TRV 10-K & 10-Q changes, risk factors and insider trading

High levels of catastrophe losses, including as a result of factors such as increased concentrations of insured exposures in catastrophe-prone areas and changing climate conditions, could materially and adversely affect our results of operations, our financial position and/or liquidity, and could adversely impact our ratings, our ability to raise capital and the availability and cost of reinsurance. Our property and casualty insurance operations expose us to claims arising out of catastrophes in each of the geographies where we write business and to varying peak catastrophe perils in different countries and regions. Catastrophes can be caused by various natural events, including, among others, hurricanes, tornadoes and other windstorms, earthquakes, hail, wildfires, severe winter weather, floods, tsunamis, volcanic eruptions, solar flares and other naturally-occurringnaturally occurring events. Catastrophes can also be man-made, such as terrorist attacks and other destructive acts including those involving cyber events, nuclear, biological, chemical and radiological events, civil unrest, explosions and destruction of infrastructure.

The incidence and severity of catastrophes are inherently unpredictable, and it is possible that both the frequency and severity of natural and man-made catastrophic events could increase. Severe weather events over the last twofew decades have underscored the unpredictability of climate trends. For example, the frequency and/or severity of hurricane, tornado, hail and wildfire events in the United States have been more volatile during this time period. The insurance industry has experienced increased catastrophe losses due to a number of potential factors, including, in addition to weather/climate variability, aging infrastructure, more people living in, and moving to, high-risk areas, population growth in areas with weaker enforcement of building codes, urban expansion, an increase in the number of amenities included in, and the average size of, a home and higher inflation, including as a result of post-event demand surge. We believe that changing climate conditions have also likely added to the frequency and severity of natural disasters and created additional uncertainty as to future trends and exposures. Climate studies by government agencies, academic institutions, catastrophe modeling organizations and other groups indicate that an increase in the frequency and/or intensity of hurricanes, hail and severe convective storms, heavy precipitation events and associated river, urban and flash flooding, sea level rise, droughts, heat waves and wildfires has occurred, and can be expected into the future. See “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Catastrophe Modeling” and “—Changing Climate Conditions.”

The extent of losses from a catastrophe is a function of the total amount of insured exposure affected by the event, the severity of the event and the coverage provided. For example, the specific location impacted by tornadoes is inherently random and unpredictable, and the specific location impacted by a tornado may or may not be highly populated and may or may not have a high concentration of our insured exposures. Similarly, the potential for losses from a cyber event can be magnified to the extent that the event impacts geographies, platforms, systems or vulnerabilities shared by a large number of policyholders, such as cloud-based software platforms.platforms, or in the event threat actors continue to expand their use of new and developing technologies, including artificial intelligence. In addition, increases in the value and geographic concentration of insured property, the number of policyholders exposed to certain events and the effects of inflation could increase the severity of claims resulting from a catastrophe. For example, in recent years, the effects of inflation, including as a result of post-event demand surge, have increased catastrophe losses, and this could occur again in the future. Disruptions to electrical power supplies have also increased losses arising from natural events, a dynamic which may become more frequent as dependency on electricity increases and/or if the reliability of the electric grid decreases. Disruptions to electrical power supplies could result from non-natural events as well, including cyber events.

States have from time to time passed legislation, and regulators have taken action, that have the effect of limiting the ability of insurers to manage catastrophe risk, such as by restricting insurers from reducing exposures or withdrawing from catastrophe-prone areasareas, limiting insurers’ ability to increase prices, requiring price reductions or discounts or mandating that insurers participate in residual markets. Residual markets have resulted in, and may in the future result in, significant losses or assessments to insurers, including us. For example, it is expected that the January 2025 California wildfires will resultresulted in assessments to insurers from the California FAIR Plan. In addition, legislative, regulatory and legal actions have sought to expand insurance coverage for catastrophe claims beyond the original intent of the policies, prevent the application of deductibles or limit other rights of insurers. We may not be able to adjust terms or adequately raise prices to offset the costs of catastrophes. See “Item 1—Business—U.S. State and Federal Regulation—Regulatory and Legislative Responses to Catastrophes.”

If actual claims exceed our claims and claim adjustment expense reserves, or if changes in the estimated level of claims and claim adjustment expense reserves are necessary, including as a result of, among other things, changes in the legal/tort, regulatory and economic environments in which the Company operates, our financial results could be materially and adversely affected. Claims and claim adjustment expense reserves (“loss reserves”) represent management estimates of what the ultimate settlement and administration of claims will cost, generally utilizing actuarial expertise and projection techniques, at a given accounting date. The process of estimating loss reserves involves a high degree of judgment and is subject to a number of variables and significant uncertainty. These variables can be affected by both internal and external events, such as: changes in claims handling procedures, including automation; adverse changes in loss cost trends, including inflationary pressures, technology or other changes that may impact medical, auto and home repair costs (e.g., more costly technology in vehicles, labor shortages, supply chain disruptions, higher costs of used vehicles and parts, and increased demand and decreased supply for raw materials, all of which resultsresult in increased severity of claims); economic conditions, including general and wage inflation; legal trends, including adverse changes in the tort environment that have continued to persist at elevated levels for a number of years (e.g., increased and more aggressive attorney involvement in insurance claims, increased litigation, expanded theories of liability, higher jury awards, lawsuit abuse and third-party litigation finance, among others); labor shortages, which can result in companies hiring less experienced workersworkers, which can increase claims; higher interest rates, which can result in higher post-judgment interest costs; and legislative changes, among others. The impact of many of these items on ultimate costs for loss reserves could be material and is difficult to estimate. Loss reserve estimation difficulties also differ significantly by product line due to differences in claim complexity, the volume of claims, the potential severity of individual claims, the determination of occurrence date for a claim and lags in reporting of events to insurers, among other factors.

We refine our loss reserve estimates as part of a regular, ongoing process as historical loss experience develops, additional claims are reported and settled, and the legal, regulatory and economic environment evolves. Business judgment is applied throughout the process, including the application of various individual experiences and expertise to multiple sets of data and analyses. Additionally, models and technology are used in the claim estimation process, which can present risks of model inaccuracy. Different experts may apply different assumptions and judgments when faced with material uncertainty, based on their individual backgrounds, professional experiences and areas of focus. As a result, these experts may at times produce estimates materially different from each other. This risk may be exacerbated in the context of an extreme event or an acquisition. Experts providing input to the various estimatesestimates, models and underlying assumptions include actuaries, underwriters, claim personnel and lawyers, as well as other members of management. Therefore, management often considers varying individual viewpoints as part of its estimation of loss reserves.

Our business could be harmed because of our continued exposure to asbestos and environmental claims and related litigation. We continue to receive a significant number of asbestos claims. Factors underlying these claim filings include continued intensive advertising by lawyers seeking asbestos claimants and the continued focus by plaintiffs on defendants, such as manufacturers of talcum powder, who were not traditionally sued and/or primary targets of asbestos litigation. We also continue to be involved in coverage litigation concerning a number of policyholders, some of whom have filed for bankruptcy, who in some instances have asserted that all or a portion of their asbestos-related claims are not subject to aggregate limits on coverage and/or that each individual bodily injury claim should be treated as a separate occurrence under the policy. To the extent both issues are resolved in a policyholder’s favor and our other defenses are not successful, our coverage obligations under the policies at issue would be materially increased and bounded only by the applicable per-occurrence limits and the number of asbestos bodily injury claims against the policyholders. Although we have seen a moderation in the overall risk associated with these lawsuits, it remains difficult to predict the ultimate cost of these claims. Further, in addition to claims against policyholders, proceedings have been launched directly against insurers, including us, by individuals challenging insurers’ conduct with respect to the handling of past asbestos claims and by individuals seeking damages arising from alleged asbestos-related bodily injuries. It is possible that the filing of other direct actions against insurers, including us, could be made in the future.

TheAs mentioned above, the Company has been, and continues to be, involved in litigation involving insurance coverage issues pertaining to asbestos and environmental claims. The Company believes that some court decisions have interpreted the insurance coverage to be broader than the original intent of the insurers and policyholders. These decisions continue to be inconsistent and vary from jurisdiction to jurisdiction. Uncertainties surrounding the final resolution of these asbestos and environmental claims continue, and it is difficult to estimate our ultimate liability for such claims and related litigation. As a result, these reserves are subject to revision as new information becomes available and as claims develop. It is also not possible to predict changes in the legal, regulatory and legislative environment and their impact on the future development of asbestos and environmental claims. This environment could be affected by changes in applicable legislation and future court and regulatory decisions and interpretations, including the outcome of legal challenges to legislative and/or judicial reforms establishing medical criteria for the pursuit of asbestos claims. It is also difficult to predict the ultimate outcome of complex coverage disputes until settlement negotiations near completion and significant legal questions are resolved or, failing settlement, until the dispute is adjudicated. This is particularly the case with policyholders in bankruptcy where negotiations often involve a large number of claimants and other parties and require court approval to be effective.

