Good morning, ladies and gentlemen. Welcome to the First Quarter Results Teleconference for Travelers. We ask that you hold all questions until the completion of formal remarks, at which time you will be given instructions for the question and answer session. As a reminder, this conference is being recorded on April 16, 2026. At this time, I would like to turn the conference over to Ms. Abby Goldstein, Senior Vice President of Investor Relations. Ms. Goldstein, you may begin.

Thank you. Good morning and welcome to Travelers discussion of our first quarter 2026 results. We released our press release, financial supplement, and webcast presentation earlier this morning. All of these materials can be found on our website at travelers.com under the Investors section. Speaking today will be Alan Schnitzer, Chairman and CEO, Dan Frey, CFO, and our three-segment presidents, Greg Teslowski of Business Insurance, Jeff Klank of Bond and Specialty Insurance and Michael Klein of Personal Insurance. They will discuss the financial results of our business and the current market environment. They will refer to the webcast presentation as they go through prepared remarks and then we will take your questions. Before I turn the call over to Alan, I'd like to draw your attention to the explanatory note included at the end of the webcast presentation. Our presentation today includes forward-looking statements. The company cautions investors that any forward-looking statement involves risks and uncertainties and is not a guarantee of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described under forward-looking statements in our earnings press release and in our most recent 10Q and 10K filed with the SEC. We do not undertake any obligation to update forward-looking statements. Also, in our remarks or responses to questions, we may mention some non-GAAP financial measures. Reconciliations are included in our recent earnings press release financial supplement and other materials available in the Investors section on our website. And now I'd like to turn the call over to Alan Schnitzer.

Thank you, Abby. Good morning, everyone, and thank you for joining us today. we're pleased to report an excellent start to 2026 with strong underwriting performance across all three segments and a strong result from our investment portfolio we also continued to deliver on key strategic initiatives during the quarter for the quarter we earned core income of 1.7 billion dollars for seven dollars and 71 cents per diluted share generating core return on equity of 19.7 percent over the trailing four quarters we generated a core return on equity of twenty two point seven percent driven by excellent underlying fundamentals underwriting income of 1.2 billion dollars pre-tax benefited from strong levels of underlying underwriting income and favorable prior year development each of our three segments generated attractive underlying and reported margins turning to investments our high quality investment portfolio continued to perform well after tax net investment income increased by nine percent to eight hundred and thirty three million dollars driven by strong and reliable returns from our growing fixed income portfolio our underwriting and investment results together with our strong balance sheet enabled us to return more than two point two billion dollars of excess capital to shareholders during the quarter including approximately two billion dollars of share repurchases even after that return of capital and having made important investments in the business adjusted book value per share was sixteen percent higher than a year ago in recognition of our strong financial position and confidence in the outlook for our business i'm pleased to share that our board of directors declared a 14 increase in our quarterly cash dividend to one dollar and 25 cents per diluted share marking 22 consecutive years of dividend increases for the compound annual growth rate of eight percent over that period turning to the top line through discipline marketplace execution across all three segments we generated net written premiums of ten point three billion dollars in the quarter in business insurance we grew net written premiums to five point eight billion dollars excluding the property line we grew domestic net written premiums in the segment by six percent the declining premium volume and property continues to be a large account dynamic property premiums were higher in our small commercial business and about flat in our middle market business. We know premium change in business insurance was 5.8%. Retention increased a point from recent quarters to a very strong 86% and was higher or stable in every line, reflecting deliberate execution on our part and a generally high level of stability in the market. We know premium change in our core middle market business was about unchanged sequentially, also with retention higher at eighty nine percent in terms of the product lines RPC and auto CMP and umbrella remained in the double digits RPC and GL and workers comp was stable and RPC in the property line was positive new business in the segment was a record seven hundred and seventy five million dollars a reflection of our strong value proposition in bond and specialty insurance we grew net written premiums by seven percent to one point one billion dollars in our high quality management liability business renewal premium change ticked up sequentially with excellent retention of 87% in our industry-leading surety business we grew net written premiums by 14% in personal insurance we generated net written premiums of 3.5 billion dollars with solid retention and positive renewal premium change in both auto and homeowners you'll hear more shortly from Greg Jeff and Michael about our segment results. The results we released this morning are part of a larger story. They reflect a set of advantages that we have developed and that have compounded over a long period of time. Over the course of many years, we've managed through a wide variety of challenging conditions. The 2008 financial crisis, dramatic changes in interest rates, a major inflection in liability loss cost trends, a global pandemic, severe natural catastrophes, and periods of heightened geopolitical and economic uncertainty we didn't predict the full scope of any of those events but by carefully balancing risk and reward on both sides of the balance sheet we were positioned to manage successfully through all of them we've consistently delivered growth in book value per share and earnings per share at industry meeting returns averaging more than a thousand basis points above the 10-year treasury over the last 10 years and with industry low volatility we've also built a strong capital position as we've ever had that track record isn't a coincidence it reflects a set of structural advantages that hold up regardless of the environment starting with the breadth of the franchise we're a market leader across nine major lines of insurance serving personal and commercial customers across the country and diversified across distribution partners industry class and customer size that balance which represents a bigger advantage than people sometimes appreciate has resulted in our consolidated loss ratio being less volatile than the loss ratio of our least volatile segments in an uncertain world that kind of structural hedge is a meaningful source of stability where we operate also matters more than 95% of our premiums come from North America at a time of considerable geopolitical complexity that concentration is a strategic advantage and the domestic market offers substantial room for growth with our broad product capability our leading market position and the execution you've seen from us over the years we're well positioned to continue gaining share as we have in our commercial businesses over the past five years equally important is our ability to navigate the loss environment we have the data the analytics and the discipline to see changes in loss activity early and to reflect what we see in our reserves our risk selection our pricing and our claim strategy that capability is foundational because until you have an accurate view of the loss environment the many downstream decisions are working from the wrong inputs our early identification of the acceleration and social inflation is a good example we adjusted before the market did and since then we've grown the business and significantly improved our margins Our scale is also a significant and growing advantage. Our profitability and cash flows support our ability to invest more than a billion and a half dollars annually in technology, including in our ambitious AI strategy. Our size gives us the data to power AI and the resources to deploy it, creating a virtuous cycle of better insights, better decisions, and better outcomes. Our financial strength also enables us to absorb the increasing severity of weather losses and all of these benefits position us as a preferred counterparty in the reinsurance market beyond that our product breadth risk control claim expertise and other capabilities that benefit from scale make us more relevant to our distribution partners deepening those relationships and our access to quality business over time companies that can leverage scale effectively will have a meaningful edge and consolidating industry premium as for our investment portfolio the principles that guide us are the same ones that have served us well for decades we consistently managed for risk adjusted returns not headline yield or the 90% of our portfolio is in high quality fixed income with an average credit rating of double a minus the issue of the day private credit is a non-issue for us manage interest rate risk by holding the vast majority of our fixed income securities to maturity and carefully coordinating the duration of our assets and liabilities our investing discipline has produced default rates that were a fraction of industry averages through every stress event of the past two decades you can't gracefully reposition a portfolio in the middle of a dislocation the time to build that resilience is before you need it in short whether we're talking about underwriting or investing the advantages we've built are designed to live to deliver across environments and they have before I wrap up I'd like to share that a number of my colleagues and I have just returned from our travelers leadership conference a multi-day event we host each year for the principals and senior leaders of our most significant distribution partners as we shared before the vision for our innovation agenda includes enhancing our value proposition as an indispensable partner to our agents and brokers we continue to make significant investments to ensure that we realize that vision the best-in-class products services and experiences what we heard consistently is that our deep specialization across a wide range of modernized simplified and tailored products along with a broad and consistent appetite and extraordinary field organization the ability to deliver exceptional experiences and our industry-leading claim capabilities are major differentiators in the market To sum it up, we're off to an excellent start for 2026, and we're highly confident that the advantages that have driven our success will extend our strong record of outperformance. And with that, I'm pleased to turn the call over to Dan.

