Travelers Companies Inc ($TRV) Q1 2026 Earnings Call

Good morning, ladies and gentlemen. Welcome to the first quarter results teleconference for travelers. We ask that you hold all questions until the completion of formal remarks at which time you will be given instructions for the question and answer session. As a reminder, this conference is being recorded on April 16th, 2026. At this time, I would like to turn the conference over to Miss Abby Goldstein, senior vice president of investor relations. Miss Goldstein, you may begin.

Thank you. Good morning and welcome to Travelers discussion of our first quarter 2026 results. We released our press release, financial supplement, and webcast presentation earlier this morning. All of these materials can be found on our website at travelers.com under the investors section. Speaking today will be Alan Schnitzer, chairman and CEO, Dan Fry, CFO, and our three segment presidents, Greg Teslowski of business insurance, Jeff Clank of bond and specialty insurance, and Michael Klein of personal insurance. They will discuss the financial results of our business and the current market environment. They will refer to the webcast presentation as they go through prepared remarks and then we will take your questions. Before I turn the call over to Alan, I'd like to draw your attention to the explanatory note included at the end of the webcast presentation. Our presentation today includes forward-looking statements. The company cautions investors that any forward-looking statement involves risks and uncertainties and is not a guarantee of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described under forward-looking statements in our earnings press release and in our most recent 10Q and 10K filed with the SEC. We do not undertake any obligation to update forward-looking statements. Also, in our remarks or responses to questions, we may mention some non-GAAP financial measures. Reconciliations are included in our recent earnings press release financial supplement and other materials available in the investor section on our website. And now I'd like to turn the call over to Alan Schnitzer.

Thank you, Alan. Travelers delivered $1.7 billion of core income in the first quarter, resulting in a quarterly core return on equity of 19.7% and a trailing 12-month core return on equity of 22.7%. First quarter earnings were driven by yet another very strong quarter of underlying underwriting income, which at $1.2 billion after tax marked our seventh consecutive quarter of more than $1 billion. Net investment income of more than $800 million after tax and net favorable prior year reserve development of $325 million after tax also contributed to the strong bottom line result. After tax CAT losses were just over $600 million. The all-in combined ratio of 88.6% was again excellent. The underlying underwriting gain reflected $10.6 billion of earned premium and an underlying combined ratio of 85.3%. Within the underlying combined ratio, the first quarter expense ratio came in at 29%. That's what we expected given the timing of expenses in Q1. And we still expect the full-year expense ratio to be in line with our prior guidance of right around 28.5%.

The previously announced sale of most of our Canadian operations closed as expected on January 2nd and I wanted to take a couple of minutes to summarize the impact of that sale on our first quarter results. Let's start with premium volume. The year-over-year comparison with Canada's business included in 2025 but not included in 2026 reduced the first quarter growth rate for consolidated net written premium and net earned premium by about two points each. The impact in both business insurance and bond and specialty was about one point while the impact in personal insurance was about four points. The impacts on the growth rate of both written and earned premium will be similar for the remaining quarters of this year. To help with modeling the year-over-year impact for the rest of the year, we provided the quarter-by-quarter dollar impacts on slide 19 of the webcast presentation. Within net income for the quarter is a gain on sale consistent with our expectations when we originally announced the transaction last May. That gain does not impact core income. And finally, within the equity section of the balance sheet, you see a reduction in accumulated other comprehensive loss, which is primarily because the previously unrealized FX loss related to the sold Canadian entities became a realized loss upon sale. The move from unrealized to realized had no impact on total equity or on book value per share.

Turning back to the rest of the quarterly results, catastrophe losses for the quarter totaled $761 million pre-tax with the largest events being the winter storm that impacted much of the country in January and a large tornado hail event in March. Both of which you can see in the table of significant cat losses in the MD&A section of our 10Q. We reported net favorable prior year reserve development of $413 million pre-tax in the first quarter with all three segments contributing. In business insurance, net favorable development of $162 million pre-tax was driven by commercial property and workers comp. In bond and specialty, net favorable PYD of $65 million pre-tax was driven by better than expected results in surety. Personal insurance recorded net favorable PYD of $186 million pre-tax with both auto and home contributing.