It is possible that the outcome of the continued uncertainties regarding these claims could result in liability in future periods that differs from current reserves by an amount that could materially and adversely affect our results of operations. See the “Asbestos Claims and Litigation,” “Environmental Claims and Litigation” and “Uncertainty Regarding Adequacy of Asbestos and Environmental Reserves” sections of “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Also see “Item 3—Legal Proceedings.”

•claims relating to consequences of current or new technologies, including generativeartificial AIintelligence or addictive software, or business models or processes, including as a result of related behavioral changes;

Our investment portfolio includes: residential mortgage-backed securities; collateralized mortgage obligations; pass-through securities and asset-backed securities collateralized by sub-prime mortgages; commercial mortgage-backed securities; and wholly-owned real estate and real estate partnerships, all of which could be adversely impacted by declines in real estate valuations, including as a result of changes in the use of commercial office and retail space since the COVID-19 pandemic.valuations.

We may not be able to collect all amounts due to us from reinsurers, reinsurance coverage may not be available to us in the future at commercially reasonable rates or at all and we are exposed to credit risk related to our structured settlements. Although the reinsurer is liable to us to the extent of the reinsurance, we remain liable as the direct insurer on all risks reinsured. As a result, reinsurance arrangements do not eliminate our obligation to pay claims. Accordingly, we are subject to credit risk with respect to our ability to recover amounts due from reinsurers. In the past, certain reinsurers have ceased writing business and entered into runoff. Some of our reinsurance claims may be disputed by the reinsurers, and we may ultimately receive partial or no payment. This is a particular risk in the case of claims that relate to insurance policies written many years ago, including those relating to asbestos and environmental claims. In addition, in a number of jurisdictions a reinsurer is permitted to transfer a reinsurance arrangement to another reinsurer, which may be less creditworthy, without a counterparty’s consent. Also, the reinsurance that we purchase may not cover all of the risks covered by the policies that we issue.

The availability of reinsurance capacity, as well as its cost and terms, can be impacted, and in recent periods have been impacted, by general economic conditions and conditions in the reinsurance market, such as the occurrence of significant reinsured events or unexpected adverse trends. The availability, cost and terms of reinsurance could affect our business volume and profitability. In addition, the Covered Agreements between the U.S. and each of the EU and U.K. eliminate the requirement for European and U.K. reinsurers operating in the U.S. to provide collateral, which couldhave makemade it more difficult for U.S. companies, including us, to obtain collateral from European and U.K. reinsurers.

The intense competition that we face, including with respect to attracting and retaining employees, and the impact of innovation, technological changechange, including with respect to artificial intelligence, and changing customer preferences on the insurance industry and the markets in which we operate, could harm our ability to maintain or increase our business volumes and our profitability. The property and casualty insurance industry is highly competitive, and we believe that it will remain highly competitive for the foreseeable future. We compete with both domestic and foreign insurers, including start-ups, which may offer products at prices and on terms that are not consistent with our economic standards in an effort to maintain or increase their business. The competitive environment in which we operate could also be impacted by current general economic conditions, which could reduce the volume of business available to us as well as to our competitors. Pension and hedge funds and other entities with substantial available capital, more flexible legal structures and/or potentially lower return objectives have increasingly sought to participate in the property and casualty insurance and reinsurance businesses. Well-capitalized new entrants to the property and casualty insurance and reinsurance industriesindustries, including entities backed by private equity, and existing competitors that receive substantial infusions of capital may conduct business in ways that adversely impact our business volumes and profitability. In addition, the competitive environment could be impacted by changes in customer preferences, including customer demand for direct distribution channels and/or greater choice, not only in personal lines, but also in commercial lines (where direct writers may become a more significant source of competition in the future, particularly in the small commercial market). Similarly, comparative rating technology has impacted competition in personal lines and is now being used to access comparative rates for small commercial business as well, and that trend is likely to continue and may accelerate. In recent years, there have been new entrants into the small commercial business, and this trend may continue. Customer behavior could also evolve in the future towards buying insurance in point-of-sale or other non-traditional distribution channels where we may not have a meaningful presence or which are designed to sell products that we currently do not provide. Consolidation within the insurance industry also could impact our business volumes and/or the rates or terms of our products.

Other technological changes also present competitive risks. For example, our competitive position could be impacted if we are unable to deploy, in a cost effective and competitive manner, technology such as artificial intelligence and machine learning that collects and analyzes a wide variety of data points (so-calledto “big data” analysis) tohelp make underwriting or other decisions, or if our competitors collect and use data which we do not have the ability to access or use or deploy artificial intelligence to create efficiencies in ways that we do not. In addition, innovations, such as telematics and other usage-based methods of determining premiums, can impact product design and pricing and are becoming an increasingly important competitive factor.

Competitive dynamics may impact the success of efforts to improve our underwriting margins on our insurance products. These efforts could include seeking improved rates or improved terms and conditions, and could also include other initiatives, such as reducing operating expenses and acquisition costs.costs, and introducing new product offerings. These efforts may not be successful and/or may result in lower business volumes. Also, in some cases, if we do not write a particular product for an account, we could lose the ability to write other products for the same account. In addition, if our underwriting is not effective, further efforts to increase rates could also lead to “adverse selection”, whereby accounts retained have higher losses, and are less profitable, than accounts lost. For more detail, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook.”

Similar to other industries, the insurance industry is undergoing rapid and significant technological and other change. Traditional insurance industry participants, technology companies, “InsurTech” companies, some of which are supported by traditional insurance industry participants, and others are focused on using technology and innovation to simplify and improve the customer experience, increase efficiencies, redesign products, alter business or distribution models, create more sophisticated pricing models and effect other potentially disruptive changes in the insurance industry. If we do not anticipate, keep pace with and adapt to technological and other changes impacting the insurance industry, including artificial intelligence, it will harm our ability to compete, decrease the value of our products to customers, and materially and adversely affect our business. Furthermore, innovation, technological change and changing customer preferences in the markets in which we operate also pose risks to our business. For example, technologies such as driverless vehicles, assisted-driving or accident prevention technologies, technologies that facilitate ride, car or home sharing, smart homes or automation could reduce the number of vehicles in use and/or the demand for, or profitability of, certain of our products, create coverage issues or impact the frequency or severity of losses, and we may not be able to respond effectively. While there is substantial uncertainty as to the timing of any impact, in the case of driverless vehicles in particular, new legal frameworks or business practices could be adopted that reduce the size of the auto insurance market. If competition or technological or other changes to the markets in which we operate limit our ability to retain existing business or write new business at adequate rates or on appropriate terms, our results of operations could be materially and adversely affected. See “Competition” sections of the discussion on business segments in “Item 1—Business.”

Our efforts to develop new products or services, expand in targeted markets, improve business processes and workflows or makepursue acquisitions or dispositions may not be successful and may create enhanced risks. From time to time, to protect and grow market share and/or improve our productivity and efficiency, we invest in strategic initiatives and pursue acquisitions.acquisitions or dispositions. These efforts may require us to make substantial expenditures and not be successful, and even if successful, they may create additional risks:

•Acquisitions or dispositions may not be successfully integrated,integrated or separated, resulting in substantial disruption, costs or delays and adversely affecting our ability to compete, may not result in the benefits anticipated by us, and may also result in unforeseen liabilities or impact our credit ratings; and

We are subject to additional risks associated with our business outside the United States. We conduct business outside the United States primarily in Canada, the United Kingdom andKingdom, the Republic of Ireland.Ireland and Canada. In addition, we conduct business in Brazil through a joint venture, and throughout other parts of the world, including as a corporate member of Lloyd’s and through our quota share agreement with Fidelis. We may also explore opportunities in other countries. In conducting business outside of the United States, we are subject to a number of risks, particularly in emerging economies. These risks include restrictions such as price controls, capital controls, currency exchange limits, ownership limits and other restrictive or anti-competitive governmental actions or requirements, which could have an adverse effect on our business and our reputation. A portion of our premiums from outside of the United States is generated in Canada, a substantial portion of which consists of automobile premiums from the provinces of Ontario and Alberta, which are highly regulated markets that can result in rate inadequacy. Our business activities outside the United States may also subject us to currency risk and, in some markets, it may be difficult to effectively hedge that risk, or we may choose not to hedge that risk. In addition, in some markets, we invest as part of a joint venture with a local counterparty. Because our governance rights may be limited, we may not have control over the ability of the joint venture to make certain decisions and/or mitigate risks it faces, and significant disagreements with a joint venture counterparty may adversely impact our investment and/or reputation. Our business activities outside the United States could subject us to increased volatility in earnings resulting from the need to recognize and subsequently revise a valuation allowance associated with income taxes if we became unable to fully utilize any deferred tax assets, including loss carry-forwards from those foreign operations. Also, political instability and geopolitical tensions have at times resulted, and may in the future result, in inflation, reduced growth, supply chain and financial market disruption or an economic downturn in such regions. For certain businesses, we give third parties binding authority to write direct and indirect business on our behalf, and in the case of Fidelis, we assume a percentage of its business under a reinsurance agreement, which exposes us to additional risks, including with respect to certain products, risks and geographies we do not normally cover.

