TRAVELERS COMPANIES, INC.

The Travelers Companies, Inc. operates in the highly competitive property and casualty insurance industry, which according to A.M. Best comprises approximately 1,100 property and casualty groups in the United States, consisting of approximately 2,600 property and casualty companies, with the top 150 groups accounting for approximately 94% of the consolidated industry's total net written premiums in 2024. The Company competes with both foreign and domestic insurers and offers products for alternative forms of risk protection, including large deductible programs and various forms of self-insurance. The marketplace is affected by the available capacity of the insurance industry as measured by statutory capital and surplus and the availability of reinsurance from both traditional sources and non-traditional sources such as hedge funds and pension plans.

The Company's competitive position is based on many factors including the ability to profitably price business, retain existing customers, obtain new business, premiums charged, contract terms, agent and broker relationships, ability to keep pace with changes in technology and information systems including artificial intelligence, ability to use data and analytics, speed of claims payment, ability to provide a positive customer experience, perceived overall financial strength and corresponding ratings assigned by independent rating agencies, and geographic scope of business. The Company has a disciplined approach to underwriting and risk management that emphasizes product returns and profitable growth over time rather than premium volume or market share.

The Company generates revenue primarily through the sale of commercial and personal property and casualty insurance products and services to businesses, government units, associations and individuals. Revenue is derived from premiums, net investment income, fee income, and other revenues. The Company's insurance subsidiaries are subject to state laws and regulations regarding rate and policy form approvals, and pricing is generally developed based upon an estimation of expected losses, expenses associated with producing, issuing and servicing business and managing claims, the time value of money, and a reasonable profit margin.

Business Insurance offers a broad array of property and casualty insurance products and services to its customers primarily in the United States, as well as in the United Kingdom, the Republic of Ireland and throughout other parts of the world, including as a corporate member of Lloyd's. For the year ended December 31, 2025, Business Insurance reported net written premiums of $22.679 billion ¹, with Domestic net written premiums of $20.745 billion ² and International net written premiums of $1.934 billion ³. The segment is organized into Select Accounts, Middle Market, National Accounts, National Property and Other, and International. Select Accounts provides small businesses with property and casualty insurance products and services, Middle Market provides mid-sized businesses with property and casualty insurance products and services, National Accounts provides large companies with casualty insurance products and services, and National Property and Other provides traditional and customized commercial property insurance programs. International provides property and casualty insurance and risk management services through operations in the United Kingdom and the Republic of Ireland and at Lloyd's syndicate (Syndicate 5000), for which the Company provides 100% of the capital ⁴.

Bond & Specialty Insurance offers surety, fidelity, management liability, professional liability, and other property and casualty coverages and related risk management services to its customers primarily in the United States, and certain surety and specialty insurance products in Canada, the United Kingdom, the Republic of Ireland and Brazil through a joint venture. For the year ended December 31, 2025, Bond & Specialty Insurance reported net written premiums of $4.262 billion ⁵, with Domestic net written premiums of $3.680 billion ⁶ and International net written premiums of $582 million ⁷. The Company owns 49.5% ⁸ of Junto Holding Brasil S.A. (Junto), a market leader in surety coverages in Brazil, which is accounted for using the equity method. Personal Insurance offers a broad range of property and casualty insurance products and services covering individuals' personal risks, primarily in the United States, with primary products of automobile and homeowners insurance. For the year ended December 31, 2025, Personal Insurance reported net written premiums of $17.446 billion ⁹, with Domestic net written premiums of $16.796 billion ¹⁰ and International net written premiums of $650 million ¹¹. Personal Insurance had approximately 8.4 million ¹² active policies in the United States as of December 31, 2025.