After tax, net investment income increased 9% from the prior year quarter to $833 million. Fixed income NII was higher than in the prior year quarter and in line with our expectations, benefiting from both higher yields and a higher level of invested assets. New money yields at the end of Q1 were about 70 basis points higher than the yield embedded in the portfolio. Our outlook for fixed income NII by quarter, including earnings from short-term securities, is consistent with the guidance we provided on our fourth quarter earnings call, expecting roughly $810 million after tax in the second quarter, growing to approximately $840 million in the third quarter and then to around $870 million in the fourth quarter. Net investment income from our alternative investment portfolio was also positive in the quarter, although down from a year ago. Given recent movement in the equity markets, this is a good time to remind you that results for our private equities, hedge funds, and real estate partnerships are generally reported to us on a one quarter lag. And while not perfectly correlated, our non-fixed income returns tend to directionally follow the broader equity markets. In other words, the impact of the decline in financial markets that occurred in the first quarter will be reflected in our second quarter results.

Turning to capital management, operating cash flows for the quarter of $2.2 billion were again very strong as we generated more than $2 billion in operating cash flow for the fourth consecutive quarter. As interest rates increased during the quarter, our net unrealized investment loss increased from $1.5 billion after tax at year end to $2.4 billion after tax at March 31st. Adjusted book value per share, which excludes unrealized investment gains and losses, was $161.60 at quarter end, up 16% from a year ago. Adjusted book value per share also increased 2% from year end despite the very strong level of share repurchases during Q1. Share repurchases this quarter included $1.8 billion of open market repurchases in line with the guidance we shared last quarter. And as a reminder, $700 million of that $1.8 billion came from the closing of the Canadian business sale in January. We had an additional $185 million of buybacks in connection with employee share-based compensation plans and we still have approximately $5.2 billion remaining under prior board authorizations for share repurchases. Dividends were $238 million in the quarter and as Alan mentioned earlier, our board authorized a 14% increase in the quarterly dividend to $1.25 per share.

In summary, our first quarter results once again demonstrate significant and durable underwriting earnings power and attractive margins across our well-diversified book of business along with steadily increasing NII from our growing investment portfolio. And with that, I'll turn the call over to Greg for a discussion of business insurance.

Thanks, Dan. Business insurance had a strong start to 2026, delivering another quarter of excellent financial results and successful execution in the marketplace. Segment income of $839 million was a first quarter record benefiting from strong underlying underwriting results and net investment income as well as favorable prior year reserve development. For the 14th consecutive quarter, we delivered an underlying combined ratio below 90%. That sustained underwriting success reflects the strength of our risk selection, granular pricing segmentation, and field execution. Turning to the top line, we generated net written premiums of $5.8 billion. Domestic net written premiums were up 4% over the prior year quarter as we grew our leading middle market and select businesses by 5% and 3% respectively. National property premium declined as we maintained our disciplined underwriting standards. Turning to production, we achieved renewal premium change of 5.8% for the quarter. Excluding the property line, RPC was nearly 8% and in line with the fourth quarter. Renewal premium change was positive in all lines and higher sequentially in the umbrella and auto lines. Retention increased to 86% up sequentially from the fourth quarter. A reflection of our continued focus on retaining our high-quality book of business and generally stable market conditions. Strong new business of $775 million was a quarterly record. These production results benefit from the investments we've made in product and underwriting precision. Our new commercial auto product TCAP, which contains industry-leading segmentation, is now live in 47 states. We also recently enhanced our property pricing models, refining catastrophe and non-cat segmentation. Our advanced analytics, market-facing tools, and sales enablement capabilities also played key roles in our success, reflecting the competitive advantages these investments continue to build. We're pleased with these production results and the excellent execution by our field organization.