Thank you, Alan. Travelers delivered $1.7 billion of core income in the first quarter, resulting in a quarterly core return on equity of 19.7 percent and a trailing 12-month core return on equity of 22.7 percent first quarter earnings were driven by yet another very strong quarter of underlying underwriting income which at 1.2 billion dollars after tax marked our seventh consecutive quarter of more than 1 billion dollars net investment income of more than 800 million dollars after tax and net favorable prior year reserve development of $325 million after-tax also contributed to the strong bottom-line result. After-tax CAT losses were just over $600 million. The all-in combined ratio of 88.6% was, again, excellent. The underlying underwriting gain reflected $10.6 billion of earned premium and an underlying combined ratio of 85.3%. within the underlying combined ratio the first quarter expense ratio came in at 29 percent that's what we expected given the timing of expenses in q1 and we still expect the full year expense ratio to be in line with our prior guidance right around 28 and a half percent the previously announced sale of most of our Canadian operations closed as expected on January 2nd and I wanted to take a couple of minutes to summarize the impact of that sale on our first quarter results. Let's start with premium volume. The year-over-year comparison with Canada's business included in 2025 but not included in 2026 reduced the first quarter growth rate for consolidated net written premium and net earned premium by about two points each. The impact in both business insurance and bond and specialty was about one point while the impact in personal insurance was about four points. The impacts on the growth rate of both written and earned premium will be similar for the remaining quarters of this year. To help with modeling the year-over-year impact for the rest of the year, we provided the quarter-by-quarter dollar impacts on slide 19 of the webcast presentation. Within net income for the quarter is a gain on sale consistent with our expectations when we originally announced the transaction last May. That gain does not impact core income. And finally, within the equity section of the balance sheet, you see a reduction in accumulated other comprehensive loss, which is primarily because the previously unrealized FX loss related to the sold Canadian entities became a realized loss upon sale. The move from unrealized to realized had no impact on total equity or on book value per Turning back to the rest of the quarterly results, catastrophe losses for the quarter totaled $761 million pre-tax, with the largest events being the winter storm that impacted much of the country in January and a large tornado hail event in March, both of which you can see in the table of significant cat losses in the MD&A section of our 10-Q. Reported net favorable prior year reserve development of $413 million pre-tax in the first quarter with all three segments contributing in business insurance net favorable development of 162 million dollars pre-tax was driven by commercial property and workers comp in bond and specialty net favorable PYD of 65 million dollars pre-tax was driven by better than expected results in surety personal insurance recorded net favorable PYD of 186 million dollars pre-tax with both auto and home contributing after tax net investment income increased nine percent from the prior year quarter to eight hundred and thirty three million dollars fixed income NII was higher than in the prior year quarter and in line with our expectations benefiting from both higher yields and a higher level of invested assets new money yields at the end of Q1 were about 70 basis points higher than the yield embedded in the portfolio Our outlook for fixed income NII by quarter, including earnings from short-term securities, is consistent with the guidance we provided on our fourth quarter earnings call, expecting roughly $810 million after tax in the second quarter, growing to approximately $840 million in the third quarter, and then to around $870 million in the fourth quarter. That investment income from our alternative investment portfolio was also positive in the quarter, although down from a year ago. Given recent movement in the equity markets, this is a good time to remind you that results for our private equities, hedge funds, and real estate partnerships are generally reported to us on a one-quarter lag. And while not perfectly correlated, our non-fixed income returns tend to directionally follow the broader equity markets. In other words, the impact of the decline in financial markets that occurred in the first quarter will be reflected in our second quarter results. Turning to capital management, operating cash flows for the quarter of $2.2 billion were again very strong, as we generated more than $2 billion in operating cash flow for the fourth consecutive quarter. As interest rates increased during the quarter, our net unrealized investment loss increased from $1.5 billion after tax at year end to $2.4 billion after tax at March 31st. Adjusted book value per share, which excludes unrealized investment gains and losses, was $161.60 at quarter end, up 16% from a year ago. Adjusted book value per share also increased 2% from year end, despite the very strong level of share repurchases during Q1. Share repurchases this quarter included $1.8 billion of open market repurchases, in line with the guidance we shared last quarter and as a reminder 700 million of that 1.8 billion came from the closing of the Canadian business sale in January we had an additional 185 million dollars of buybacks in connection with employee share-based compensation plans and we still have approximately 5.2 billion dollars remaining under prior board authorizations for share repurchases Dividends were $238 million in the quarter, and as Alan mentioned earlier, our board authorized a 14% increase in the quarterly dividend to $1.25 per share. In summary, our first quarter results once again demonstrate significant and durable underwriting earnings power and attractive margins across our well-diversified book of business, along with steadily increasing NII from our growing investment portfolio. And with that, I'll turn the call over to Greg for a discussion of business insurance.

