Dan Frey
Executive Vice President And Chief Financial Officer at Travelers Companies
Thank you, Alan. We're pleased to have generated record levels of earned premium this quarter and an underlying combined ratio of 87.7%, a 340 basis point improvement from last year's strong result and a third consecutive quarter below 88%. This led to one of our strongest ever underlying underwriting gains of $952 million after tax, up $337 million, or 55%, from the prior year quarter. The expense ratio for the second quarter was 28.8%, in line with our expectations and once again benefiting from the combination of our focus on productivity and efficiency, coupled with strong top line growth. We continue to expect 2024's full year expense ratio to be 28% to 28.5%.
As Alan mentioned, the industry experienced a very active cat quarter, and our second quarter results include $1.5 billion of pretax catastrophe losses, driven by a record number of severe convective storms. As disclosed in the significant events table in our 10-Q, we had five events surpass the $100 million mark in Q2, all in the month of May.
Turning to prior year reserve development. We had total net favorable development of $230 million pretax. In Business Insurance, net favorable PYD of $34 million, resulted from approximately $300 million of better-than-expected loss experience in workers' comp across a number of accident years, largely offset by about $250 million of strengthening in general liability, driven by umbrella for accident years 2021 through 2023. In terms of the umbrella line, these are very young accident years, made up almost entirely of IBNR. While we will obviously continue to evaluate loss activity as it comes in, we believe we have been proactive and decisive in addressing the latest observed loss activity and adjusting our view of loss development factors to allow for the prospect of rising settlement costs and lengthening settlement patterns. Importantly, our picks for accident years 2015 through 2020 did not require much adjustment in the first half of this year. It's also worth noting that our returns in the umbrella line for the impacted accident years remain attractive.
As we saw five years ago, when we were the first to call out a change in loss levels tied to an increase in attorney rep rates, sharpening our view of loss costs early in the development of immature accident years and long-tail lines, positions us to enhance our risk selection, pricing, and claim strategies, ultimately setting us up to outperform in terms of growth and profitability. And on a related note, with court backlogs from the COVID shutdown now largely resolved, that element of uncertainty is, to a large degree, behind us. In bond and specialty, net favorable PYD was $24 million pretax.
Personal Insurance had significant net favorable PYD of $172 million pretax, with good news from recent accident years in both home and auto. After-tax net investment income of $727 million increased by 22% from the prior year quarter. As expected, fixed maturity NII was again higher than the prior year quarter, reflecting both the benefit of higher average yields and higher invested assets. Returns in the non-fixed income portfolio were also up from the prior year quarter. Our outlook for fixed income NII, including earnings from short-term securities, has increased slightly. We now expect approximately $675 million after-tax in the third quarter and $695 million after-tax in the fourth quarter. New money rates as of June 30th are still above the yields embedded in the portfolio, so fixed income NII should continue to improve beyond 2024 as the portfolio gradually turns over and continues to grow.
Turning to capital management. Operating cash flows for the quarter of $1.7 billion were again very strong, and we ended the quarter with holding company liquidity of approximately $1.7 billion. Interest rates increased during the quarter, and as a result, our net unrealized investment loss increased modestly, from $3.7 billion after-tax at March 31st to $4 billion after-tax at June 30th. Adjusted book value per share, which excludes net unrealized investment gains and losses, was $126.52 at quarter end, up 3% from year end, and up 10% from a year ago. We returned $498 million of capital to our shareholders this quarter, comprising share repurchases of $253 million and dividends of $245 million. We have approximately $5.5 billion of capacity remaining under the share repurchase authorization from our board of directors.
Turning to reinsurance. Page 19 of the webcast presentation shows a summary of our July 1st reinsurance placements. We increased coverage when we renewed our Northeast Property Cat XoL treaty, which now provides $1 billion of coverage above the attachment point of $2.75 billion. A year ago, we purchased $850 million of coverage, and the attachment point was $2.5 billion. We also renewed the Personal Insurance Hurricane Cat Excess-of-Loss Treaty for Coastal Exposure, which continues to provide 50% coverage for the $1 billion layer above an attachment point of $2 billion.
Recapping our results, Q2 was another quarter of strong premium growth, excellent underlying underwriting profitability, and continued growth in net investment income, all of which bode well for our future returns. Our ability to absorb $1.5 billion of pre-tax cat losses and still deliver $585 million of core income for the quarter is a testament to the overall strength of our diversified franchise and the fundamentals of our business.
To give a little more color on that, underlying underwriting income has become an increasingly reliable and important component of our earnings power. Going back to the combination of Travelers and St. Paul, from 2005 through 2019, annual underlying underwriting income averaged $1.2 billion after-tax. Our focus on profitable premium growth, which began accelerating around 2016, resulted in underlying underwriting income surpassing $2 billion for the first time ever in 2020, and we stayed above $2 billion through 2022.
We then surpassed $3 billion in 2023, and through the first half of 2024, underlying underwriting income of just over $1.9 billion is up by 32% compared to the first half of 2023. In short, underlying underwriting income has become a significant and growing contributor to our ability to continue generating industry-leading returns with industry-low volatility.
And now, for more color on each segment's results, I'll turn the call over to Greg to begin with a discussion of Business Insurance.