As for the individual businesses, in select, renewal premium change was strong at 8.8% while retention increased one point sequentially to 82%. As expected, we are seeing the benefit of having largely completed our targeted CMP risk return optimization effort. New business of $157 million was strong and in line with last year's record. These results underscore our continued investments in product underwriting and agent experience. BOP 2.0 is now fully deployed nationwide, completing a multi-year initiative that has transformed our small commercial offering. The recent rollouts of the product in California and New York were meaningful milestones and the industry-leading segmentation embedded in the product is contributing to profitable growth. We continue to enhance Travis, our digital quoting platform, which processes over 1 million transactions annually. Travis is a reflection of our ongoing commitment to delivering an industry-leading experience for our distribution partners. In middle market, renewal premium change remained attractive at 6.6% while retention improved two points from the fourth quarter to a very strong 89%. Price increases remained broad-based as we achieved higher prices on about 3/4 of our middle market accounts. New business of $468 million was up 7% compared to the prior year quarter, reaching a new quarterly high. Once again, another great quarter for business insurance. We are energized by both the impact of the new capabilities contributing to our strong performance and by the additional capabilities we are currently building that will drive our continued success throughout the remainder of 2026 and into the future.

Thank you, Greg, and good morning, everyone. We're pleased to report that Bond and Specialty started the year with another strong quarter on both the top and bottom lines. We generated segment income of $254 million, an excellent combined ratio of 83.3%, and a strong underlying combined ratio of 88.9%. Turning to the top line, we grew net written premiums by a very strong 7% in the quarter to $1.1 billion. In our high-quality domestic management liability business, renewal premium change was slightly higher sequentially, while retention remained strong at 87%. We're encouraged by our continued progress in achieving improved pricing through our purposeful and segmented initiatives while continuing to deliver strong retention. Turning to our market leading surety business, we're very pleased that we increased net written premiums by 14% from the prior year quarter. Bond premium growth came from both long-term accounts, many of which are relationships spanning decades, as well as high-quality new accounts recently added to our industry-leading portfolio. These new surety relationships reflect years of effort spent by our outstanding field team earning trust as well as the strategic investments we've made over time to deliver value beyond the bond itself. Our portfolio of premier contractors is well positioned to continue to benefit from higher and broad-based infrastructure spending. So bond and specialty insurance delivered strong results in the first quarter of 2026 driven by our consistent underwriting and risk management diligence, excellent execution by our field organization in delivering our leading products and value added services and by continuing to leverage our market-leading competitive advantages. And with that, I'll turn the call over to Michael.

Thanks, Jeff. Good morning, everyone. In personal insurance, we delivered segment income of $74 million for the first quarter of 2026. Strong underlying underwriting income and favorable prior year development both contributed to this excellent bottom-line result. The combined ratio of 82.9% was a terrific result in the quarter. The underlying combined ratio of 78.3% improved by 1.6 points compared to the first quarter of 2025, reflecting strong profitability in both automobile and homeowners and other. Net written premiums for the segment were $3.5 billion. As a reminder, we completed the sale of our Canada Personal Alliance business on January 2nd, 2026. The decrease in domestic net written premiums of 5% year-over-year reflects the impact of both auto and home actions we've taken over the past year to improve property pricing terms and conditions and to reduce exposure in high catastrophe risk geographies. The decrease also reflects higher ceded premium related to the expanded coverage we purchased as part of the enterprise catastrophe reinsurance program which renewed on January 1st.