Future pandemics (including new variants of COVID-19), could materially affect our results of operations, financial position and/or liquidity. COVID-19The pandemic presented, and any future pandemics (including new variants of COVID-19) could present, the following risks, among others: inflation; supply chain disruption; labor shortages; backlogs in the court system (which increase the time and costs to resolve claims); legal and regulatory demands for rate refunds; behavioral changes that can result in the increased frequency and severity of claims, such as driving at faster speeds; medical conditions such as “long-COVID” and other claims in our workers compensation line; litigation seeking business interruption coverage; reduced earned premiums; higher claims and claim adjustment expenses in certain lines of business; adverse legislative or regulatory actions; operational disruptions; increased general and administrative expenses; financial market disruption; and an economic downturn. These risks could materially and adversely impact our results of operations, financial position and/or liquidity. For a further discussion of risks that can impact us as a result of financial market disruption or an economic downturn, see “During or following a period of financial market disruption or an economic downturn, our business could be materially and adversely affected” above and “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook.”

Our business success and profitability depend, in part, on effective information technology systems and on continuing to develop and implement improvements in technology, including artificial intelligence, particularly as our business processes become more digital. We depend in large part on our technology systems for conducting business and processing claims, as well as for providing the data and analytics we utilize to manage our business. As a result, our business success is dependent on maintaining the effectiveness of existing technology systems and on continuing to develop and enhance technology systems that support our business processes and strategic initiatives in an efficient manner, particularly as our business processes become more digital and seek to incorporate artificial intelligence, which has a high rate of change, and certain of our products, such as cyber insurance, are more technology-based. Some system development projects are long-term in nature, may negatively impact our expense ratios as we invest in the projects and may cost more than we expect to complete. In addition, system development projects may not deliver the benefits or perform as expected, or may be replaced or become obsolete more quickly than expected, which could result in operational difficulties, additional costs or accelerated recognition of expenses. Artificial intelligence, in particular, may become more expensive in the future given the resources necessary to develop that technology. Attracting and retaining technology personnel has also become significantly more challenging in recent years. If we do not effectively and efficiently manage and upgrade our technology portfolio, or if the costs of doing so are higher than we expect, our ability to provide competitive services to, and conduct business with, new and existing customers in a cost effective manner and our ability to implement our strategic initiatives could be adversely impacted.

IfIf, as a result of a cyber-attack (the risk of which could be exacerbated by geopolitical tensions) or otherwise, we experience difficulties with technology, data and network security (including as a result of cyber attacks),security, outsourcing relationships or cloud-based technology, our ability to conduct our business could be negatively impacted. A shut-down of, or inability to access, one or more of our facilities (including our primary data processing facility); a power outage; or a failure of one or more of our systems could significantly impair our ability to perform necessary business functions on a timely basis. In the event of a computercyber-attack, virusmalware or natural or other disaster, our systems could be inaccessible for an extended period of time, including as a result of hostile actions taken by cyber criminals, nation-states or terrorist organizations. In addition, because our systems increasingly interface with and depend on third-party systems, including cloud-based,cloud-based systems, we could experience service denials or failures of controls if demand for our service exceeds capacity or a third-party system fails or experiences an interruption. Business interruptions and failures of controls could also result if our internal systems do not interface with each other as intended or if changes to such systems or our other business processes, such as new payment technologies, are not effectively implemented. Business continuity can also be disrupted by an event, such as a pandemic, that renders large numbers of a workforce unable to work as needed, particularly at critical locations. If our business continuity plans do not sufficiently address a business interruption, system failure or service denial, this could result in a deterioration of our ability to write and process new and renewal business, provide customer service, pay claims in a timely manner or perform other necessary business functions. In addition, should internet disruptions occur, or frustration with our business platforms or distribution initiatives develop among our independent agents and brokers, any resulting loss of business could materially and adversely affect our future business volume and results of operations.

Our operations rely on the secure processing, storage and transmission of confidential and other information in our computer systems and networks. Computer viruses, hackersCyber-attacks and employee or vendor misconduct, and other external hazardsmisconduct (suchinadvertent asor social engineering attacksintentional), could expose our systems or data systems to securityunauthorized breaches, cyber-attacksparties or otherotherwise cause significant disruptions. Increased use of data supplied by third parties in our business increases our exposure to this risk. While we attempt to develop secure transmission capabilities with third-party vendors and others with whom we do business, we may not be successful and, in addition, these third parties may not have appropriate controls in place to protect the confidentiality of the information.

Like other global companies, our computer systems and networks are regularly subject to and will continue to be the target of computer viruses, malware or other malicious codes (including ransomware), unauthorized access, cyber-attacks or other computer-related penetrations. The Company, like other property and casualty insurers, may be under greater threat from cybercriminals seeking sensitive personal or other insurance-related information. The risk of cyber attackscyber-attacks could be exacerbated by geopolitical tensions, including hostile actions taken by cyber criminals, nation-states or terrorist organizations.organizations, and the increased use of artificial intelligence by threat actors to perpetrate these attacks.

While we have experienced cyber-attacks, to date, we are not aware that we have experienced a material cyber-security breach. The sophistication of these threats continues to increase, including because of the rapid evolution of artificial intelligence, and the preventative actions we take to reduce the risk of cyber incidentscyber-attacks and protect our systems and information may be insufficient. In addition, new technology that could result in greater operational efficiency, including artificial intelligence, may further expose our computer systems and networks to the risk of cyber-attacks. Also, our increased use of open source software, cloud technology and software as a service can make it more difficult to identify and remedy such situations due to the disparate location of code utilized in our operations.

The increased risks identified above could expose us to data loss or manipulation, disruption of service, monetary and reputational damages, competitive disadvantage and significant increases in compliance costs and costs to improve the security and resiliency of our computer systems.systems and networks. The compromise of personal, confidential or proprietary information could also subject us to significant legal liability or regulatory action under evolving cyber-security, data protection and privacy laws and regulations enacted by the U.S. federal and state governments, Canada, the European UnionUnion, Canada or other jurisdictions or by various regulatory organizations or exchanges. As a result, our ability to conduct our business and our results of operations might be materially and adversely affected.

Intellectual property is important to our business, and we may be unable to protect and enforce our own intellectual property or we may be subject to claims for infringing the intellectual property of others. Our success depends in part upon our ability to protect our proprietary trademarks, technology and other intellectual property. See “Item 1—Business—Other Information—Intellectual Property.” We may not, however, be able to protect our intellectual property from unauthorized use and disclosure by others. Further, the intellectual property laws may not prevent our competitors from independently developing trademarks, products and services that are similar to ours. We may incur significant costs in our efforts to protect and enforce our intellectual property, including the initiation of expensive and protracted litigation, and we may not prevail. Any inability to enforce our intellectual property rights could have a material adverse effect on our business and our ability to compete.

We may be subject to claims by third parties from time to time that our products, services and technologies infringe on their intellectual property rights. In recent years, certain entities have acquired patents in order to allege claims of infringement against companies, including in some cases, us. Any intellectual property infringement claims brought against us could cause us to spend significant time and money to defend ourselves, regardless of the merits of the claims. If we are found to infringe any third-party intellectual property rights, it could result in reputational harm, payment of significant monetary damages or fees and/or substantial time and expense to redesign our products, services or technologies to avoid the infringement. In addition, we use third-party software in some of our products, services and technologies. With respect to artificial intelligence, emerging intellectual property-related rights and issues are being interpreted by courts and addressed by regulations. If any of our software vendors or licensors are faced with infringement claims, we may lose our ability to use such software until the dispute is resolved. If we cannot successfully redesign an infringing product, service or technology (or procure a substitute version), this could have a material adverse effect on our business and ability to compete.

