Travelers Companies Q2 Earnings Call Highlights

Travelers Companies (NYSE:TRV) reported what executives described as an "excellent" second quarter of 2026, supported by strong underwriting results across all three business segments, higher investment income and favorable reserve development.

Chairman and Chief Executive Officer Alan Schnitzer said the insurer earned core income of $2.2 billion, or $10.04 per diluted share, and generated a core return on equity of 24.9% for the quarter. Over the trailing four quarters, Travelers produced a core return on equity of 24.2%.

"We're pleased to report an excellent second quarter and another in a sustained run of successful quarters, with very strong underwriting performance across all three segments and a terrific result from our investment portfolio," Schnitzer said.

Pre-tax underwriting income totaled $1.7 billion, while the combined ratio improved to 83.6%. The underlying combined ratio improved to 84.1%, which management attributed to a lower underlying loss ratio. Chief Financial Officer Dan Frey said underlying underwriting income reached $1.3 billion after tax, marking the company's eighth consecutive quarter above $1 billion.

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After-tax net investment income rose 14% from the prior-year quarter to $883 million. Frey said fixed income investment income benefited from higher yields and a higher level of invested assets, while alternative investment income also increased. He noted that new money yields at the end of the second quarter were about 90 basis points above the yield embedded in the portfolio.

Travelers expects fixed income net investment income, including earnings from short-term securities, of approximately $840 million in the third quarter and roughly $870 million in the fourth quarter, consistent with prior guidance, Frey said.

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Operating cash flow was $1.9 billion for the quarter and surpassed $11 billion over the trailing 12 months. Adjusted book value per share, which excludes unrealized investment gains and losses, was $168.20 at quarter-end, up 16% from a year earlier.

The company returned more than $1.5 billion of capital to shareholders during the quarter, including $266 million of dividends and $1.3 billion of share repurchases. Frey said Travelers had about $3.9 billion remaining under prior board authorizations for buybacks.

Schnitzer emphasized that the company's capital management priorities remain reinvestment in the business, organic or inorganic, where attractive returns are available, followed by returning excess capital to shareholders.

Business Insurance generated segment income of $1.2 billion, a second-quarter record, according to Greg Toczydlowski, president of Business Insurance. The segment's underlying combined ratio was 88.2%, also a second-quarter record.

Net written premiums in Business Insurance reached $6 billion. Excluding the impact of the sale of the company's Canadian business in the first quarter, net written premiums increased 5% from the prior-year quarter. Toczydlowski said growth was led by a 7% increase in Middle Market and a 4% increase in Select.

National property premiums declined as Travelers maintained disciplined underwriting standards, passing on business where pricing and terms did not align with the company's view of risk. However, Schnitzer said property premiums were higher in both small commercial and middle market businesses.

Renewal premium change in the segment was 4.8%. Excluding property, renewal premium change was 7.8% and roughly flat sequentially. Retention remained strong at 86%, while new business reached a quarterly record of $805 million, up 8% from the prior-year quarter.

In response to an analyst question about whether Travelers might relax underwriting standards or pricing to accelerate growth given its elevated return on equity, Schnitzer rejected the idea.

"Competing on pricing in this business is a fool's errand," Schnitzer said. He added that Travelers' objective is to compete on franchise value rather than lower prices.