Turning to automobile, bottom line results continue to be very strong. The first quarter combined ratio was 82.9% reflecting a very strong underlying combined ratio of 88.3% and a 6.3 point benefit from favorable prior year development. As a reminder, the first quarter is historically our seasonally lowest combined ratio quarter in auto. In homeowners and other, the first quarter combined ratio was an excellent 83%. The underlying combined ratio of 69.7% improved by approximately three points compared to the prior year quarter, primarily related to the continued benefit of earned pricing. As another reminder, the second quarter historically has been the seasonally highest quarter for homeowners weather related losses. Turning to production in automobile, retention of 82% was relatively consistent with recent periods and renewal premium change continued to moderate reflective of our strong profitability. We're pleased to note that both auto new business premium and the number of new business policies written increased compared to the prior year quarter. In homeowners and other, retention improved to 85%. Renewal premium change in homeowners moderated reflecting our successful efforts to align replacement costs with insured values. We expect renewal premium change to further moderate into the mid-single digits reflecting improved profitability. We were encouraged to see new business premium higher year-over-year as we broadened our disciplined efforts to deploy property capacity. These production results reflect progress toward our objective of delivering profitable growth over time. We're executing a range of initiatives to generate new business growth in both auto and property, including continuing to enhance product and pricing segmentation, unwinding eligibility restrictions, lifting agent binding limitations, and increasing new agency appointments. We're focused on providing total account solutions that together with continued investment in digitization and ease of doing business make us an indispensable partner for our agents and an undeniable choice for customers. To sum it up, we're operating from a position of strength. The underlying profitability in our personal insurance business is excellent. Our multi-year efforts to improve returns and manage volatility in the property portfolio are largely behind us. And the early signs of growth momentum in both auto and home are encouraging. And with that, I'll turn the call back over to Abby.

Thanks, Michael. Thank you. We are ready to open up for Q&A.

At this time, if you would like to ask a question, simply press star followed by the number one on your telephone keypad. We ask that you please limit your questions to one and one follow-up. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Gregory Peters with Raymond James.

Good morning everyone. So for my first question, Alan, you've talked about your investment in technology every year for years now and I'm curious how it is affecting the culture of the company and I'm thinking about this from two perspectives. First of all, a number of your peers have talked about the potential for headcount reduction and then at the SBU or line of business level, their risks I suppose of deploying new technology both on growth and margin and

Maybe sometimes that might outweigh the benefits. So some perspective on those two points would be helpful.

Okay. I guess related to that, I'm looking at the personal lines results again, Michael, just balancing profitability with possibly adjusting pricing to drive new business and growth. Just curious about how you're looking at that equation.

Got it. Thank you everyone for the answers.

Thanks, Craig.

Our next question is from David Madin with Evercore.

Hey, thanks. Good morning. I had a question just on the RRC within the select business. I was a little surprised that the deceleration there. Was hoping you could unpack that a little bit and sort of what lines were driving that deceleration.

Got it. Thank you. And then maybe just for my follow-up, I thought the underlying loss ratio in BI was definitely better than I was looking for. Could you just talk through the moving pieces there? I think last year you had talked about increasing IBNR on liability lines. You saw maybe an update there and then also you guys had talked about some light non-cat property losses in the first couple quarters last year and there were some questions if that is durable or not. So wondering if you have any updated thoughts there that you might be reflecting in loss picks.

Yeah David, it's Dan. I'll take that. So look, overall feel really terrific about the underlying profitability in business insurance, and as Greg called out in his prepared remarks, that's been sustained for quite a while. I think we're in a really sweet spot to the point Alan was just making about retention, pricing, and returns. Nothing really unusual in the quarter. Sort of the normal suspects that you would expect. A little bit of mixed impact, but nothing that we would call out as being particularly unusual, including non-cat weather or anything else. You also talked about our comment last year on the casualty lines and putting a little bit of what we called an uncertainty provision in both 2024 and 2025. I think we said at the end of the 2025 year-end call, but I'll repeat it here. We did again carry that into the 2026 loss pick. The losses have not performed poorly. We like the margins in this line, but again, it's a pretty long tail line. There's still a lot of uncertainty. There's still a lot of attorney rep. We're going to have a healthy respect for that uncertainty. And so we did include that provision again in the 2026 loss picks.

Got it. Thanks. That makes sense.

Your next question is from Rob Cox with Goldman Sachs.