Thanks, Dan. Business insurance had a strong start to 2026, delivering another quarter of excellent financial results and successful execution in the marketplace. Segment income of $839 million was a first quarter record, benefiting from strong underlying underwriting results and net investment income, as well as favorable prior year reserve development. For the 14th consecutive quarter, we delivered an underlying combined ratio below 90%. That sustained underwriting success reflects the strength of our risk selection, granular pricing segmentation, and field execution. Turning to the top line, we generated net written premiums of $5.8 billion. Domestic net written premiums were up 4% over the prior year quarter as we grew our leading middle market and select businesses by 5% and 3% respectively. National property premium declined as we maintained our disciplined underwriting standards. Turning to production, we achieved renewal premium change of 5.8% for the quarter. Excluding the property line, RPC was nearly 8% and in line with the fourth quarter. Renewal premium change was positive in all lines and higher sequentially in the umbrella and auto lines. Retention increased to 86 percent up sequentially from the fourth quarter, a reflection of our continued focus on retaining our high quality book of business in generally stable market conditions. Strong new business of $775 million was a quarterly record. These production results benefit from the investments we've made in product and underwriting precision. Our new commercial auto product, TCAP, which contains industry-leading segmentation, is now live in 47 states. We also recently enhanced our property pricing models, refining catastrophe and non-CAT segmentation. Our advanced analytics, market-facing tools, and sales enablement capabilities also played key roles in our success, reflecting the competitive advantages these investments continue to build. We're pleased with these production results and the excellent execution by our field organization. As for the individual businesses, in select, renewal premium change was strong at 8.8 percent, while retention increased one point sequentially to 82 percent. As expected, we are seeing the benefit of having largely completed our targeted cmp risk return optimization effort new business of 157 million dollars was strong and in line with last year's record these results underscore our continued investments in product underwriting and agent experience bop 2.0 is now fully deployed nationwide completing a multi-year initiative that has transformed our small commercial offering The recent rollouts of the product in California and New York were meaningful milestones, and the industry-leading segmentation embedded in the product is contributing to profitable We continue to enhance Travis, our digital quoting platform, which processes over 1 million transactions annually. Travis is a reflection of our ongoing commitment to delivering an industry-leading experience for our distribution partners. In middle market, renewal premium change remained attractive at 6.6%, while retention improved two points from the fourth quarter to a very strong 89%. Price increases remained broad-based as we achieved higher prices on about three quarters of our middle market accounts. New business of $468 million was up 7% compared to the prior year quarter, reaching a new quarterly high. Once again, another great quarter for business insurance. We are energized by both the impact of the new capabilities contributing to our strong performance and by the additional capabilities we are currently building that will drive our continued success throughout the remainder of 2026 and into the future. With that, I'll turn the call over to Jeff.

