Alan D. Schnitzer
Chairman and Chief Executive Officer at Travelers Companies
Thank you, Abbe. Good morning, everyone, and thank you for joining us today.
I'd like to start by acknowledging the devastation caused by recent hurricanes, Helene and Milton. These were powerful storms and our hearts go out to all those who have been impacted. Of course, we send our thoughts and prayers, but we're also sending claim resources. From our National Catastrophe Center in Hartford, we're managing the deployment of hundreds of Travelers' claim professionals along with mobile claim offices and quick response vehicles. We've activated thousands more cross-trained colleagues across the country to support our local response.
Our catastrophe response model enables us to adjust virtually every claim with a Travelers' claim professional and without resorting to independent adjusters. That results in a better outcome for our customers and distribution partners. Thanks to these efforts and the advanced analytics and geospatial tools that we leverage, we are on track this year to meet our objective of resolving 90% of our claims from natural catastrophes within 30 days. That can make the difference between whether a customer of ours is able to celebrate the holiday season in their living room instead of a hotel room. I'd also like to express my deep gratitude to our claim organization. The entire team tirelessly delivers exceptional technical expertise and support to our customers, demonstrating day-in and day-out the value of the Travelers' promise.
Turning to results. We are very pleased to have generated outstanding top and bottom-line results this quarter. Excellent underlying underwriting income, higher net investment income and net favorable prior year reserve development all contributed to core income of more than $1.2 billion or $5.24 per diluted share, generating core return on equity of 16.6%. Underlying underwriting income of $1.5 billion pre-tax was up 73% over the prior year quarter, driven by record net earned premiums of $10.7 billion, up 10% and an underlying combined ratio that improved 5 points to an excellent 85.6%.
Both underwriting income and underlying margins were strong in all three of our segments. The underlying combined ratio in our Business Insurance segment improved nearly 2 points to an excellent 87.9%. And our Bond & Specialty business delivered a very strong underlying combined ratio of 85.6%. The underlying combined ratio in Personal Insurance improved 11.5 points to an exceptional 82.7%. These terrific segment results contributed to our reported consolidated combined ratio that improved nearly 8 points to 93.2%.
Turning to investments. Our high-quality investment portfolio continued to perform well with after-tax net investment income up 16% to $742 million, 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 by 4% during the quarter. And that's after returning $496 million of excess capital to shareholders and continuing to make important investments in our business as we notched another quarter of successful execution on a number of important strategic initiatives.
Turning to the top-line. We grew net written premiums by 8% to $11.3 billion. The strong value proposition that we offer to our customers and distribution partners, along with outstanding execution by our colleagues in the field, contributed to our top-line success. In Business Insurance, we grew net written premiums by 9% to more than $5.5 billion. Renewal premium change in the segment remained very strong, increasing to 10.5%, driven by strong contributions from the liability coverages. Renewal rate change accelerated to 7.3% in the quarter and was steady or higher in every product line. Even with the firm pricing environment, retention in the segment ticked up to 86%. The combination of strong pricing and excellent retention reflects our deliberate execution and a marketplace that is reacting in a generally disciplined way to the headwinds of social and economic inflation.
In Bond & Specialty Insurance, we grew net written premiums by 7% to a record $1.1 billion, driven by excellent retention of 90% in our high-quality management liability business and strong production in our market-leading surety business. We grew surety net written premiums by 7% from a very strong result in the prior year quarter. We are very pleased to have generated terrific production results across our commercial segments where margins continue to be attractive. That includes our E&S offerings where we've grown net written premiums by 13% year-to-date.
In Personal Insurance, we were pleased to grow net written premiums by 7%, driven by strong renewal price change in both auto and home. The strong production results across our three segments are a reflection of our view that in order to achieve our objective of industry-leading returns over time, we need an effective strategy to grow profitably over time. As we've shared before, we seek to achieve profitable growth by investing in franchise value, making sure that we offer the products, services and experiences that our customers want to buy and our distribution partners want to sell.
Also central to our growth strategy is our very granular approach to risk selection, underwriting and pricing, which we've discussed many times. As a result of that approach and investments we've made over decades in leading data and analytics, our growth in insured exposures correlates to returns. In other words, generally speaking, the more attractive the returns in a business, the more we've been growing insured exposures in that business. All of which is to say, Travelers' unique combination of franchise value and execution yields very effective capital deployment, a high-quality profitable growth.
The numbers speak for themselves. Over the last four years, we've grown our premium base by more than $13 billion, nearly a 50% increase, while simultaneously improving our underwriting margins. The result is that we've more than doubled our underlying underwriting income and increased our total underwriting income by more than 80%. The combination of strong underwriting income and the reliable investment income from our substantial and growing investment portfolio makes for a powerful earnings engine. That's what's driving our strong results this quarter and year-to-date and that's what's driving our core return on equity of 15.9% over the last 12 months. And that's what gives us great confidence in the outlook for our business into 2025 and beyond.
With that, pleased to turn the call over to Dan.