These regulatory systems also address authorization for lines of business, statutory capital and surplus requirements, limitations on the types and amounts of certain investments, underwriting limitations, transactions with affiliates, dividend limitations, changes in control, premium rates and a variety of other financial and non-financial components of an insurer’s business including, recently, cyber-security.cyber-security and the use of artificial intelligence and models. In addition, many jurisdictions restrict the timing and/or the ability of an insurer to discontinue writing a line of business or to cancel or non-renew certain policies. Insurance regulators may also increase the statutory capital and surplus requirements for our insurance subsidiaries or, as has happened recently in certain states, reject or delay rate increases or other changes to terms and conditions due to the economic environment or other factors and/or expand FAIR plans or similar residual market mechanisms, including with respect to commercial lines. The adverse impacts of these types of actions have caused some insurance companies to withdraw from certain states, resulting in market dislocations for those insurance companies that remain. These market dislocations make it harder for the remaining companies to maintain their market presence and manage their exposures and profitability. In addition, state tax laws that specifically impact the insurance industry, such as premium taxes, or more general tax laws, such as U.S. federal corporate taxes, could be enacted or changed and could have a material adverse impact on us. Other legislative actions could impact our business as well. For example, changes to state law regarding workers’ compensation insurance or to requirements for other insurance products could impact the demand for our products, and the legalization of cannabis in certain states has, according to some studies, resulted in more automobile accidents. In addition, the potential repeal of the McCarran-Ferguson Act (which exempts insurance from most federal regulation) or a change to the federal health care system that eliminates or reduces the need for the medical coverage component of workers’ compensation insurance, could also significantly harm the insurance industry, including us. State, federal and international regulators are also increasingly focused on imposing new reporting and other requirements, which in some cases can be conflicting, on a multitude of topics. Regarding artificial intelligence, legal and regulatory frameworks are developing and subject to change. Changes in applicable legislation and regulations and future court and regulatory decisions may be more restrictive and may result in lower revenues, higher costs of compliance and higher risk of non-compliance and, as a result, could materially and adversely affect our results of operations. See also “Item 1 – Business – Regulation.”

•Net favorable prior year reserve development of $709$1.04 millionbillion ($559$815 million after-tax)

Diluted net income per share of $27.43 in 2025 increased by 28% over diluted net income per share of $21.47 in 20242024. Net income of $6.29 billion in 2025 increased by 68%26% over diluted net income per share of $12.79 in 2023. Net income of $5.00 billion in 2024 increased by 67% over net income of $2.99 billion in 2023.2024. The higher rate of increase in diluted net income per share reflected the impact of share repurchases in recent periods. The increase in income before income taxes primarily reflected the pre-tax impacts of (i) higher underwriting margins excluding catastrophe losses and prior year reserve development (“underlying underwriting margins”), (ii) higher net investment income,income and (iii) higher net favorable prior year reserve development and (iv) lower net realized investment losses,development, partially offset by (viv) higher catastrophe losses. Net favorable prior year reserve development in 20242025 and 20232024 was $709$1.04 millionbillion and $143$709 million, respectively. Catastrophe losses in 20242025 and 20232024 were $3.34$3.69 billion and $2.99$3.34 billion, respectively. The higher underlying underwriting margins in 20242025 were driven by Personalall Insurancethree and Business Insurance, partially offset by Bond & Specialty Insurance.segments. Income tax expense in 20242025 was higher than in 2023,2024, primarily reflecting the impact of the increase in income before income taxes, partially offset by a one-time tax benefit of $211 million in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item.taxes.

The Company has insurance operations in Canada, the United Kingdom, the Republic of IrelandIreland, Canada and throughout other parts of the world as a corporate member of Lloyd’s, as well as in Brazil through a joint venture. Because these operations are conducted in local currencies other than the U.S. dollar, the Company is subject to changes in foreign currency exchange rates. For the years ended December 31, 20242025 and 2023,2024, changes in foreign currency exchange rates impacted reported line items in the statement of income by insignificant amounts. The impact of these changes was not material to the Company’s net income or segment income (loss) for the periods reported.

Net investment income in 20242025 was $3.59$3.96 billion, $668$369 million or 23%10% higher than in 2023.2024. Net investment income from fixed maturity investments in 20242025 was $2.95$3.43 billion, $476$485 million higher than in 2023.2024. The increase primarily resulted from higher long-term average yields and a higher average level of fixed maturity investments.investments and higher long-term average yields. Net investment income from short-term securities in 20242025 was $280$253 million, $39$27 million higherlower than in 2023.2024. The increasedecrease primarily resulted from lower short-term average yields, partially offset by a higher level of short-term investments and higher short-term average yields.investments. The Company’s remaining investment portfolios had net investment income of $409$326 million in 2024,2025, $156$83 million higherlower than in 2023,2024, primarily reflecting higherlower private equity partnership returns. Included in other investments are private equity, hedge fund and real estate partnerships that are accounted for under the equity method of accounting and typically report their financial statement information to the Company one month to three months following the end of the reporting period. Accordingly, net investment income from these other investments is generally reflected in the Company’s financial statements on a quarter lag basis.

Net realized investment gains on equity securities still held of $50 million and $89 million in 20242025 and 2024, respectively, were driven by the impact of changes in fair value attributable to favorable equity markets. Net realized investment gains on equity securities still held of $16 million in 2023 were driven by the impact of changes in fair value attributable to favorable equity markets, partially offset by a net unfavorable change in fair value on an individual security held in the Company’s portfolio.

Other net realized investment losses in 2025 included $67 million of net realized investment losses related to fixed maturity investments, $24 million of net realized investment losses related to other investments and $5 million of net realized investment losses related to equity securities sold. Other net realized investment losses in 2024 included $126 million of net realized investment losses related to fixed maturity investments and $10 million of net realized investment losses related to other investments, partially offset by $17 million of net realized investment gains related to real estate sales and $10 million of net realized investment gains related to equity securities sold. Other net realized investment losses in 2023 included $93 million of net realized investment losses related to fixed maturity investments, $7 million of net realized investment losses related to equity securities sold and $9 million of net realized investment losses related to other investments.

Income tax expense in 20242025 was $1.18$1.51 billion, $801$327 million or 211%28% higher than in 2023,2024, primarily reflecting the impact of the $2.81$1.62 billion increase in income before income taxes in 2024 and the one-time tax benefit of $211 million in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item.2025.

The Company’s effective tax rate was 19% and 11% in 2024both 2025 and 2023, respectively. The effective tax rate in 2023 was reduced by the impact of the one-time tax benefit discussed above.2024. The effective tax rates in both years reflected the impact of tax-exempt investment income on the calculation of the Company’s income tax provision.

The combined ratio of 92.5%89.9% in 20242025 was 4.52.6 points lower than the combined ratio of 97.0%92.5% in 2023.2024. The loss and loss adjustment expense ratio of 64.0%61.4% in 20242025 was 4.92.6 points lower than the loss and loss adjustment expense ratio of 68.9%64.0% in 2023.2024. The underwriting expense ratio of 28.5% in 20242025 was 0.4comparable points higher thanwith the underwriting expense ratio of 28.1% in 2023.2024.

Catastrophe losses in 20242025 and 20232024 accounted for 8.08.4 points and 7.98.0 points, respectively, of the combined ratio. Net favorable prior year reserve development in 20242025 and 20232024 provided 1.72.4 points and 0.41.7 points of benefit, respectively, to the combined ratio. The combined ratio excluding prior year reserve development and catastrophe losses (“underlying combined ratio”) in 20242025 was 3.32.3 points lower than the 20232024 ratio on the same basis, primarily reflecting the impacts of (i) the benefit of earned pricing in Personal Insurance and Business Insurance, partially offset by Bond & Specialty Insurance, (ii) lower physical damage losses in the automobile product line and lower non-weather and non-catastrophe weather-related losses in the homeowners and other product line in Personal Insurance and (iii) the comparison to an elevated level of losses in 2023 from both a small number of surety accounts and loss activity related to the disruption in the banking sector in Bond & Specialty Insurance, partially offset by (iv) higher other losses in Business Insurance.