On May 27, 2025, the Company entered into an agreement to sell its Canadian personal insurance business and the majority of its Canadian commercial insurance business to Definity Financial Corporation for approximately US$2.4 billion ¹³. The assets and liabilities of the Canadian personal insurance business and the majority of its Canadian commercial insurance business have been classified as held for sale in the consolidated balance sheet as of December 31, 2025. The Company retained its surety business in Canada. The sale closed on January 2, 2026. The Company's Board of Directors approved common share repurchase authorizations, with the most recent authorization approved on January 21, 2026 adding $5.0 billion ¹⁴ of repurchase capacity to the $2.02 billion ¹⁵ capacity remaining at that date. During the year ended December 31, 2025, the Company repurchased shares and paid dividends totaling $4.18 billion ¹⁶ of capital returned to shareholders, comprising $3.20 billion ¹⁷ of share repurchases and $987 million ¹⁸ of dividends.

For the year ended December 31, 2025, the Company reported total revenues of $48.828 billion ¹⁹, net income of $6.288 billion ²⁰, diluted net income per share of $27.43 ²¹, and a combined ratio of 89.9% ²². Net earned premiums were $43.914 billion ²³, net investment income was $3.959 billion ²⁴, and operating cash flows were $10.61 billion ²⁵. Net income increased by 26% over net income of $4.999 billion ²⁶ in 2024, and diluted net income per share increased by 28% over diluted net income per share of $21.47 ²⁷ in 2024. The combined ratio of 89.9% ²⁸ in 2025 was 2.6 points lower than the combined ratio of 92.5% ²⁹ in 2024.

The Company continues to make significant investments to enable real-time interface capabilities with its independent agencies and brokers across Business Insurance, Bond & Specialty Insurance, and Personal Insurance. In Business Insurance, the Company renewed a quota share reinsurance agreement with subsidiaries of Fidelis Insurance Holdings Limited (Fidelis) effective January 1, 2026, pursuant to which the Company assumes 20% ³⁰ of the subject gross written premiums of Fidelis on a risk-attaching basis, subject to a loss ratio cap, with the Company's portion of premiums from Fidelis reported as part of the International results of Business Insurance. The Company also has a minority investment in Fidelis. In Personal Insurance, the Company has had a distribution agreement with the agency affiliate of GEICO since 1995 to underwrite a portion of their homeowners business.

The Company's growth in its International operations is supported by its Lloyd's syndicate (Syndicate 5000), for which the Company provides 100% of the capital ³¹, underwriting five principal businesses: marine, energy, property, aviation and special risks. Through its Lloyd's syndicate, the Company has access to international markets across the world by virtue of Lloyd's worldwide licenses. The Company also conducts business in Brazil through a joint venture, Junto Holding Brasil S.A., in which the Company owns 49.5% ³², a market leader in surety coverages in Brazil. The Company's International operations in Bond & Specialty Insurance saw net written premiums increase by 15% ³³ over 2024, driven by increases in the United Kingdom and broader Europe.

The Company's underlying underwriting margins in 2025 improved across all three segments, with the underlying combined ratio in 2025 being 2.3 points lower than the 2024 ratio on the same basis, primarily reflecting the impacts of the benefit of earned pricing and lower losses in Personal Insurance. The underwriting expense ratio of 28.5% ³⁴ in 2025 was comparable with the underwriting expense ratio in 2024. The Company continues to invest in technology and data analytics to improve underwriting and claims management, and the Company regularly monitors its investment in claim resources to maintain an effective focus on claim outcomes and a disciplined approach to continual improvement.

The Company has approximately 34,000 ³⁵ employees as of December 31, 2025, with approximately 90% ³⁶ located in the United States. The Company's minimum hourly wage in the United States is $20 ³⁷ as of April 2025. The Company offers a 401(k) Savings Plan through which the Company matches employee contributions dollar-for-dollar up to 5% of eligible pay, with a maximum annual Company match of $7,500 ³⁸ for 2025 and $8,000 ³⁹ for 2026. The Company also has a Pension Plan that provides annual pay credits from 2% ⁴⁰ to 6% ⁴¹ of eligible pay based on age and years of service, plus quarterly interest credits.