Hey, thanks. Good morning. Just a question for you around AI exclusions from policy terms. We're hearing brokers talk about increasing inbounds around AI related exclusions from policy terms. So I'm just curious how Travelers is thinking about underwriting exclusions for AI related risks and if you're seeing this play out in the market at all.

Hey Rob, this is Greg. Clearly, we're looking at our policy language all the time when there's new perils or dynamics in the marketplace, and that's evolving right now. We haven't had any material changes, but it's something we're watching very closely.

Okay, great. Thank you. And then maybe I just wanted to check in on tort reform. I know we've talked in the past, Florida is kind of viewed as a success story there. There are a number of other states who have recently passed some fairly comprehensive actions. I'm just curious if you think that these other states could have similar success as Florida and if Travelers would plan to proactively change strategy in those states with regards to underwriting and pricing or would you wait to see an improvement before changing strategy?

Thank you.

Your next question comes from Andrew Anderson with Jeff.

Hey, good morning. Within BI as some of these lines continue to see firm pricing other than property, how do you think about the relative attractiveness of workers comp from either a growth or a margin perspective?

Got it. And within charity growth accelerated again, how would you kind of frame the demand conditions relative to credit quality?

Hey, this is Jeff Clank responding. Andrew, I would tell you that our growth in the quarter for surety was really broad-based. As I mentioned in the prepared remarks, it was new and existing customers. It was from several of the different segments within our surety business. We are really proud of the high credit quality of our book of business. We continue to look at that as we take new customers into that portfolio and we feel really good that our portfolio will continue to benefit from this broad-based infrastructure spending that's out there as we look ahead. Thanks for the question.

Thank you.

Your next question comes from Josh Shanker with Bank of America.

Yeah, thank you for putting me in. I was curious about the expense ratio. It's a little higher than it's been in the past on both the acquisition costs and the other expense ratio. Can you talk about the drivers and how we should think about that as the year progresses?

Sure, Josh. It's Dan. So we're not at all surprised with the expense ratio. If you look at our results over the last five or six years, if you look at the quarters within any given full year, it's not at all unusual to see the expense ratio vary by a point or more from quarter to quarter. 2025 really didn't, but 25 was more of an outlier and just sort of happenstance. So you mentioned compensation, commission. Things like at what point do you evaluate the level of accrual that you think you're going to need for profit sharing or contingent commission. In the first quarter last year, we were sitting here coming out of one of the largest CAT events in the history of the industry with California wildfires and saying, 'Well, at this rate, we probably don't need a whole lot of extra accrual for contingent commissions and profit sharing.' That's a different situation this year given the profitability of the book in the first quarter. But as I said in my prepared remarks, first quarter came out pretty much where we expected it to be when we gave the guidance last year that we expected 28.5% for this year's full year.

And on personal lines, is there a difference in the complexion of a business that's churning out of your portfolio versus business that you're winning currently?

Thanks Josh. It's Michael. I would say absolutely the business that's turning out of the portfolio is not as high quality as the business that's coming in. When we look at the profile of the business lost versus the profile of the business added new, the profile of the business we're adding new is superior to the profile of the business we're losing.

And what are the qualitative features that make that business better? Is it bundled? Is it higher value homes? Is it more cars per home? Or what is the difference between those two cohorts?

Yeah, the elements we look at when we look at profile include all those things: credit quality, limits, bundling, number of vehicles, age of vehicle, age of home. Really, pretty much across the board, the profile characteristics of the business we're adding is better than the profile characteristics of the business we're losing.

So, can we say that you're churning the business you're losing with some intentionality? That's actually business you don't want anymore.

I would say we're very happy with the tradeoff between what we're writing new and what we're losing. I mean, again, remember in personal insurance, the business is mostly systematized. So there is certainly an element of business we are non-renewing or declining to offer renewal based on risk quality, risk characteristics, our estimate of what the loss ratio relativity on that business is. But really I think what you're seeing is the successful outcome of a pricing and segmentation strategy that's tuned to attract the business that we want.

Thank you very much.

Your next question comes from Jarren Canar with Mazuo.