Gross and net written premiums in 2024 both2025 increased by 8%3% and 2%, respectively, over 2023.2024. Factors contributing to the changes in gross and net written premiums in each segment are discussed in more detail in the segment discussions that follow.

Segment income in 20242025 was $3.31$3.70 billion, $723$389 million or 28%12% higher than segment income of $2.58$3.31 billion in 2023.2024. The increase in segment income before income taxes primarily reflected the pre-tax impacts of (i) higher net investment income, (ii) higher underlying underwriting margins and (iii) higher net favorable prior year reserve development compared to net unfavorable prior year reserve development in 2023,development, partially offset by (iv) higher catastrophe losses. Net favorable prior year reserve development in 2025 and 2024 was $233 million and $90 million.million, Net unfavorable prior year reserve development in 2023 was $289 million.respectively. Catastrophe losses in 20242025 and 20232024 were $1.03$1.07 billion and $838$1.03 million,billion, respectively. The higher underlying underwriting margins primarily reflected the impacts of (i) higher business volumes and (ii) the benefit of earned pricing,pricing and (ii) higher business volumes, partially offset by (iii) higher other losses and (iv) higher general and administrative expenses. Income tax expense in 20242025 was higher than in 2023,2024, primarily reflecting the impact of the increase in segment income before income taxes and a one-time tax benefit of $171 million in the first quarter of 2023.taxes.

Other revenues in 20242025 were $322$379 million, $90$57 million or 39%18% higher than in 2023,2024, driven by growth in Simply Business. Other revenues also include premium installment premium charges and other policyholder service charges.

Claims and claim adjustment expenses in 20242025 were $13.68$14.15 billion, $983$475 million or 8%3% higher than in 2023,2024, primarily reflecting the impacts of (i) higher business volumes, (ii) loss cost trends, (iii) higher other lossestrends and (ivii) higher catastrophe losses, partially offset by (viii) higher net favorable prior year reserve development compared to net unfavorable prior year reserve development in 2023.development.

Income tax expense in 20242025 was $781$891 million, $413$110 million or 112%14% higher than in 2023,2024, primarily reflecting the impact of the $1.14$499 billionmillion increase in segment income before income taxes in 2024 and the one-time tax benefit of $171 million in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item.2025.

The combined ratio of 92.5%91.7% in 20242025 was 2.20.8 points lower than the combined ratio of 94.7%92.5% in 2023.2024. The loss and loss adjustment expense ratio of 63.1%62.2% in 20242025 was 2.20.9 points lower than the loss and loss adjustment expense ratio of 65.3%63.1% in 2023.2024. The underwriting expense ratio of 29.5% in 2025 was 0.1 points higher than the underwriting expense ratio of 29.4% in 2024 was comparable with the underwriting expense ratio in 2023.2024.

Catastrophe losses in 2024both 2025 and 20232024 accounted for 4.8 points and 4.3 points, respectively, of the combined ratio. Net favorable prior year reserve development in 2025 and 2024 provided 1.1 points and 0.4 points of benefitbenefit, respectively, to the combined ratio. Net unfavorable prior year reserve development in 2023 accounted for 1.5 points of the combined ratio. The underlying combined ratio in 20242025 was 0.80.1 points lower than the 20232024 ratio on the same basis, primarily reflecting the impact of the benefit of earned pricing, partially offset by higher other losses.basis.

Gross and net written premiums in 20242025 both increased by 9% and 8%, respectively,3% over 2023.2024.

Select Accounts. Net written premiums of $3.73$3.83 billion in 20242025 increased by 7%3% over 2023.2024. Retention rates remained strong in 20242025 but decreased from 2023.2024. Renewal premium changes in 20242025 remained positive andbut were higherslightly lower than in 2023.2024. New business premiums in 20242025 increased over 2023.2024.

NationalMiddle Accounts.Market. Net written premiums of $1.26$12.54 billion in 20242025 increased by 11%4% over 2023.2024. Retention rates remained strong in 20242025 and were comparable with 2023.2024. Renewal premium changes in 20242025 remained positive andbut were comparablelower withthan 2023.in 2024. New business premiums in 20242025 increased over 2023.2024.

National Property and Other.Accounts. Net written premiums of $3.13$1.26 billion in 20242025 increased by 4%slightly over 2023.2024. Retention rates remained strong in 20242025 butand decreasedwere fromcomparable 2023.with 2024. Renewal premium changes in 20242025 remained positive but were lower than in 2023.2024. New business premiums in 20242025 increaseddecreased overfrom 2023.2024.

International. Net written premiums of $1.94$1.93 billion in 20242025 increasedwere bycomparable 10%with over 2023.2024.

Segment income in 20242025 was $815$950 million, $127$135 million or 13%17% lowerhigher than segment income of $942$815 million in 2023.2024. The decreaseincrease in segment income before income taxes primarily reflected the pre-tax impacts of (i) lowerhigher net favorable prior year reserve development anddevelopment, (ii) lower underlying underwriting margins, partially offset by (iii) higher net investment income.income, (iii) lower catastrophe losses and (iv) higher underlying underwriting margins. Net favorable prior year reserve development in 20242025 and 20232024 was $129$221 million and $285$129 million, respectively. Catastrophe losses in 20242025 and 20232024 were $51$25 million and $37$51 million, respectively. The lowerhigher underlying underwriting margins primarily reflected (i) higher generalbusiness andvolumes, administrativepartially expensesoffset andby (ii) the impact of earned pricing,pricing partially offset byand (iii) higher business volumesgeneral and (iv)administrative the comparison to an elevated level of losses in 2023 from both a small number of surety accounts and loss activity related to the disruption in the banking sector.expenses. Income tax expense in 20242025 was lowerhigher than in 2023,2024, primarily reflecting the impact of the decreaseincrease in segment income before income taxes, partially offset by a one-time tax benefit of $9 million in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item.taxes.

Claims and claim adjustment expenses in 20242025 were $1.77$1.76 billion, $289$10 million or 19%1% higherlower than in 2023,2024, primarily reflecting the impacts of (i) lowerhigher net favorable prior year reserve development,development and (ii) higher business volumes, (iii) loss cost trends and (iv) higherlower catastrophe losses, partially offset by (viii) thehigher comparisonbusiness to an elevated level of losses in 2023 from both a small number of surety accountsvolumes and (iv) loss activitycost related to the disruption in the banking sector.trends.

General and administrative expenses in 20242025 were $832$843 million, $151$11 million or 22%1% higher than in 2023. The increase primarily reflected the acquisition of Corvus in the first quarter of 2024, as well as higher employee and technology related expenses.2024.

Income tax expense in 20242025 was $201$244 million, $26$43 million or 11%21% lowerhigher than in 2023,2024, primarily reflecting the impact of the $153$178 million decreaseincrease in segment income before income taxes in 2024, partially offset by the one-time tax benefit of $9 million in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item.2025.

The combined ratio of 81.9% in 2025 was 2.4 points lower than the combined ratio of 84.3% in 20242024. wasThe 7.4loss pointsand higherloss thanadjustment the combinedexpense ratio of 76.9%42.6% in 2023.2025 Thewas 1.8 points lower than the loss and loss adjustment expense ratio of 44.4% in 20242024. wasThe 4.3 points higher than the loss and loss adjustmentunderwriting expense ratio of 40.1%39.3% in 2023.2025 Thewas 0.6 points lower than the underwriting expense ratio of 39.9% in 2024 was 3.1 points higher than the underwriting expense ratio of 36.8% in 2023.2024.

Net favorable prior year reserve development in 20242025 and 20232024 provided 3.35.4 points and 7.83.3 points of benefit, respectively, to the combined ratio. Catastrophe losses in 20242025 and 20232024 accounted for 1.30.7 points and 1.01.3 points, respectively, of the combined ratio. The underlying combined ratio in 20242025 was 2.60.3 points higher than the 20232024 ratio on the same basis, primarily reflecting (i) a higher expense ratio and (ii) the impact of earned pricing, partially offset by (iii) the comparison to an elevated level of losses in 2023 from both small number of surety accounts and loss activity related to the disruption in the banking sector.pricing.

Domestic. Net written premiums of $3.60$3.68 billion in 20242025 increased by 9%2% over 2023.2024. Excluding the surety line of business, for which the following are not relevant measures, retention rates remained strong in 20242025 andbut weredecreased comparablefrom with 2023.2024. Renewal premium changes in 20242025 remained positive butand were lowerhigher than in 2023.2024. New business premiums in 20242025 increaseddecreased overfrom 2023, driven by Corvus.2024.