The Company's capital allocation strategy includes common share repurchases and dividends. The most recent share repurchase authorization was approved by the Board of Directors on January 21, 2026 and added $5.0 billion ⁴² of repurchase capacity to the $2.02 billion ⁴³ capacity remaining at that date. The Company's Board of Directors has approved common share repurchase authorizations under which repurchases may be made from time to time. The Company paid dividends of $987 million ⁴⁴ in 2025. The Company's debt-to-total capital ratio was 22.0% ⁴⁵ as of December 31, 2025 (21.2% ⁴⁶ excluding net unrealized investment losses, net of tax, included in shareholders' equity).

The Company faces structural headwinds from catastrophe losses, which are inherently unpredictable. The incidence and severity of catastrophes are inherently unpredictable, and it is possible that both the frequency and severity of natural and man-made catastrophic events could increase. The Company's catastrophe reinsurance program includes a Corporate Catastrophe Excess-of-Loss Reinsurance Treaty that provides for recovery of 100% of each qualifying loss in excess of a $3.0 billion ⁴⁷ retention up to $4.0 billion ⁴⁸, 80% of losses in excess of $4.0 billion ⁴⁹ up to $5.0 billion ⁵⁰, 95% of losses in excess of $5.0 billion ⁵¹ up to $7.5 billion ⁵² and 100% of losses in excess of $7.5 billion ⁵³ up to $8.0 billion ⁵⁴, with a maximum recovery under the treaty of $4.7 billion ⁵⁵. The Company also has catastrophe bonds through Long Point Re IV Ltd. providing coverage of up to $575 million ⁵⁶ through May 24, 2026 for certain losses from tropical cyclones, earthquakes, severe thunderstorms or winter storms, subject to a $2.89 billion ⁵⁷ retention.

The Company faces execution risks related to its ability to maintain adequate pricing and underwriting discipline in a competitive market. The property and casualty insurance industry is highly competitive, and the Company competes with both domestic and foreign insurers, including start-ups, which may offer products at prices and on terms that are not consistent with the Company's economic standards. The Company's ability to increase rates and the relative timing of the process are dependent upon each respective state's requirements, as well as the competitive market environment. The Company also faces risks from changing climate conditions, which the Company believes have likely added to the frequency and severity of natural disasters and created additional uncertainty as to future trends and exposures.

The Company faces material risks from high levels of catastrophe losses, which are inherently unpredictable and could materially and adversely affect results of operations, financial position, and liquidity. The Company's catastrophe reinsurance program has a $3.0 billion ⁵⁸ retention for its Corporate Catastrophe Excess-of-Loss Reinsurance Treaty, and the Company's estimated deductible under the Terrorism Risk Insurance Program is $4.01 billion ⁵⁹ for 2026. The Company also faces significant uncertainty in estimating claims and claim adjustment expense reserves, which involves a high degree of judgment and is subject to variables such as changes in the legal and tort environment, inflation, and economic conditions. Net favorable prior year reserve development was $1.04 billion ⁶⁰ in 2025, but the Company cautions that the final resolution of estimated liabilities will likely be higher or lower than the related loss reserves. The Company is exposed to credit risk in its surety insurance operations, where it guarantees customer performance obligations, and in its large deductible insurance policies, where contractholder payables on unpaid losses within the deductible layer were approximately $3.03 billion ⁶¹ as of December 31, 2025. A downgrade in the Company's claims-paying and financial strength ratings could negatively impact business volumes and the ability to access capital markets, and the Company's insurance subsidiaries are subject to regulatory restrictions that limit the maximum amount of dividends available to be paid to the parent without prior approval.

Management's message emphasizes the Company's strong financial performance in 2025, with net income of $6.288 billion ⁶² and diluted net income per share of $27.43 ⁶³, representing a 26% increase in net income and a 28% increase in diluted net income per share over 2024. The Company's strategic priorities include maintaining a disciplined approach to underwriting and risk management that emphasizes product returns and profitable growth over time rather than premium volume or market share, continuing to make significant investments in technology and data analytics to improve underwriting, claims management, and customer experience, and managing exposure to catastrophes through individual risk selection and the purchase of catastrophe reinsurance. The Company also emphasizes its commitment to returning capital to shareholders, having returned $4.18 billion ⁶⁴ in 2025 through $3.20 billion ⁶⁵ of share repurchases and $987 million ⁶⁶ of dividends.