Alan D. Schnitzer
Chairman and Chief Executive Officer at Travelers Companies
Thank you, Abbe. Good morning, everyone, and thank you for joining us today. We are very pleased to report excellent top and bottom line results for the quarter.
Core income was $1.1 billion or $4.69 per diluted share, generating core return on equity of 15.4%. After-tax core income increased by $126 million despite a $211 million one-time tax benefit in the prior-year quarter. On a pre-tax basis, this year's core income was $413 million or 45% higher year-over-year. Strong core income was driven by record net earned premiums of $10.1 billion, up 14% compared to the prior year period, and an excellent combined ratio of 93.9%. The combined ratio improved 1.5 points, notwithstanding elevated catastrophe activity, primarily in the Central and Eastern regions of the United States. The underlying combined ratio improved 2.9 points to an outstanding 87.7%, driven by strong underlying results in each of our three segments. Looking at the two commercial segments together, the aggregate BI, BSI underlying combined ratio was an excellent 88.8% for the quarter. The underlying combined ratio in Personal Insurance was 86.1%, a 6.8 point improvement over the prior year.
Turning to investments. Our high-quality investment portfolio continued to perform well, generating after-tax net investment income of $698 million for the quarter. Driven by strong and reliable returns from our growing fixed-income portfolio and higher returns from our non-fixed income portfolio. Our underwriting and investment results together with our strong balance sheet enabled us to grow adjusted book value per share after returning $620 million of excess capital to shareholders through dividends and share repurchases and making important investments in our business as we notched another quarter of successful execution on a number of important strategic initiatives. In recognition of our strong financial position and confidence in the outlook for our business, I'm pleased to share that our Board of Directors declared a 5% increase in our quarterly cash dividend to $1.05 per share, marking 20 consecutive years of dividend increases with a compound annual growth rate of 8% over that period.
Turning to the top line, we grew net written premiums by 8% to $10.2 billion in the quarter. All three segments and excellent execution by our colleagues in the field contributed to our top-line success. In Business Insurance, we grew net written premiums by 9% to $5.6 billion. Renewal premium change remained very strong at 10.6%, while retention remained high. The combination of strong pricing and retention reflects deliberate execution on our part and a marketplace that continues to be generally disciplined in the face of persistent headwinds. The segment generated a very strong $691 million of new business in the quarter, a reflection of the fact that our customers and distribution partners value the products and services that we offer and the experiences that we provide.
In Bond & Specialty Insurance, we grew net written premiums by 6% to $943 million. That was driven by strong retention of 90% and record new business in our high-quality management liability business, along with excellent production in our market-leading surety business, where net written premiums were up 15%. Given the attractive returns, we are very pleased with the strong production results in both of our commercial business segments. In Personal Insurance, continued strong pricing drove 9% growth in net written premiums. Renewal premium change was 16.6% in our auto business and 13.4% in home. We'll hear more shortly from Greg, Jeff, and Michael about our segment results.
Before I turn the call over to Dan, I'll share that more than 100 of my Travelers colleagues and I just returned from our Travelers Leadership Conference, TLC as we call it. It's a multi-day event that we host every year for the principals and senior leaders of our most significant distribution partners. Most of our guests have been coming for years, some for decades. We're also pleased every year to host a number of first timers. The represented firms are industry leaders and collectively account for more than half of our premium volume. We all returned home with the continued confidence that our relationships with these business partners and their firms are as strong as ever. We've confirmed that they remain very supportive of the strategic initiatives that we have underway and we took away valuable feedback on how we can accomplish even more together. The independent agent and broker-channel remains a robust and growing part of our industry. At Travelers, we proudly partner with more than 15,000 agent broker firms across their 35,000 locations. We're a top three market for the majority of these firms. That's a critical advantage because distributors place a disproportionate amount of their business with their top few carriers. We don't take these relationships for granted. As we've shared before, the vision for our innovation agenda includes optimizing our value proposition as an indispensable partner to our agents and brokers. We continue to make significant investments to ensure that we realize that vision by offering best-in-class products, services and experiences.
Case in point, in our Bond & Specialty business, we recently conducted a blind survey of agents and brokers, ours and others to determine how we ranked on the 10 attributes they identified as most likely to impact their placement decisions. Among our key competitors, we ranked first or tied for first in each of the 10 categories. We hear over and over again that Travelers' deep specialization across a wide range of modernized, simplified and tailored products along with a broad and consistent appetite are major differentiators for us in the market. For example, in Business Insurance, we offer a wide variety of coverages and product solutions, admitted and E&S across industries representing more than 85% of domestic GDP. Everything from a bot product for local florist to a packaged solution for a main street middle market account, the loss-sensitive workers' compensation for a large national account.
Across our three business segments, our distribution partners generally don't need to go to multiple carriers to satisfy customers' insurance needs. And the more lines per account we write, the higher the lifetime value of the customer. The primary focus of ours has been digitizing the value chain. In part to create value and provide great experiences for our agents and brokers and in part to create efficiencies for them and for us. I'll share a few examples. In Business Insurance, we believe we were the first to offer agents and brokers a comprehensive portfolio loss data exchange, which allows us to digitally transfer to a small commercial or middle-market distributor loss information on their entire book with us. This capability enables our distribution partners to efficiently develop important insights into their books of business and supports their marketing efforts. In our middle market business, we believe we were the first carrier to offer multi-line digital submission capabilities. In our small commercial business, agents can transact with us through APIs or through our new quote and issue platform, Travis, which has reduced quoting time by 25% for our leading bot product. Across Business Insurance, nearly all of our largest distributors are currently leveraging one or more of our digital capabilities.
In Personal Insurance, earlier this year, we added our proprietary aerial imagery viewer to our agent portal. This advanced capability integrates a high-resolution over time photo series of a home into agents quoting workflow. This gives our partners a bird's eye view, helping them to better understand the customers' or prospects' insurance needs and how they may have evolved. We bring our franchise value directly to agents and brokers through distribution, underwriting, sales and claim professionals in more than 80 local offices. Through our expansive and empowered field organization, we fostered deep relationships with our partners and are well-positioned to deliver the strength and expertise of Travelers at the local level.
We're also investing in our distribution partners' workforces by providing education and training programs to their up and coming producers. Our flagship Travelers agency leadership program and agency producer school provide in-person training to invited participants. We also offer larger virtual programs that have trained thousands of producers, including more than 3,000 just last year. We remain deeply committed to our vision of being the undeniable choice for the customer and an indispensable partner to our agents and brokers. Our pole position with leading distributors is a significant competitive advantage and one that's hard to replicate.
To sum it up, the year is off to a terrific start with strong profitability and production in all three segments as well as higher investment income. In short, we're firing on all cylinders. We also continued to invest in important strategic initiatives. We have demonstrated success in executing our innovation strategy, which has contributed to superior returns with industry low-volatility, growth in our premium base and higher adjusted book value per share. With this momentum and the best talent in the industry, we remain well-positioned for success this year and beyond.
And with that, I'm pleased to turn the call over to Dan.