International. Net written premiums of $506$582 million in 20242025 decreasedincreased by 6%15% fromover 2023,2024, driven by decreasesincreases in the United Kingdom and broader Europe, partially offset by increases in Canada.Europe.

Segment income in 20242025 was $1.25$2.05 billion, compared$804 withmillion aor 64% higher than segment lossincome of $128$1.25 millionbillion in 2023.2024. The increase in segment income before income taxes was driven by the pre-tax impacts of (i) higher underlying underwriting margins, (ii) higher net favorableinvestment prior year reserve developmentincome and (iii) higher net investmentfavorable income,prior year reserve development, partially offset by (iv) higher catastrophe losses. Net favorable prior year reserve development in 20242025 and 20232024 was $490$582 million and $147$490 million, respectively. Catastrophe losses in 20242025 and 20232024 were $2.25$2.59 billion and $2.12$2.25 billion, respectively. The higher underlying underwriting margins primarily reflected the impacts of (i) the benefit of earned pricing, (ii) lower physical damage losses in the automobile product line, (ii) the benefit of earned pricing, (iii) higher business volumes and (iv) lower non-weathernon-catastrophe weather-related and non-catastrophe weather-relatednon-weather losses in the homeowners and other product lineline. and (iv) higher business volumes. The segment recorded incomeIncome tax expense in 20242025 comparedwas tohigher an income tax benefitthan in 2023. The change in income taxes2024, primarily reflectedreflecting the impact of the increase in segment income before income taxes and a one-time tax benefit of $31 million in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item.taxes.

Earned premiums in 20242025 were $16.64$17.40 billion, $1.68$757 billionmillion or 11%5% higher than in 2023,2024, primarily reflecting the increase in net written premiums over the preceding twelve months.

Claims and claim adjustment expenses in 20242025 were $11.61$11.30 billion, $428$303 million or 4%3% lower than in 2023,2024, primarily reflecting the impacts of (i) lower losses in the automobile product line, (ii) lower non-catastrophe weather-related and non-weather losses in the homeowners and other product line and (iii) higher net favorable prior year reserve development, (ii) lower physical damage losses in the automobile product line and (iii) lower non-weather and non-catastrophe weather-related losses in the homeowners and other product line, partially offset by (iv) higher businesscatastrophe volumeslosses and (v) higherloss catastrophecost losses.trends.

General and administrative expenses in 20242025 were $1.64$1.75 billion, $223$106 million or 16%6% higher than in 2023. The increase2024, primarily reflectedreflecting higher contingent commissions, as well as higher employee and technology related expenses.commissions.

Income tax expense in 20242025 was $294$485 million, compared with an income tax benefit of $103$191 million or 65% higher than in 2023,2024, primarily reflecting the impact of the $1.77$995 billionmillion increase in segment income before income taxes and the one-time tax benefit of $31 million in the first quarter of 2023 due to the expiration of the statute of limitations with respect to a tax item.taxes.

The combined ratio of 94.4%89.5% in 20242025 was 10.44.9 points lower than the combined ratio of 104.8%94.4% in 2023.2024. The loss and loss adjustment expense ratio of 69.7%65.0% in 20242025 was 10.74.7 points lower than the loss and loss adjustment expense ratio of 80.4%69.7% in 2023.2024. The underwriting expense ratio of 24.5% in 2025 was 0.2 points lower than the underwriting expense ratio of 24.7% in 2024 was 0.3 points higher than the underwriting expense ratio of 24.4% in 2023.2024.

Catastrophe losses accounted for 13.514.9 points and 14.113.5 points of the combined ratio in 20242025 and 2023,2024, respectively. Net favorable prior year reserve development in 20242025 and 20232024 provided 3.03.4 points and 1.03.0 points of benefit, respectively, to the combined ratio. The underlying combined ratio in 20242025 was 7.85.9 points lower than the 20232024 ratio on the same basis, primarily reflecting the impacts of (i) the benefit of earned pricing, (ii) lower physical damage losses in the automobile product lineline, (ii) the benefit of earned pricing and (iii) lower non-weathernon-catastrophe weather-related and non-catastrophe weather-relatednon-weather losses in the homeowners and other product line.

Automobile net written premiums of $7.93$7.75 billion in 20242025 increaseddecreased by 8%2% overfrom 2023.2024. Retention rates remained strong in 20242025 and were comparable with 2023.2024. Renewal premium changes in 20242025 remained positive but were lower than in 2023.2024. New business premiums in 20242025 decreasedincreased fromover 2023.2024.

Homeowners and Other net written premiums of $8.55$9.05 billion in 20242025 increased by 8%6% over 2023.2024. Retention rates remained strong in 20242025 andbut weredecreased comparablefrom with 2023.2024. Renewal premium changes in 20242025 remained positive butand were lowerhigher than in 2023.2024. New business premiums in 20242025 decreased from 2023.2024.

International net written premiums of $694$650 million in 20242025 increaseddecreased by 7%6% overfrom 2023,2024, driven by increasesdecreases in the automobile and homeowners and other product lines, partially offset by the impact of changes in foreign currency exchange rates.line.

The Company’s net asbestos reserves atas of December 31, 20242025 and 20232024 were $1.34$1.36 billion and $1.38$1.34 billion, respectively, and include case reserves, IBNR reserves and reserves for the costs of defending asbestos-related coverage litigation. IBNR reserves include amounts for new claims and adverse development on existing policyholders, as well as reserves for claims from policyholders reporting asbestos claims for the first time and for policyholders for which there is, or may be, litigation. Asbestos reserves also include amounts related to certain policyholders with whom the Company has entered into permanent settlement agreements, which are based on the expected payout for each policyholder under the applicable agreement. Additionally, a portion of the asbestos reserves relates to assumed reinsurance contracts, primarily consisting of reinsurance of excess coverage, including various pool participations.

The following table displays activity for asbestos losses and loss adjustment expenses and reserves:reserves.

UNCERTAINTY REGARDING ADEQUACY OF ASBESTOS AND ENVIRONMENTAL RESERVES

As a result of the processes and procedures discussed above, management believes that the reserves carried for asbestos and environmental claims are appropriately established based upon known facts, current law and management’s judgment. However, the uncertainties surrounding the final resolution of these claims continue, and it is difficult to determine the ultimate exposure for asbestos and environmental claims and related litigation. As a result, these reserves are subject to revision as new information becomes available and as claims develop. The continuing uncertainties include, without limitation:

•a further increase in the cost to resolve, and/or the number of, asbestos and environmental claims beyond that which is anticipated;

•the resolution or adjudication of disputes concerning coverage for asbestos and environmental claims in a manner inconsistent with our previous assessment of these disputes;

2026 FirstSecond Quarter Consolidated Results of Operations

2026 FirstSecond Quarter Consolidated Financial Condition

Diluted net income per share of $7.78$10.26 in the firstsecond quarter of 2026 increased by 358%57% over diluted net income per share of $1.70$6.53 in the same period of 2025. Net income of $1.71$2.21 billion in the firstsecond quarter of 2026 increased by 333%46% over net income of $395$1.51 millionbillion in the same period of 2025. The higher rate of increase in diluted net income per share reflected the impact of share repurchases in recent periods. The increase in income before income taxes in the firstsecond quarter of 2026 primarily reflected the pre-tax impacts of (i) lower catastrophe losses, (ii) net realized investment gains compared to net realized investment losses in the same period of 2025, (iii) higher net investment income and (iv) higher net favorable prior year reserve development, partially(iii) offsethigher bynet investment income, (iv) higher net realized investment gains and (v) lowerhigher underwriting margins excluding catastrophe losses and prior year reserve development (“underlying underwriting margins”). Catastrophe losses in the firstsecond quarters of 2026 and 2025 were $761$518 million and $2.27$927 billion,million, respectively. Net favorable prior year reserve development in the firstsecond quarters of 2026 and 2025 was $413$578 million and $378$315 million, respectively. The lowerhigher underlying underwriting margins in the firstsecond quarter of 2026 were driven by BusinessPersonal Insurance and Bond & SpecialtyBusiness Insurance, partially offset by PersonalBond & Specialty Insurance. Income tax expense in the firstsecond quarter of 2026 was higher than in the same period of 2025, primarily reflecting the impact of the increase in income before income taxes.

