Second Quarter 2017 Results July 20, 2017 1 Long-Term Financial - PowerPoint PPT Presentation

Second Quarter 2017 Results July 20, 2017 1

Long-Term Financial Strategy Generation of Balanced approach Meaningful and top tier earnings to rightsizing sustainable and capital capital and competitive substantially in growing book value advantages excess of growth per share over time needs CREATE SHAREHOLDER VALUE Objective: Mid-Teens Core ROE Over Time 2

Second Quarter 2017 Overview Travelers Reports Second Quarter Net Income and Core Income per Diluted Share of $2.11 and $1.92, Respectively, Including Catastrophe Losses of $0.93 per Diluted Share Return on Equity and Core Return on Equity of 10.0% and 9.5%, Respectively • Net income of $595 million and core income of $543 million impacted by relatively high levels of catastrophe and non-catastrophe weather-related losses. • Combined ratio of 96.7%, included 6.4 points of catastrophe losses. Underlying combined ratio of 93.5%. • Net investment income increased 9% pre-tax (6% after-tax) over prior year quarter due to strong private equity returns. • Record net written premiums of $6.640 billion up 5% over prior year quarter, with growth in all segments. • Total capital returned to shareholders of $676 million in the quarter, including $475 million of share repurchases. Year-to-date total capital returned to shareholders of $1.152 billion, including $761 million of share repurchases. • Book value per share of $86.46 and adjusted book value per share of $82.71, up 4% and 3%, respectively, from year-end 2016. • Board of Directors declared quarterly dividend per share of $0.72. 3

Consolidated Performance ($ in millions, except per share amounts, after-tax) YEAR-TO-DATE SECOND QUARTER 2017 2016 Change 2017 2016 Change Core income $ 543 $ 649 (16) % $ 1,157 $ 1,347 (14) % per diluted share $ 1.92 2.20 (13) % $ 4.08 $ 4.52 (10) % Included the following items: Net favorable prior year reserve development $ 132 $ 192 $ 176 $ 311 Catastrophes, net of reinsurance (262) (222) (488) (429) Total items $ (130) $ (30) $ (312) $ (118) Loss and loss adjustment ratio 65.6 % 61.1 % 65.5 % 61.1 % Underwriting expense ratio 31.1 32.0 30.9 31.6 Combined ratio 1 96.7 % 93.1 % (3.6) pts 96.4 % 92.7 % (3.7) pts 3.2 4.7 2.3 3.9 Net favorable prior year reserve development Catastrophes, net of reinsurance (6.4) (5.5) (6.0) (5.4) x Underlying combined ratio 93.5 % 92.3 % (1.2) pts 92.7 % 91.2 % (1.5) pts Net Written Premiums $ 6,640 $ 6,345 5 % $ 13,135 $ 12,511 5 % 4 1 A benefit to the combined ratio is indicated as a positive item, and a charge is indicated as a negative item.

Very Strong Financial Position ($ and shares in millions, except per share amounts) Capital At or above target levels for all rating agencies. • June 30, December 31, 2017 2016 Repurchased 3.8 million shares during the second quarter • 6,920 Debt $ $ 6,437 2017 at a total cost of $475 million. 22,823 Common equity 1 22,491 Total capital 1 29,743 $ $ 28,928 Dividends in the second quarter were $201 million. • Debt-to-capital 1 23.3% 22.3% Leverage Common shares 275.9 279.6 outstanding Debt-to-capital ratio 1 of 23.3% comfortably within target • range. Book value per common $ 86.46 $ 83.05 Low level of maturing debt . share • 2017 $450 million - Adjusted book value per $ 82.71 $ 80.44 2018 $500 million - common share 1 2019 $500 million - Tangible book value per $ 68.99 $ 66.91 common share 1, 2 Very high quality investment portfolio Net unrealized investment gains of $1.585 billion pre-tax • Statutory capital and $ 20,607 $ 20,759 surplus ($1.035 billion after-tax) at June 30, 2017. • Fixed maturities average weighted quality Aa2, AA. Holding company $ 2,553 $ 1,677 liquidity • Fixed maturities below investment grade 2.7%. 5 1 Excludes net unrealized investment gains, net of tax 2 Excludes the after-tax value of goodwill and other intangible assets

Combined Net Investment Income - After-tax ($ in millions) TOTAL Second Quarter 2017 Commentary • Net investment income from the long-term fixed income $493 $476 $480 $472 $462 $468 $442 $439 portfolio declined modestly from the prior year quarter due to lower reinvestment rates as expected • Short-term portion of fixed income portfolio returns, while still low, have improved due to recent interest rate increases • Net investment income from the non-fixed income portfolio 1 1 increased from the prior year quarter due to higher private 2015 2016 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 After-tax yield equity returns 2.7% 2.6% 2.5% 2.5% 2.7% 2.8% 2.7% 2.6% FIXED INCOME 2 NON-FIXED INCOME 2 $428 $412 $410 $409 $409 $405 $395 $390 $96 $92 $84 $69 Long-term $55 $59 $38 $33 Short-term 1 1 1 1 2015 2016 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 2015 2016 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 After-tax yield After-tax yield Total 2.6% 2.5% 2.5% 2.5% 2.5% 2.5% 2.4% 2.4% 4.1% 4.5% 2.5% 2.9% 5.3% 7.4% 7.1% 6.4% Short-term 0.2% 0.4% 0.3% 0.4% 0.5% 0.5% 0.6% 0.7% Long-term 2.8% 2.7% 2.7% 2.7% 2.7% 2.6% 2.6% 2.5% 6 1 2015 and 2016 data represent quarterly average 2 Excludes investment expenses

