it raise essentially to point, auto taken as that rate we've good of a evidence hits example on we X.X in the the X RPC and as as Our quarters one, X pricing the of focus into and over rate last impact an our reported renewals. continuing that To written your or

that And year, But number to to digits the in of additional importantly written again, which the any and because additional we've again, if And that to didn't even continuing rate we've is impact the gotten haven't are, specifically gotten it drive -- that continue and, already that the quarter drive rate, one will higher. important drive number of that we increases, we seek to filed next are point by rise auto. pipeline higher already which make so for would number will seen fourth we file speaking we full this yet rate approved. double into quarter that the

question next comes Your Tracy from Barclays. from Benguigui

you're your trying in underlying just idea that sequential withdraw need just I out a ratios discerning pockets you risk-adjusted trying from your of like where even to happy I'm just more with underwriting I'm here, achievement. growing it's capacity deteriorating yet? just if on you're guess mean, so PI reconcile you're in your and loss basis the both to don't to BI your returns, premium growth I figure business. you is to if feel be trying

of it's on part cat than combined we second feel of underlying rest got But that think I'll is this a sequential a like that a in through We there's this that's a We've the the first XX.X% property, making year. the combined that north as pretty we've look whole had are a of year which are of the we if and I underlying XX.X% at year. the think we year, in Alan the the where ratios the you To ratio the losses quarters first because of So the start. Dan. again, I back was core Tracy, place. second and And or in is half comments a X the quarter particular XXXX, done Greg coming of in to portfolio. returns out balanced what months see made, And basis. the we in business the in good look more quarter ROE it's that activity expect whether at before. go reason of don't

business are good capacity portfolio well there's serve We've going got the not be And long stronger in think for to thinking the at business us the of we that's to term. parts others Some times. But long And than the to capital. of we're write managing certain this plenty marketplace about in withdrawing at point. we're going of plenty the term.

I'm liability Okay. noticed unpack GL. years, Could more lines. the experienced from make prior unfavorable from tail releases you accident is sense Was would CMP favorable maybe came you in short within development asking development recent the And your in or reason I And specifically CMP? nonliability? which because that for

big it Yes. any just I'm not It's a down break not to than further number, going Tracy. that.

next from comes Your from Evercore. Motemaden question David

approaching would I think book talk that resolutions? for cars handling closing how more Just bit newer auto. and that a your claims question Michael preferred little you're has on quickly personal business you -- auto the Could about claims just a and feel complex a more are on maybe you're could that closing you repair, timely to you how sounds like potential fashion you're just it of But guys like which about top in on claims book? talk issue.

Sure, David.

So yes, top of I would say we're it. on

the environmental you capable. the and heard pressures Our They're terrifically and really partners in just talk others business. That from is inside claims we're about you've They're organization. top-notch. we've immune process talented and that not team support of terrific the And seen read great claim discipline and got said, about.

their We're being lot things really get all help nondrivable and body it the customers that it longer is taking available. in slot work drivable, makes putting verified on customer top days rental portfolio parts length shop. way you until dialogue sense, a shop we and ensuring, of have It longer That vehicle to the manage get putting the can parts. is pressure with to So to on that to take to that. of is repair. doing takes in while for taking the is we with One we for on the of time the if is labor That while and wait a they are described are until time pressure make our they in is example, to repairs. example a average

total terrific think for I job element challenges. these really of But faced Salvage lot -- all repair those takes our doing of things challenge. the time managing remains to with on try navigating organization length average longer And a doing is a days subrogation it's So of of that's that. to one -- to availability vehicle the a manage process. is I those. extending. those mean But and we're claim and

Got it. for And then just a Dan. question

expense I operate full or getting 'XX think -- as ratio ratio down little to a level feel good XX% had that lower to XX% XX% bit about going we thinking are you you we Should do 'XX? a the is mentioned like of expense the for we forward? schedule. ahead at year, a about think Or than be

pretty target comfortable about quarter more or Yes, to talking ratio. improving XX.X. do couple as a ratio inside to that to we been being make. want able 'XX we with just ago, years still X with ago, give that expense XX. then not the combined 'XX comfortable of business the the all not a we really or We're we've And I'd being We're and that going What a David, were we're say here. setting were returns. we about is outlook talking the a to investments overall whole the expense ratio. managing find We're making

like probably last an not to the -- next XX there looks another really beyond inclined might X of that. down this year quarter be get think give we'll year. in sometime or quarter, It I we to we said I'm success. outlook

Jefferies. have one we question time coming Kinar And just from for Yaron from more

Michael Because damage. it's question from you in bodily also for physical the as insurers I seeing something lot heard talk trends late. personal certainly the a of first Are guess we've lot auto about loss you around component of a injury I auto. that there? a other heard

that? qualify could you quantify So maybe or

it assumption we've Yaron, injury loss bodily and out hasn't loss seen injury. pretty But because trend severity. Yes. a and haven't we year-over-year quantify question, expectation. and bodily and we for made comment driver elevated the spiked we what the thanks I in as to But probably had a bodily healthy in There's of some been elevated to bodily and it relative the a injury comparisons injury because sort that favorability particular, not trend. inflation was it. in not haven't similar I'll Not of last seen qualify quarter, frequency, injury in around been trend offsetting loss bit going elevated -- to And little of bodily be. the

to And just It It we difference expectation. just means not delta so from out a as observing that it our doesn't pressure. don't it's a mean see what jumped had not relative mean hasn't significant But anticipated. we're doesn't it. we

and -- is maybe this broader Alan. a then or And probably for for it. Got question Greg

with this materializing? You there today indicator U.S. or see that about any fears clients would seeing all are you maybe your that you're is seeing guys are insurer talk a that essentially if industries in the there that recession, potential of the in? pressure of emerging conversations will. economy, if to recession, so, you're you with And specific actually And sectors lead

The fundamentals we're Yaron, yet. our underlying strong. I'd from business say seeing not are customers

I think and see imagining not data economic those the degree. it that not effort significant in -- we're demand, data, all tea reading you increase to as seeing rates think I the coming. our we're in interest time down leaves confirms But bring macroeconomic continues any it's the an to

over for the call closing I will turn back remarks. Abbe to

Thanks. joining always, Investor We please feel follow-up, to to out you appreciate have Relations. much. if reach today. any everyone free very you as directly And Thank us

conference call. concludes This today's

disconnect. now You may