Thank you, Greg, and good morning, everyone. we're pleased to report that bond and specialty started the year with another strong quarter on both the top and bottom lines. We generated segment income of $254 million, an excellent combined ratio of 83.3%, and a strong underlying combined ratio of 88.9%. The top line, we grew net written premiums by a very strong 7% in the quarter to $1.1 billion. High quality domestic management liability business renewal premium change was slightly higher sequentially while retention remains strong at 87 percent we're encouraged by our continued progress in achieving improved pricing through our purposeful and segmented initiatives while continuing to deliver strong retention turning to our market-leading surety business we're very pleased that we increased net written premiums by 14 percent from the prior year quarter bond premium growth came from both long-term accounts many of which are relationships spanning decades as well as high quality new accounts recently added to our industry leading portfolio these new surety relationships reflect years of effort spent by our outstanding field team earning trust as well as strategic investments we've made over time to deliver value beyond the bond itself. Our portfolio of premier contractors is well positioned to continue to benefit from higher and broad-based infrastructure spending. So, bond and specialty insurance delivered strong results in the first quarter of 2026, driven by our consistent underwriting and risk management diligence, excellent execution by our field organization in delivering our leading products and value-added services, and by continuing to leverage our market-leading competitive advantages. And with that, I'll turn the call over to Michael.

Thanks, Jeff. Good morning, everyone. In personal insurance, we delivered second income of $704 million for the first quarter of 2026. Underwriting income and favorable prior year development both contributed to this excellent bottom-line result. The combined ratio of 82.9% was a terrific result in the quarter. The underlying combined ratio of 78.3% improved by 1.6 points compared to the first quarter of 2025, reflecting strong profitability in both automobile and homeowners and others. Net written premiums for the segment were $3.5 billion. As a reminder, we completed the sale of our Canada Personal Alliance business on January 2, 2026. The decrease in domestic net written premiums of 5% year-over-year reflects the impact of both auto and home actions we've taken over the past year to improve property pricing terms and conditions and to reduce exposure and high catastrophe risk geographies. The decrease also reflects higher seeded premium related to the expanded coverage we purchased as part of the Enterprise Catastrophe Reinsurance Program, which renewed on January 1st. Turning to automobile, bottom line results continue to be very strong the first quarter combined ratio was 82.9 percent reflecting a very strong underlying combined ratio of 88.3 percent and a 6.3 point benefit from favorable prior year development as a reminder the first quarter is historically our seasonally lowest combined ratio quarter in auto in homeowners and other the first quarter combined ratio was an excellent 83 percent The underlying combined ratio of 69.7% improved by approximately three points compared to the prior year quarter, primarily related to the continued benefit of earned pricing. As another reminder, the second quarter historically has been the seasonally highest quarter for homeowners' weather-related losses. Turning to production, in automobile, retention of 82% was relatively consistent with recent periods, and renewal premium change continued to moderate, reflective of our strong profit profitability. We're pleased to note that both auto new business premium and the number of new business policies written increased compared to the prior year quarter. In homeowners and other, retention improved to 85%. Renewal premium change in homeowners moderated, reflecting our successful efforts to align replacement costs with insured values. We expect renewal premium change to further moderate into the mid-single digits, reflecting improved profitability. We were encouraged to see new business premium higher year-over-year as we broadened our disciplined efforts to deploy property capacity. These production results reflect progress toward our objective of delivering profitable growth over time. We're executing a range of initiatives to generate new business growth in both auto and property, including continuing to enhance product and pricing segmentation, unwinding eligibility restrictions, lifting agent binding limitations, and increasing new agency appointments. We're focused on providing total account solutions that, together with continued investment in digitization and ease of doing business, make us an indispensable partner for our agents and an undeniable choice for customers. To sum it up, we're operating from a position of strengths the underlying profitability in our personalized business is excellent our multi-year efforts to improve returns and manage volatility in the property portfolio are largely behind us and the early signs of growth momentum in both auto and home are encouraging and with that i'll turn the call back over to abby thanks michael um thank you we are

ready to open up for q a at this time if you would like to ask a question simply press star followed by the number one on your telephone keypad we ask that you please limit your questions to one and one follow-up we'll pause for just a moment to compile the q a roster your first question comes from gregory peters with raymond james

good morning everyone uh so uh for my first question um alan and dean you've you've talked about your investment in technology um every year for years now and i'm curious how it is affecting the culture of the company and i'm thinking about this from two perspectives first of all a number of your peers have talked about the potential for headcount reduction and then at the sbu or line of business level there are risks i suppose of deploying new technology both on growth and margin. And maybe sometimes that might outweigh the benefits. So some perspective on those two