Thank you. Good morning everybody. I had two questions on business insurance. The first one, it seems like renewal pricing changes below loss trend for the first time in a while at least based on the last long-term loss trend that the company provided a few years ago. And assuming that persists, how does that change the company's approach to writing and retaining business? As an example, I think the last time we saw RPC in this range, retention rates were a bit lower than where they are today.

Okay, got it. And then my follow-up again, on BI more focused on select accounts. I'm just trying to think about the impact of AI here. On the one hand, it probably offers an opportunity to increase TAM, drive scale and efficiency benefits. But at the same time, it could mean that we see more of a shift of small commercial to larger brokers with more data and analytics capabilities, maybe greater negotiating power. So I'm just curious to hear how you think about those dynamics, whether my thinking is correct, how you see the business develop over the coming years with the advent of AI.

Thanks so much.

Our next question is from Elise Greenspan from Wells Fargo. At least one moment for that last question.

We can go to the next and if Elise jumps back in, we'll take her later.

Okay, one moment.

Okay, your next question is from Tracy Bengawi with Wolf Research.

Thank you. Good morning. Hey, a follow-up on the AI and commercial lines distribution. I appreciate your comments on Simply Business and the lower takeup rate, but if I could take that in a different angle. Rather than brokers being disintermediated, I'm wondering over time, can commission structures change due to the advancement of AI?

Okay. I also have a big picture casualty reserving question. Are claim patterns normalizing post-COVID catchup period? And if so, does that inform your loss development factor selection?

Hey Tracy, it's Dan. So, compared to what we saw in COVID, I would say COVID was probably as disrupted payout patterns as we saw. So normalized relative to that, yes. But the trend in payout patterns in the casualty lines, particularly the longtail liability lines, has still been increased frequency of attorney reps, general lengthening of the tail. The things we talked about in the middle of 2024 when we made some adjustments to our loss picks for accident years 21 through 23 and then started to factor in that uncertainty provision I talked about in a question earlier today is still relevant because we have not seen attorney rep rates slow down. We have not seen severity increases slow down. We have not seen payout patterns return to their pre-COVID patterns. It's an extended payout pattern that has if anything continued to slightly extend.

Thank you.

Your next question is from Elise Greenspan with Wells Fargo.

Hi, thanks. Sorry about that earlier. My first question I wanted to ask just about M&A and just capital, Alan, just given that things are starting to soften from a market and premium perspective or continuing to soften. I was hoping to just get your current views on M&A things that you might consider and how that fits into your capital priorities right now.

Thanks. And then my follow-up, on personal lines, as we start to think about gas prices being elevated given what's going on overseas and the offset could be potential supply chain issues which would impact severity, gas prices obviously potentially helpful to frequency. I was hoping to get some color on the outlook for margins within personal lines given some of the things going on in the market right now.

Sure, Elise. It's Michael. I would say the gas price dynamic really depends on duration. Short to even medium-term increases in gas prices don't materially change commuting patterns and driving levels. So it does have to be a sustained elevation in gas prices to really impact miles driven. To be clear, if gas prices stay high for an extended period, that puts downward pressure on miles driven and it's actually a benefit to frequency. That's the most straightforward dynamic we could see. But again, gas prices would need to stay high for an extended period to drive that. From a supply chain standpoint, it's a fast-moving, fast-changing situation. There are scenarios where elevated costs put downward pressure on consumer purchases and actually reduce used car prices because there's not as much demand, as just one example. At this point, it would be speculative to go beyond that and pick a path.

Your next question is from Mike Zerimsky with...

Hey, thanks. Question on the home insurance side. Mike, I believe you said, Michael, that pricing would start to move to the mid-single digits. If we look at Travelers' historical loss trend in home, it looks like it's well into the double digits. So are you signaling that the loss cost trend is better after the changes you've made or you're letting margin deteriorate a bit to accelerate growth, or a little bit of both? Especially if we look at the cat load increased guide over the last few years, it's pretty much all emanated from home being a bigger part of the equation. Thanks.