The Company has insurance operations in the United Kingdom, the Republic of Ireland, Canada and throughout other parts of the world as a corporate member of Lloyd’s, as well as in Brazil through a joint venture. Because these operations are conducted in local currencies other than the U.S. dollar, the Company is subject to changes in foreign currency exchange rates. For the three months and six months ended MarchJune 31,30, 2026 and 2025, changes in foreign currency exchange rates impacted reported line items in the statement of income by insignificant amounts. The impact of these changes was not material to the Company’s net income or segment income for the periods reported.

Earned premiums in the second quarter of 2026 were $10.75 billion, $168 million or 2% lower than in the same period of 2025. Earned premiums in the second quarter of 2025 included $266 million related to the Canadian operations divested by the Company in the first quarter of 2026. Earned premiums in the first six months of 2026 were $10.61$21.36 billion, $105$273 million or 1% lower than in the same period of 2025. Earned premiums in the first quartersix months of 2025 included $258$524 million related to the Canadian operations divested by the Company in the first quarter of 2026. In Business Insurance, earned premiums in the second quarter and first quartersix months of 2026 increasedwere bycomparable 1% overwith the same periodperiods of 2025. In Bond & Specialty Insurance, earned premiums in the second quarter and first quartersix months of 2026 both increased by 2%3% over the same periodperiods of 2025. In Personal Insurance, earned premiums in the second quarter and first quartersix months of 2026 decreased by 4%5% and 4%, respectively, from the same periodperiods of 2025. Factors contributing to the changes in earned premiums in each segment are discussed in more detail in the segment discussions that follow.

Net investment income in the second quarter of 2026 was $1.07 billion, $128 million or 14% higher than in the same period of 2025. Net investment income in the first quartersix months of 2026 was $1.01$2.08 billion, $78$206 million or 8%11% higher than in the same period of 2025. Net investment income from fixed maturity investments in the second quarter and first quartersix months of 2026 was $899 million, $87$930 million higherand $1.83 billion, respectively, $97 million and $184 million higher, respectively, than in the same periodperiods of 2025. The increaseincreases in theboth first quarterperiods of 2026 primarily resulted from higher long-term average yields and a higher average level of fixed maturity investments. Net investment income from short-term securities in the firstsecond quarter of 2026 was $75$53 million, $18$2 million lower than in the same period of 2025, driven by lower short-term average yields. Net investment income from short-term securities in the first six months of 2026 was $128 million, $16 million higher than in the same period of 2025.2025, Thedriven increase in the first quarter of 2026 primarily resulted fromby a higher average level of short-term securities, partially offset by lower short-term average yields. The Company’s remaining investment portfolios had net investment income of $47$100 million and $147 million, respectively, in the second quarter and first quartersix months of 2026, $29$33 million lowerand $4 million higher, respectively, than in the same period of 2025,2025. The increases in both periods of 2026 primarily reflectingreflected lowerhigher private equity partnership returns. Included in other investments are private equity, hedge fund and real estate partnerships that are accounted for under the equity method of accounting and typically report their financial statement information to the Company one month to three months following the end of the reporting period. Accordingly, net investment income from these other investments is generally reflected in the Company’s financial statements on a quarter lag basis.

Fee income in the second quarter of 2026 was $126 million, $2 million higher than in the same period of 2025. Fee income in the first quartersix months of 2026 was $121$247 million, $2$4 million higher than in the same period of 2025. The National Accounts market in Business Insurance is the primary source of the Company’s fee-based business and is discussed in the Business Insurance segment discussion that follows.

Other net realized investment gains in the first quartersix months of 2026 were driven by net realized investment gains related to the Canadian operations divested by the Company in the first quarter of 2026, partially offset by net realized investment losses related to fixed maturity investments.

Other revenues in the second quarter of 2026 were $144 million, $21 million higher than in the same period of 2025. Other revenues in the first quartersix months of 2026 were $141$285 million, $29$50 million higher than in the same period of 2025. Other revenues include revenues from Simply Business, installment premium charges and other policyholder service charges.

Claims and claim adjustment expenses in the firstsecond quarter of 2026 were $6.38$5.92 billion, $1.62$867 billionmillion or 20%13% lower than in the same period of 2025, driven by Personal Insurance and Business Insurance, partially offset by Bond & Specialty Insurance. Claims and claim adjustment expenses in the firstsecond quarter of 2025 included $182$180 million related to the Canadian operations divested by the Company in the first quarter of 2026. Catastrophe losses in the firstsecond quarterquarters of both 2026 and 2025 primarily resulted from severe wind and hail storms and winter storms in multiple states. Catastrophe losses in the first quarter of 2025 primarily resulted from the January 2025 wildfires and severe wind and hail storms in multiple states. Factors contributing to the changes in claims and claim adjustment expenses in each segment are discussed in more detail in the segment discussions that follow.

Factors contributing to net favorable prior year reserve development during the second quarters and first quarterssix months of 2026 and 2025 are discussed in more detail in note 7 of the notes to the unaudited consolidated financial statements.

The following table presents the amount of losses recorded by the Company for significant catastrophes that occurred in the three months and six months ended MarchJune 31,30, 2026 and 2025, the amount of net unfavorable (favorable) prior year reserve development recognized in the three months and six months ended MarchJune 31,30, 2026 and 2025 for significant catastrophes that occurred in 2025 and 2024, and the estimate of ultimate losses for those catastrophes at MarchJune 31,30, 2026 and December 31, 2025. For purposes of the table, a significant catastrophe is an event for which the Company estimates its ultimate losses will be $100 million or more after reinsurance and before taxes. The Company’s threshold for disclosing catastrophes is primarily determined at the reportable segment level and for 2026 ranged from $20 million to $30 million of losses before reinsurance and taxes. For the Company’s definition of a catastrophe, refer to “Part II—Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations— Consolidated Overview” in the Company’s 2025 Annual Report.

Amortization of deferred acquisition costs in the second quarter of 2026 was $1.79 billion, $16 million or 1% lower than in the same period of 2025. Amortization of deferred acquisition costs in the first quartersix months of 2026 was $1.77$3.55 billion, $12$28 million or 1% lower than in the same period of 2025. The decreasedecreases wasin both periods were generally consistent with the decreasedecreases in earned premiums. Amortization of deferred acquisition costs is discussed in more detail in the segment discussions that follow.

General and administrative expenses in the firstsecond quarter of 2026 were $1.54$1.57 billion, $82$20 million or 6%1% higher than in the same period of 2025,2025. General and administrative expenses in the first six months of 2026 were $3.11 billion, $102 million or 3% higher than in the same period of 2025. The increases in both periods of 2026 primarily reflectingreflected normal quarter-to-quarter variability. General and administrative expenses are discussed in more detail in the segment discussions that follow.

Interest expense in the second quarter and first quartersix months of 2026 was $116$113 million and $229 million, respectively, compared with $99 million and $198 million, respectively, in the same periodperiods of 2025.

Income tax expense in the firstsecond quarter of 2026 was $408$559 million, $335$187 million or 459%50% higher than in the same period of 2025, primarily reflecting the impact of the $1.65$886 million increase in income before income taxes in the second quarter of 2026. Income tax expense in the first six months of 2026 was $967 million, $522 million or 117% higher than in the same period of 2025, primarily reflecting the impact of the $2.54 billion increase in income before income taxes in the first quartersix months of 2026.

The Company’s effective tax rate was 19%20% in both the second quarters of 2026 and 16%2025. The Company’s effective tax rate was 20% and 19% in the first quarterssix months of 2026 and 2025, respectively. The effective tax rate for all periods reflected the impact of tax-exempt investment income on the calculation of the Company’s income tax provision.

The combined ratio of 88.6%83.6% in the firstsecond quarter of 2026 was 13.96.7 points lower than the combined ratio of 102.5%90.3% in the same period of 2025. The loss and loss adjustment expense ratio of 59.6%54.6% in the firstsecond quarter of 2026 was 14.67.1 points lower than the loss and loss adjustment expense ratio of 74.2%61.7% in the same period of 2025. The underwriting expense ratio of 29.0% in the firstsecond quarter of 2026 was 0.70.4 points higher than the underwriting expense ratio of 28.3%28.6% in the same period of 2025. The Company expects the full year 2026 expense ratio to be approximately 28.5%.