points would be helpful. Greg, good morning. Thanks for the question. And I love that question. And I'll take you back to, I think it was 2017 when we came out and we said innovation is going to be a strategy for travelers. And what we've done in the intervening years really is hone our innovation skills and and we're referring to the last essentially 10 years as innovation 1.0 positioning is for innovation 2.0 but but when you talk about the culture that's a culture that fortunately we've developed and honed over over a decade and so that that's everything from how do you pick the right initiatives how do you assess performance along the way how do you measure results how do you prepare an organization to manage change how do you communicate to an organization. It's in the middle of change. And so that, that has been a constant for us. And I don't, I just don't think you can wake up on Monday morning and say, okay, we're going to be innovative today. It's, it's a skill set and we've got a lot of hard one know how in doing it. And I think that's, that shaped our culture, which is,

which is prepared for it. Okay. Um, uh, I guess related to just, um, uh, You know, I'm looking at the personalized results again, Michael, just balancing profitability with possibly adjusting pricing to drive new business and growth. Just curious about how you're looking at that equation.

Sure, Greg, thanks for the question. And that is absolutely what we're trying to accomplish, right, balance growth with returns and generate profitable growth over time. Certainly, given the strong profit position, we've taken a number of actions across pricing, eligibility, and distribution management to drive growth. And importantly, I think we're doing that. I mentioned it from a position of strength. The segment combined ratio and underlying combined ratio on personal insurance is the lowest first quarter segment combined ratio in the last 10 years. So that gives us some flexibility to look at pricing segmentation. That gives us the opportunity to look at base rate levels in certain states to ensure that pricing is consistent with loss costs. And then, as I mentioned in the prepared remarks, we're executing a range of initiatives across distribution management, expanding eligibility, relaxing limitations to support that growth. And as I mentioned, we're encouraged by the momentum we're starting to see.

Got it. Thank you, everyone, for the answers. Thanks, Greg.

Our next question is from David Momodin with Evercore.

Hey, thanks. Good morning. I had a question just on the RRC within the select business. I was a little surprised that the deceleration there. I was hoping you could unpack that a little bit and sort of what lines were driving that deceleration.

Hey, David, if you're referencing the RPC, first of all, let me point out that's a real strong number for SELECT, just at under 9%. And you can see that drove a real strong retention number also. Rate came in at 4% and down from the fourth quarter, but that really is a reflection of how we feel about the portfolio and the rate adequacy and the very deliberate execution by our field organization.

David, I'd add to that, when you're looking at that pricing metric, any pricing metric, and I would say this for Select or, frankly, anywhere else, you really have to look at it as a package of what's the pricing, where are the returns, and where's the retention. And when you look at that trio together and you look at Select, it's an excellent outcome.

Thank you. And then maybe just for my follow-up, I thought the underlying loss ratio in BI, Um, you know, that was, uh, you know, that was, that was definitely better than I was looking for. Um, could you just talk through the moving pieces there? Um, you know, I think last year you had talked about, um, increasing IBNR on liability lines. Um, you saw maybe an update there. And then also, uh, you guys had talked about some light non-cat property losses, I think in the first couple quarter last year's and there were last year, and there were some questions if that is durable or not. So I was wondering if you have any updated thoughts there that you might be reflecting in loss picks.

Yeah, David, it's Dan. I'll take that. So, look, overall, I feel really terrific about the underlying profitability in business insurance. And as Greg called out in his prepared remarks, now that's been sustained for quite a while. So I think we're in a really sweet spot to the point Alan was just making about retention pricing and returns. nothing really unusual in in the quarter sort of the the normal suspects that you would expect a little bit of mixed impact but nothing that we would call out as being particularly unusual including including non-cat weather or anything else you also talked about you know our comment last year on the casualty lines and putting a little bit of a you know what we called I think an uncertainty provision in both 2024 and 2025 I think we said at the end of the 2025 year-end call, but I'll repeat it here, we did again carry that into the 2026 loss pick. So, the losses have not performed, you know, poorly. We like the margins in this line, but again, it's a pretty long tail line. There's still a lot of uncertainty. There's still a lot of attorney rep. We're going to have a healthy respect for that uncertainty, and so we did include that provision again in the 2026 loss picks. Got it. Thanks. That makes sense.

Your next question is from Rob Cox with Goldman Sachs.

Hey, thanks. Just a question for you around AI exclusions from policy terms. We're hearing brokers talk about increasing inbounds around AI-related exclusions from policy terms. So I'm just curious how Travelers is thinking about underwriting exclusions for AI-related risks and if you're seeing this play out in the market at all. Hey, Rob, this is Greg. Clearly,

we're looking at our policy language all the time when there's new perils or dynamics in the marketplace, and that's evolving right now, and we haven't had any material changes, but it's something we're watching very closely. Okay, great. Thank you. And then maybe I just wanted

to check in on tort reform. I know we've talked in the past. Florida is kind of viewed as a success story there. There's a number of other states who have recently passed some fairly comprehensive actions. I'm just curious if, you know, do you think that these other states could have similar success as Florida and if travelers would plan to proactively change strategy in those states with regards to underwriting and pricing, or would you wait to see an improvement before

changing strategy. Rob, we've been very encouraged by what we saw in Florida, and we've seen other encouraging actions in some other states, as you've mentioned, Georgia, Texas, Louisiana, South Carolina, and so forth. So it's been terrific to see, and I think in part attributable to a really strong ground game that we and the rest of the industry have put on, just state by state, making sure that that we're pounding the pavement together with with other industries uh just just making the case for the impact of litigation abuse on on affordability and so we're we're really pleased to see um early gains and and we hope to continue the momentum um we will um we will it's it's hard to answer your question on how we're going to execute on a with a broad brush but But we will look at the dynamics in each state. We'll look at the actions that states take, and either at the outset or over time, that will impact how we think about the opportunity there and how we execute. But we're hopeful that this is the beginning of some momentum.