Components of Core Return on Equity 15.5% 15.5% 15.2 % 13.3% 12.0% 10.2% 13.0% 11.0% 9.4% 9.4% 0.8% 8.4% 8.5% 1.3% 1.3% 0.3% 7.8% 1.5% 1.2% 7.4% 8.3% 7.2% 7.3% 1.5% 8.1% 7.1% 7.0% 6.8% 0.9% 0.9% 7.3% 1.4% 0.5% 6.1% 6.9% 0.1% 0.1% 6.5% 6.2% 6.2% 0.1% 5.2% 5.8% 3.6% 2.9% 1.6% 2005 through 2016 2017 2012 2013 2014 2016 2011 2015 Full Year Year-to-Date Long-term fixed net investment portfolio investment income less holding company interest expense Short-term fixed net investment portfolio investment income Non-fixed net investment portfolio investment income Underwriting gain and other From Jan. 1, 2005 through June 30, 2017, TRV’s average annual core ROE was approximately 13.3% 7

Business Insurance Performance ($ in millions) SECOND QUARTER YEAR-TO-DATE 2017 2016 Change 2017 2016 Change Segment income $ 429 $ 401 7 % $ 871 $ 848 3 % 64.3 % 63.7 % 64.4 % 63.5 % Loss and loss adjustment ratio 32.2 32.8 32.1 32.3 Underwriting expense ratio Combined ratio 1 96.5 % 96.5 % - pts 96.5 % 95.8 % (0.7) pts Net favorable prior year reserve development 3.6 3.6 2.7 2.9 Catastrophes, net of reinsurance (5.3) (4.8) (4.6) (4.6) Underlying combined ratio 94.8 % 95.3 % 0.5 pts 94.6 % 94.1 % (0.5) pts Net written premiums Domestic $ 720 $ 709 2 % $ 1,475 $ 1,433 3 % Select Accounts 1,820 1,741 5 3,997 3,804 5 Middle Market 219 234 (6) 507 554 (8) National Accounts 496 521 (5) 882 931 (5) National Property and Other 3,255 3,205 2 6,861 6,722 2 Total Domestic 289 267 8 538 510 5 International Total Business Insurance $ 3,544 $ 3,472 2 % $ 7,399 $ 7,232 2 % Change excluding the impact of changes in foreign exchange rates 2 % 3 % 1 A benefit to the combined ratio is indicated as a positive item, and a charge is indicated as a negative item. 8

Domestic Business Insurance (Ex. National Accounts) ILLUSTRATIVE BUSINESS STATISTICS 10% Renewal Premium Change 1 % ▲  Renewal Rate Change 2 % • Exposure/Other % 8% 6% 4% 2% 0.6% 0.6% 0.6% 0.2% 0.0% (0.1%) - (2%) 2 Q’17 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 ($ in millions) Retention 86% 85% 85% 85% 85% 85% Renewal premium 1.6% 1.5% 2.6% 2.3% 2.6% 3.5% change 1 New $554 $496 $409 $415 $518 $491 business 1 Represents the estimated change in average premium on policies that renew, including rate and exposure changes. 9 2 Represents the estimated change in average premium on policies that renew, excluding exposure changes. Note: Statistics are in part dependent on the use of estimates and are therefore subject to change.

Domestic Business Insurance: Select Accounts ILLUSTRATIVE BUSINESS STATISTICS 10% Renewal Premium Change 1 % ▲  Renewal Rate Change 2 % • Exposure/Other % 8% 6% 4% 2% 1.3% 1.0% 0.6% 0.6% 0.4% 0.3% - (2%) 2 Q’17 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 ($ in millions) Retention 82% 82% 83% 83% 84% 83% Renewal premium 6.4% 5.8% 5.5% 5.3% 4.7% 4.9% change 1 New business $102 $99 $94 $92 $121 $109 1 Represents the estimated change in average premium on policies that renew, including rate and exposure changes. 10 2 Represents the estimated change in average premium on policies that renew, excluding exposure changes. Note: Statistics are in part dependent on the use of estimates and are therefore subject to change.

Domestic Business Insurance: Middle Market ILLUSTRATIVE BUSINESS STATISTICS 10% Renewal Premium Change 1 % ▲  Renewal Rate Change 2 % • Exposure/Other % 8% 6% 4% 2% 0.9% 0.9% 0.7% - 0.3% 0.2% (0.5%) (2%) 2 Q’17 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 ($ in millions) Retention 88% 87% 87% 87% 88% 88% Renewal premium 0.6% 0.5% 1.9% 2.0% 2.3% 3.4% change 1 New business $360 $304 $239 $254 $319 $294 1 Represents the estimated change in average premium on policies that renew, including rate and exposure changes. 11 2 Represents the estimated change in average premium on policies that renew, excluding exposure changes. Note: Statistics are in part dependent on the use of estimates and are therefore subject to change.