Catastrophe losses in the firstsecond quarters of 2026 and 2025 accounted for 7.24.9 points and 21.28.5 points, respectively, of the combined ratio. Net favorable prior year reserve development in the firstsecond quarters of 2026 and 2025 provided 3.95.4 points and 3.52.9 points of benefit, respectively, to the combined ratio. The combined ratio excluding prior year reserve development and catastrophe losses (“underlying combined ratio”) in the firstsecond quarter of 2026 was 0.50.6 points higherlower than the 2025 ratio on the same basis, primarily reflecting the impactsimpact of a higher expense ratio in Business Insurance and Bond & Specialty Insurance, partially offset by lower losses in Personal Insurance.

Gross and net written premiums in the firstsecond quarter of 2026 decreasedwere byboth 1%comparable and 2%, respectively, fromwith the same period of 2025. Gross and net written premiums in the firstsecond quarter of 2025 included $238$283 million and $223$273 million, respectively, related to the Canadian operations divested by the Company in the first quarter of 2026. Excluding the impact of the sale, gross written premiums increased by 1% over the same period of 2025 and net written premiums both increased slightlyby 2% over the same period of 2025. Factors contributing to the changes in gross and net written premiums in each segment are discussed in more detail in the segment discussions that follow.

Segment income in the firstsecond quarter of 2026 was $839$1.20 million,billion, $156$385 million or 23%47% higher than segment income of $683$813 million in the same period of 2025. The increase in segment income before income taxes primarily reflected the pre-tax impacts of (i) lower catastrophe losses, (ii) higher net favorable prior year reserve developmentdevelopment, (ii) lower catastrophe losses and (iii) higher net investment income, partially offset by (iv) lower underlying underwriting margins. Catastrophe losses in the first quarters of 2026 and 2025 were $379 million and $509 million, respectively.income. Net favorable prior year reserve development in the firstsecond quarters of 2026 and 2025 was $162$319 million and $74$79 million, respectively. TheCatastrophe lowerlosses underlying underwriting margins primarily reflectedin the impactssecond quarters of (i) higher general2026 and administrative2025 expenseswere $238 million and (ii)$368 lowermillion, business volumes, partially offset by (iii) the benefit of earned pricing.respectively. Income tax expense in the firstsecond quarter of 2026 was higher than in the same period of 2025, primarily reflecting the impact of the increase in segment income before income taxes.

Earned premiums in the firstsecond quarter of 2026 were $5.49$5.55 billion, $28$6 million or 1% higher than in the same period of 2025,2025. Earned premiums in the first six months of 2026 were $11.04 billion, $34 million higher than in the same period of 2025. The increases in both periods of 2026 primarily reflectingreflected the increase in net written premiums over the preceding twelve months. Earned premiums in the second quarter and first quartersix months of 2025 included $79$80 million and $159 million, respectively, related to the Canadian operations divested by the Company in the first quarter of 2026.

Net investment income in the second quarter of 2026 was $762 million, $100 million or 15% higher than in the same period of 2025. Net investment income in the first quartersix months of 2026 was $708$1.47 million,billion, $52$152 million or 8%12% higher than in the same period of 2025. Refer to the “Revenues—Net Investment Income” section of the “Consolidated Results of Operations” discussion herein for a description of the factors contributing to the increaseincreases in the Company’s consolidated net investment income in the second quarter and first quartersix months of 2026 compared with the same periodperiods of 2025. In addition, refer to note 2 of the notes to the consolidated financial statements in the Company’s 2025 Annual Report for a discussion of the Company’s net investment income allocation methodology.

National Accounts is the primary source of fee income due to revenue from its large deductible policies and service businesses, which include risk management, claims administration, loss control and risk management information services provided to third parties, as well as policy issuance and claims management services to workers’ compensation residual market pools. Fee income in the firstsecond quarter of 2026 was $111$117 million, $3$6 million or 3%5% higher than in the same period of 2025. Fee income in the first six months of 2026 was $228 million, $9 million or 4% higher than in the same period of 2025.

Other revenues in the second quarter of 2026 were $113 million, $18 million higher than in the same period of 2025. Other revenues in the first quartersix months of 2026 were $104$217 million, $22$40 million higher than in the same period of 2025. Other revenues include revenues from Simply Business, premium installment charges and other policyholder service charges.

Claims and claim adjustment expenses in the firstsecond quarter of 2026 were $3.53$3.19 billion, $174$396 million or 5%11% lower than in the same period of 2025, primarily reflecting the impacts of (i) lower catastrophe losses, (ii) lower business volumes, (iii) higher net favorable prior year reserve developmentdevelopment, (ii) lower catastrophe losses, (iii) lower business volumes and (iv) the Canadian operations divested by the Company in the first quarter of 2026, partially offset by (v) loss cost trends.

GeneralClaims and administrativeclaim adjustment expenses in the first quartersix months of 2026 were $912$6.72 million,billion, $65$570 million or 8% higherlower than in the same period of 2025, primarily reflecting normalthe quarter-to-quarterimpacts variability.of (i) higher net favorable prior year reserve development, (ii) lower catastrophe losses, (iii) lower business volumes and (iv) the Canadian operations divested by the Company in the first quarter of 2026, partially offset by (v) loss cost trends.

Income tax expense in the firstsecond quarter of 2026 was $196$300 million, $37$103 million or 23%52% higher than the same period of 2025, primarily reflecting the impact of the $193$488 million increase in income before income taxes. Income tax expense in the first six months of 2026 was $496 million, $140 million or 39% higher than in the same period of 2025, primarily reflecting the impact of the $681 million increase in income before income taxes.

The combined ratio of 93.8%86.8% in the firstsecond quarter of 2026 was 2.46.8 points lower than the combined ratio of 96.2%93.6% in the same period of 2025. The loss and loss adjustment expense ratio of 63.3%56.5% in the firstsecond quarter of 2026 was 3.57.2 points lower than the loss and loss adjustment expense ratio of 66.8%63.7% in the same period of 2025. The underwriting expense ratio of 30.5%30.3% in the firstsecond quarter of 2026 was 1.10.4 points higher than the underwriting expense ratio of 29.4%29.9% in the same period of 2025.

Catastrophe losses in the firstsecond quarters of 2026 and 2025 accounted for 6.94.3 points and 9.36.7 points, respectively, of the combined ratio. Net favorable prior year reserve development in the firstsecond quarters of 2026 and 2025 provided 2.95.7 points and 1.31.4 points of benefit, respectively, ofto the combined ratio. The underlying combined ratio in the firstsecond quarter of 2026 was 1.60.1 points higherlower than the 2025 ratio on the same basis, primarily reflecting a higher expense ratio.basis.

Gross and net written premiums in the firstsecond quarter of 2026 increased by 1%2% and 2%,3%, respectively, over the same period of 2025. Gross and net written premiums in the firstsecond quarter of 2025 included $77$83 million and $67$79 million, respectively, related to the Canadian operations divested by the Company in the first quarter of 2026. Excluding the impact of the sale, gross and net written premiums increased by 2%4% and 3%,5%, respectively, over the same period of 2025.

International.Gross Netand net written premiums of $417 million in the first quartersix months of 2026 decreasedboth increased by 20%2% fromover the same period of 2025. NetGross and net written premiums in the first quartersix months of 2025 included $67$160 million and $146 million, respectively, related to the Canadian operations divested by the Company in the first quarter of 2026. Excluding the impact of the sale, gross and net written premiums decreasedincreased by 9%3% fromand 4%, respectively, over the same period of 2025.

Segment income in the firstsecond quarter of 2026 was $254$234 million, $34$10 million or 15%4% higherlower than segment income of $220$244 million in the same period of 2025. The increasedecrease in segment income before income taxes primarily reflected the pre-tax impacts of (i) lower catastropheunderlying lossesunderwriting margins and (ii) higherlower net investmentfavorable income,prior year reserve development, partially offset by (iii) lowerhigher underlyingnet underwritinginvestment margins. Catastrophe losses in the first quarters of 2026 and 2025 were $8 million and $19 million, respectively.income. Net favorable prior year reserve development in the firstsecond quarters of 2026 and 2025 was $65$75 million and $67$81 million, respectively. Catastrophe losses in the second quarters of 2026 and 2025 were $4 million and $5 million, respectively. The lower underlying underwriting margins primarily reflected (i)a higherloss generalevent and administrative expenses and (ii)in the impactinternational ofmanagement earnedliability pricing, partially offset by (iii) higher business volumes.business. Income tax expense in the firstsecond quarter of 2026 was lower than in the same period of 2025, primarily reflecting a tax benefit related to the Canadian operations divested by the Company in the first quarter of 2026, partially offset by the impact of the increasedecrease in segment income before income taxes.