Thank you.

Thank you.

Your next question comes from Andrew Anderson with Jeffries.

Hey, good morning. Within BI, as some of these lines continue to see firm pricing other than property, how do you think about the relative attractiveness of workers' comp from either a growth or a margin perspective?

The workers' comp business is a fantastic business for us, and it continues to perform very well. You can look at the calendar year returns, and we are more than open for business in workers' comp.

Got it. And within surety, growth accelerated. Again, how would you kind of frame the demand conditions relative to credit quality?

Yeah, hey, this is Jeff Klink responding, Andrew. I would tell you that our growth in the quarter for surety was really broad-based. As I mentioned in the prepared remarks, it was new and existing customers. It was the different segments within our surety business. We have the quality of our book of business. We continue to look at that as we take new customers into that portfolio. And we feel really good that our portfolio will continue to benefit from the broad-based infrastructure spending that's out there as we look ahead. Thanks for the question.

Thank you.

Your next question comes from Josh Schenker with Bank of America.

Thank you for putting me in. I was curious about the expense ratio. It's a little higher than this in the past on both the acquisition costs and the other expense ratio. Can you talk about the drivers and how we should think about that as the year progresses?

Sure, Josh, it's Dan. So we're not at all surprised with the expense ratio. If you look at our results over the last five or six years, if you look at the quarters within any given full year, It's not at all unusual to see the expense ratio vary by a point or more from quarter to quarter. 2025 really didn't, but 2025 was more of an outlier and just sort of happenstance. So you mentioned, you know, compensation commission. So things like, you know, at what point do you evaluate the level of accrual that you think you're going to need for profit sharing or contingent commission? And so in the first quarter last year, we were sitting here coming out of one of the largest cat events in the history of the industry with California wildfires and saying, look, at this rate, we probably don't need a whole lot of extra accrual for contingent commissions and profit sharing. That's a different situation this year, given the profitability of the book in the first quarter. But as I said in my prepared remarks, first quarter came out pretty much where we expected it to be when we gave the guidance last year that we expected 28.5% for this year's full year.

And on personal lines, is there a difference in the complexion of a business that's churning out of your portfolio versus business that you're winning currently?

uh thanks josh it's michael i would i would say absolutely the business that's churning out of the portfolio is not as of high quality as the business that's coming in uh when we look at the profile of the business um lost versus the profile of the business added new uh the profile of the business we're adding new is superior to the profile of the business that that we're losing

And what are the qualitative features that make that business better? Is it bundled? Is it higher value homes? Is it more cars per home? What is the difference between those two cohorts?

I mean, the elements that we look at when we look at profile include all those things, credit quality, limits, bundling, number of vehicles, age of vehicle, age of home, really pretty much across the board, the portfolio characteristics, the profile characteristics of the business we're adding is better than the profile characteristics of the business we're

losing. So can we say that you're churning the business you're losing with some intentionality?

that that's a cheap business you don't want anymore? I would say we're very happy with the tradeoff between what we're writing new and what we're losing. I mean, again, remember in personal insurance, the business is mostly systematized. So there is certainly an element of business we are non-renewing or declining to offer renewal for based on risk quality, risk characteristics, our estimate of what the lost racial relativity on that business is, but really I think what you're seeing is the successful outcome of a pricing and segmentation strategy that's tuned to attract the business that we want. Thank you very much. Your next question comes from

Yaron Kinnar with Mizuho. Thank you. Good morning, everybody. I had two questions on business

insurance. The first one, it seems like renewal pricing changes below loss trend for the first time in a while, at least based on the last long-term loss trend that the company provided a few years ago. And assuming that persists, how does that change the company's approach to writing and retaining business? As an example, I think the last time we saw RPC in this range, retention rates were a bit lower than where they are today.

So, Jaron, I'm not going to respond to whether it's, in fact, expanding or shrinking on a written basis, but what I will say is we're thrilled with the book of business we have, and we're very happy about the business we're putting on the books, and so the way we think about the execution isn't looking at retention as sort of a headline number. It's executing at a very granular account-by-account basis. So, you know, when you're looking at the business we want to retain, you want to keep your quality business, you want to get the right price on it, and through a lot of hustle and franchise value, write new business. And so we are – the retention and the fact that it ticked up, given the quality of the book and the returns in this business, fantastic.