Sure, Mike. It is Michael. Taking those pieces and putting them together, what I would say is the guidance for property pricing moving down towards mid-single digits really just reflects the fact that we have rate adequacy broadly in virtually every state across the country as we sit here today and we're pleased with the profitability of the portfolio. Importantly, that's been driven by pricing but also by changes in appetite, terms and conditions, and business mix including state distribution. What you saw between fourth quarter of last year and first quarter of this year was that we had caught up on insurance to value, we had gotten coverage limits where they needed to be on property policies, and so we've gone to a lower inflation factor on those property policies renewing in 2026. That explains most of the quarter-to-quarter drop in RPC. What I'm signaling going forward is that rate will also start to moderate in response to that improved profitability. Underneath that is an assumption based on what we've been seeing that the elevated inflation has returned to a more normal level, so that's aligned with that pricing expectation.

That's helpful. And my follow-up is pivoting to commercial lines loss cost trend. If we look at your commentary about loss cost trend being mid-single digits plus in the past, if we look at your reserve releases and especially over the last year or more, it kind of implies that loss trend has been a bit below the historical stated trend. Would you agree with that or is loss trend maybe improving slightly versus your historical view? Thanks.

Yeah, Mike and Stan. I think if you look at business insurance in particular, a large part of the favorable reserve development we've seen over the last several years in general has been comp related. We've said on comp each time that it's come up, there's been favorability both in frequency and in severity, particularly in medical cost trend severity. That doesn't really bleed over into the way we think about loss trend in commercial auto or commercial property or the general liability lines, as an example. So I don't think we've seen a sea change in the way we think about loss trend to the positive. There's still a lot of pressure on the liability lines, which is why we continue to talk about things like double-digit pricing in umbrella. But I don't think we've seen any big changes there. And Mike, I'd add to that that one of the reasons we've gotten away from talking about loss trend is because it's a pretty narrow concept of frequency and severity. It's a very blunt instrument to think about what's happening across billions of dollars of premium. Each line has its own dynamic and there are other things that impact margins. There's base year changes, exposure changes, mix changes, changes in our large loss assumptions, other adjustments we make for one reason or another. There's a lot of estimation in that number. So we try to get away from it. But holistically, the loss picks we have reflect what we think is going on with loss trend. On the whole, it behaved about as we expected.

Thanks.

We have time for one more question and that question comes from Pablo Suzan with JP Morgan.

Hi, thanks for speaking me on. First, just a quick modeling question. You talked about the impact of the Canada sale on earned and written premiums. I think you had mentioned two points. Should there be a similar proportionate impact on the dollar run rate acquisition and gen expenses?

Understood. And then my second one just a follow-up to Rob's questions about AI and not entirely related to Porter. So Travelers is one of the largest cyber writers in the US and I guess the question is how are you thinking about your exposures there and risk management just given recent developments of AI? Thanks.

Yeah, thanks for the question Pablo. It's Jeff. So absolutely it is an underwriting consideration. We're thinking about artificial intelligence and with some of the more recent announcements in the last few days about the strength of the LLM models and what that could mean. It's not just on the negative side. It's also got the potential to be on the positive side from an investment in resilience and capability to actually address the threat. We're heavily invested. We've continued to invest in our risk control capabilities to address the cyber risk issue. Ultimately, we're going to have to make sure we're staying on top of it in partnership with broader government entities as we already are. The investments we've made in our cyber risk control team for the benefit of our customers, the really good news for them is that as this technology continues to expand and change, we're going to be in an even better position to help them identify and remediate vulnerabilities as they come about.

Thanks for the question.

Thank you very much.

There are no further questions at this time. I'll now turn the call back over to Miss Goldstein for any closing remarks.

Thanks so much. We appreciate you tuning in. We know we left some questions in Q, so as always, please feel free to follow up with investor relations. Appreciate your time. Have a good day.

This concludes today's conference call. Thank you for participating. You may now disconnect.