Travelers Companies Q4 Earnings Call Highlights

Travelers Companies (NYSE:TRV) reported what management described as “excellent” fourth-quarter and full-year 2025 results, driven by strong underlying underwriting income across all three operating segments and higher net investment income. Executives also highlighted expanded use of artificial intelligence across underwriting and claims, updated 2026 catastrophe reinsurance protection, and an elevated pace of capital return through share repurchases.

Fourth-quarter results fueled by underwriting and investments

Chairman and CEO Alan Schnitzer said core income for the quarter was $2.5 billion, or $11.13 per diluted share, producing a core return on equity of 29.6%. Pre-tax underwriting income was $2.2 billion, up 21% from the prior-year quarter, helped by higher underlying underwriting income, higher favorable prior-year reserve development, and lower catastrophe losses.

The underlying combined ratio improved nearly two points to 82.2%, which CFO Dan Frey noted was the company’s fifth consecutive quarter below 85%. Travelers reported after-tax net investment income of $867 million for the quarter, up 10% year over year, with growth driven primarily by fixed maturity investment income on higher invested assets and higher average yields.

Premium growth and segment performance

Travelers grew net written premiums to $10.9 billion in the quarter through what management called disciplined execution across Business Insurance, Bond & Specialty Insurance, and Personal Insurance.

• Business Insurance: Net written premiums were more than $5.5 billion, an all-time fourth-quarter high. Segment income was nearly $1.3 billion, with an all-in combined ratio of 84.4% and an underlying combined ratio of 87%. President Greg Toczydlowski said renewal premium change was just over 6% (8% excluding the property line) and retention remained strong at 85%. New business was $675 million, up 6% year over year. Management reiterated that declining property premium reflected a large-account dynamic and continued discipline around risk selection, pricing, and terms and conditions.
• Bond & Specialty Insurance: Net written premiums rose 4% to $1.1 billion. Segment income was $236 million and the combined ratio was 83%, with an underlying combined ratio of 85.7%. President Jeff Klenk said management liability renewal premium change was 2.8% with retention of 87%, and surety premiums increased from a strong prior-year quarter on strong demand.
• Personal Insurance: Net written premiums were $4.2 billion in the quarter and were comparable to the prior year, reflecting strong homeowners renewal premium change and higher auto new business. President Michael Klein said segment income exceeded $1 billion and the combined ratio was 74%. In auto, the fourth-quarter combined ratio was 89.4%, with an underlying combined ratio of 92.2% that improved more than four points year over year. In homeowners and other, the combined ratio was 60.3% and the underlying combined ratio was 59.9%, both improving year over year, helped by earned pricing and lower catastrophe losses.

Reserves, catastrophes, and expense ratio outlook

Frey said fourth-quarter catastrophe losses were $95 million pre-tax. Total net favorable prior-year reserve development was $321 million pre-tax, with contributions from all three segments. Business Insurance had $205 million of net favorable development, driven by workers’ compensation; Bond & Specialty had $30 million, driven by fidelity and surety; and Personal Insurance had $86 million, with favorability in both auto and home.

The consolidated expense ratio was 28.4% in the fourth quarter and 28.5% for the full year. Frey said the company continues to expect the 2026 expense ratio to be “right around 28.5%.” In response to an analyst question about when efficiency benefits might show up structurally in the expense ratio, Schnitzer said management seeks to optimize operating leverage, noting that some productivity gains—particularly in claims—flow through loss adjustment expense and therefore benefit the loss ratio rather than the expense ratio.

On casualty lines, Frey said Travelers again included an uncertainty provision in its 2025 accident-year loss picks and plans to do so again in 2026. He added that while workers’ comp drove favorability, long-tail casualty lines remain an area where the company intends to “stay prudent.”

AI investments, reinsurance renewal, and capital return

Schnitzer framed Travelers’ technology agenda as moving from “Innovation 1.0” to “Innovation 2.0,” powered by AI. He said dozens of scaled generative AI tools are already in production, millions of transactions are automated, and more than 20,000 employees use AI tools regularly. He also highlighted a recently announced partnership with Anthropic intended to provide 10,000 engineers, data scientists, analysts, and product owners with “personalized, context-aware, and integrated AI assistance,” which management expects to accelerate software and model development.

In claims, Schnitzer said more than half of all claims are now eligible for straight-through processing and customers use straight-through processing about two-thirds of the time, with another 15% of claims processed with advanced digital tools. He said Travelers recently launched a generative AI voice agent for first notice of loss by phone and early adoption is exceeding expectations. As an example of operational impacts, he said the call center population in claims is down by a third and the company will consolidate four claim call centers down to two.

On reinsurance, Frey said Travelers’ January 1 catastrophe reinsurance renewal included a lowered attachment point on its catastrophe excess-of-loss treaty: the per-occurrence deductible remains $100 million, but the attachment point dropped to $3 billion from $4 billion in 2025. He said the improved coverage came with only a modest increase in total ceded premium costs, citing refined reinsurance structures and more favorable reinsurance pricing. Frey added that Travelers renewed its enhanced casualty reinsurance program introduced in 2025 and again renewed its 20% quota share with Fidelis, including the same loss ratio cap in place since 2023.

Travelers returned $1.9 billion of capital to shareholders in the fourth quarter, including $1.65 billion of share repurchases and $244 million of dividends. Frey said the sale of the company’s Canadian operations closed as planned on January 2, 2026, and the company now expects around $1.8 billion of share repurchases in the first quarter of 2026, up from the roughly $1.6 billion previously discussed.

For the full year, Travelers reported core income of $6.3 billion, or $27.59 per diluted share, and a core return on equity of 19.4%. Adjusted book value per share ended the year at $158.01, up 14% year over year. Frey also said the investment portfolio grew by about $7.5 billion in 2025 to $106 billion, and the company expects approximately $3.3 billion of after-tax fixed income net investment income in 2026, beginning at about $800 million in the first quarter and rising to about $870 million in the fourth quarter.

About Travelers Companies (NYSE:TRV)

The Travelers Companies, Inc (NYSE: TRV) is a leading provider of property and casualty insurance products and services. The company underwrites a broad range of commercial and personal insurance lines, offering coverage designed to protect individuals, small and midsize businesses, and large corporate clients against property loss, liability, and other operational risks. Travelers is known for combining underwriting, claims management and risk control services to help clients prevent losses and recover when incidents occur.

On the commercial side, Travelers writes primary and specialty coverages including property, general liability, commercial auto, workers’ compensation, professional and management liability, surety and inland marine.