Okay, got it. And then my follow-up, again, NBI, more focused on select accounts. I'm just trying to think about the impact of AI here, where on the one hand, I think it probably offers an opportunity to increase TAM. You can drive scale and efficiency benefits there. But at the same time, it could also mean that we see more of a shift of small commercial to larger brokers with more data and analytics capabilities, maybe greater negotiating power. So I'm just curious to hear how you think about those dynamics, whether my thinking about this is correct, how you see the business develop over the coming years with the advent of AI. I honestly think it's a little too early to know

how that's going to happen. We've acquired three digital agencies, brokers over the years, simply business insurance and insure match expecting the digitization of small commercials or move up in size and and it really hasn't and and we think about simply business for example the the small commercial it it writes is I would describe it as micro and and the for whatever reason we just haven't had the the take up there the way we would have expected you know eight or ten years ago so i think before we see how this business is going to transition from one size of distributor to another you're going to have to see customers adopt that way adopt uh digital distribution for for research and purchasing we just haven't seen it and aaron one thing i would

throw out in addition um you know we're really excited about the gen ai within the independent agent channel and particularly Select and in middle market. And in Select, we've executed some Gen AI that helps us process the business endorsements and changes and just remove the friction and allow it to be much smoother for our independent agent channel. So I don't think it has all applicability of just changing distribution channels. We think it can be a great facilitator in having us be more efficient in our existing distribution channels. And just to go back to

your question. To the extent small commercial does gravitate to the larger brokers, it's probably good for us. I mean, it's probably a good thing for us. We've got those relationships, and that's

probably a plus for travelers. Thanks so much. Your next question is from Elise Greenspan from Wells Fargo. Hi, Elise. One moment for that last question. We can go to the next, and if Elise jumps back in, we'll... Okay, one moment. Okay, your next question is from Tracy Bengali with Wolf Research.

Thank you. Good morning. Hey, a follow-up on the AI and commercial lines distribution. I appreciate your comments on simply business and the lower take-up rate, but if I could take that in a different angle, rather than brokers being disintermediated, I'm wondering over time, can commission structures change due to the advancement of AI? It's pretty early, I think,

in the evolution of AI and the distribution of insurance to probably get into that, Tracy, and it's probably a broader conversation maybe for a different time, different day.

Okay. I also have a big picture casualty reserving question. Are claim patterns normalizing post-COVID catch-up period? And if so, does that inform your loss development factor selection?

Hey, Tracy, it's Dan. So, you know, compared to what we saw in COVID, I would say COVID was probably as disrupted payout patterns as you know as we saw um so normalized relative to that yes but the trend in payout patterns in the casualty lines particularly the long tail liability lines has still been increased frequency of attorney reps general lengthening of the tail so the things that we talked about you know in the middle of 2024 when we made some adjustments to our loss picks for accident years 21 through 23 and then started to factor in that uncertainty provision i i talked about in in a question earlier today is still relevant because we have not seen attorney rep rates slow down we have not seen severity increases slow down we have not seen payout patterns return to their pre-covid um pre-covid patterns it's it's a extended payout pattern that this, if anything, continue to slightly extend. Thank you. Your next question is from Elise

Greenspan with Wells Fargo. Hi, thanks. Sorry about that earlier. My first question, I wanted to ask just about M&A and just capital, Alan, just given that things are starting to soften just from a market and premium perspective or continuing to soften. I was hoping to just get your current views on just M&A, things that, you know, you might consider and how that just fits into your

capital priorities right now so at least I'll give you the same answer that I think I've given you for ten years consistently on that which is where we're always interested in M&A of all you know potentially shapes and sizes and and we're very active in looking at things I think our shareholders should demand that we're active in looking at things and whether that's the larger transactions or whether we're considering bolt-ons or whether we're considering acquiring capabilities that's that's all uh within our thought process and within our regular activity i i don't we don't need to do anything at all to continue to be successful we've got all the tools and capabilities that that we need to be successful but if if we find the the right opportunity that that meets our objectives and i've shared many times are i mean obviously we're going to assess a transaction in a million different dimensions, but we're looking for transactions that either improve our return profile, lower volatility, or provide us with some of the strategic capability. And we're actively looking for those, and when we find them and can get them done at the right terms and conditions, we'll do it. Thanks. And then my

follow-up, you know, on personal lines, you know, as we, you know, start to think about, you know, gas prices being elevated um you know just given um what's going on overseas and i guess the offset could be potential if there's potentially supply chain issues right which would impact severity gas prices obviously potentially helpful to frequency can you guys just um just was hoping to get some color just on the outlook um just for margins within personal lines given you know some some of the things going on in the market right now sure at least it's michael i would say you

You know, the gas price dynamic really depends on duration. Short to even medium-term increases in gas prices don't materially change commuting patterns and driving levels. So it does have to be a sustained elevation in gas prices to really impact miles driven. And to be clear, if gas prices stay high for an extended period of time, that puts downward pressure on miles driven, and it's actually a benefit to frequency. That's the most kind of straightforward dynamic that we could see. But, again, gas prices would need to stay high for an extended period of time to drive that. You know, from a supply chain standpoint, I mean, it's a fast-moving, fast-changing situation. There's lots of different things that could happen. There are scenarios where elevated costs actually put sort of downward pressure on consumer purchases and actually reduce used car prices because there's not as much demand. um as just one example of the type of scenario we could see uh but at this point it would be speculative to really you know go beyond that and sort of sort of pick a path your next question is

from mike zirinsky with bmo hey thanks a question on the uh home insurance uh side um mike i believe you uh said michael that um pricing would would start to to move to the mid single digits you if I look at if we look at travelers historical loss trend in home it looks like it's well into the double digits so you know are you signaling that um you know that the lost cost trend uh is is better after kind of the the changes you've made or you're letting you know margins deteriorate a bit to accelerate growth or a little bit of both because especially if you look at the cat load increased guide over the last few years, it's pretty much all emanated from home being a

bigger part of the equation. Thanks. Sure, Mike. It is, Michael. Sort of taking those pieces and putting them together, what I would say is the guidance for property pricing moving down towards mid-single digits really just reflects the fact that we have rate adequacy broadly in virtually every state across the country as we sit here today and we're pleased with the profitability of the portfolio. And I think importantly, that's been driven by pricing, but also by changes in appetite, terms and conditions, and business mix, including state distribution. And so what you saw between fourth quarter of last year and first quarter of this year was really that we had caught up on insurance to value. We had gotten coverage limits where they needed to be on property policies, and so we've gone to a lower inflation factor on those property policies renewing in 2026. That really explains most of the quarter-to-quarter drop in RPC. What I'm signaling in the go forward is that rate will also start to moderate in response to that improved profitability, and underneath that certainly is an assumption based on what we've been seeing that the elevated inflation that I think you're referring to in your question has returned to a more normal level, and so that's aligned with that pricing expectation.

that's helpful and my follow-up's um um pivoting to commercial lines uh lost cost trend and if we look at you know your commentary about lost cost trend being um you know mid single digits plus um in the past uh if we look at kind of your reserve releases and especially over the last year or or more uh it kind of implies that lost trend has been a bit below uh the the historical stated trend. Would you agree with that, or is loss trend maybe improving slightly versus your

historical view? Thanks. Yeah, Mike, it's Dan. I think if you look at business insurance in particular, you know, a large part of the favorable reserve development we've seen over the last several years in general has been comp related, and we've said on comp each time that it's come up there's been favorability both in frequency and in severity, particularly in medical cost trend severity. That doesn't really bleed over into the way we think about loss trend in commercial auto or commercial property or the general liability lines as an example. So I don't think that we've seen a sea change in the way we think about loss trend to the positive. There's still a lot of pressure on the liability lines, which is why we continue to talk about, you know, things like double-digit pricing in Umbrella. Fair question, but I don't think we've seen anything.

And Mike, I'd add to that that, you know, one of the reasons that we've gotten away from talking about loss trends is because it's a pretty narrow concept of frequency and severity. It's a very blunt instrument to think about what's happening across billions of dollars of premium. Each line has its own dynamic, and there are other things that impact margins. There's base year changes, there's exposure changes mix changes change in in our loss our large loss assumptions other adjustments that we make for one reason or another there's you know there's a lot of estimation in that number so we try to get away from it but you know holistically speaking what i'd say is um the you know loss picks we have reflect what we think is going on with lost trend and you know on the whole it behaved about as we expected thanks we have time for one more

question and that question comes from Pablo with JP Morgan hi thanks so first

just a quick modeling question you talked about the impact of the Canada sale and earned and written premiums I think you've mentioned two points should there be a similar proportion impact on the dollar run rate acquisition and

junior expenses I think the way we think about it Pablo is just think about combined ratio in general and so there's a little bit of a mixed difference between the way Canada performed relative to the other lines, but not so significant that we think we'd call it out and tell you you need to adjust the run rate loss ratio. So you'd ask the same question you asked about whether it's acquisition cost or G&A or loss ratio or claim and claim adjustment expense, sort of up and down the income statement. We don't think it's going to significantly change the profile, the profitability related to those dollars.

Understood. And then the second one, just a follow-up to Rob's questions about AI and not entirely related to the quarter. So, Shirel is one of the largest cyber writers in the U.S., and I guess the question is, how are you thinking about your exposures there and risk management just given recent development to the AI?

Yeah, thanks for the question, Pablo. So, absolutely, it is an underwriting consideration. We're thinking about artificial intelligence and with some of the more recent announcements in the last few days about the strength of the LLM models and what that could mean, it's not just on the negative side. It's also got the potential to be on the positive side from an investment in resilience and capability to actually address the threat. And so we're heavily invested. We've continued to invest in our risk control capabilities to address the cyber risk issue. And I think that ultimately we're going to have to make sure we're staying on top of it in partnership with broader government entities, as we already are. And I think the investments we've made in our cyber risk control team for the benefit of our customers, the really good news for them is that as this technology continues to expand and change, we're going to be even in a better position to help them identify and remediate vulnerabilities as they come about. Thanks for the question. Thank you very much.

There are no further questions at this time. I'll now turn the call back over to Ms. Goldstein for any closing remarks.

Thanks so much. We appreciate your tuning in. We know we left some questions in queue, so as always, please feel free to follow up with Investor Relations and appreciate your time. Have a good day.

This concludes today's conference call. Thank you for participating. You may now disconnect.