Travelers Reports Third Quarter 2021 Net Income per Diluted Share of $2.62 and Return on Equity of 9.2%

The Travelers Companies, Inc. today reported net income of $662 million, or $2.62 per diluted share, for the quarter ended September 30, 2021, compared to $827 million, or $3.23 per diluted share, in the prior year quarter. Core income in the current quarter was $655 million, or $2.60 per diluted share, compared to $798 million, or $3.12 per diluted share, in the prior year quarter. Core income decreased primarily due to net unfavorable prior year reserve development compared to net favorable prior year reserve development in the prior year quarter and higher catastrophe losses, partially offset by higher net investment income and a higher underlying underwriting gain (i.e., excluding net prior year reserve development and catastrophe losses). Net favorable prior year reserve development in the prior year quarter included a $403 million pre-tax ($318 million after-tax) subrogation benefit from Pacific Gas and Electric Company (PG&E) related to the 2017 and 2018 California wildfires. Net realized investment gains in the current quarter were $8 million pre-tax ($7 million after-tax), compared to $37 million pre-tax ($29 million after-tax) in the prior year quarter. Per diluted share amounts benefited from the impact of share repurchases.

“We are very pleased to report excellent underlying underwriting and investment results, contributing to third quarter core income of $655 million, or $2.60 per diluted share, and core return on equity of 10.1%, a strong result despite significant catastrophe losses in the quarter,” said Alan Schnitzer, Chairman and Chief Executive Officer. “Higher underlying underwriting income compared to the prior year was driven by record net earned premiums of $7.8 billion and a strong underlying combined ratio of 91.4%. Our high-quality investment portfolio generated net investment income of $645 million after-tax, reflecting reliable performance in our fixed income portfolio and very strong returns in our non-fixed income portfolio. These results, together with our strong balance sheet, enabled us to return $821 million of excess capital to shareholders this quarter, including $601 million of share repurchases.

“For the quarter, net written premiums grew 7% to a record $8.3 billion, with each of our three segments contributing. In Business Insurance, net written premiums grew by 5%, with renewal premium change of 9.9% near an all-time high, driven by continued strong renewal rate change and higher exposure growth. At the same time, retention was higher, reflecting stability in the pricing environment. In Bond & Specialty Insurance, net written premiums increased by 19%, driven by record renewal premium change of 13.6% and continued strong retention in our management liability business and terrific production in our surety business. In Personal Insurance, net written premiums increased by 7%. Policies in force in both Auto and Homeowners increased to record levels, driven by continued strong retention and growth in new business.

“Our strong top and bottom line results this quarter and year to date reflect the continued successful execution of our innovation strategy to develop and deploy capabilities designed to position Travelers for growth at attractive returns. Our below-market-share losses from Hurricane Ida, for example, benefited from investments in all three of our innovation priorities: extending our lead in risk expertise, providing great experiences to our customers and optimizing productivity and efficiency. We continue to make investments consistent with those priorities in everything from talent to technology. With our significant and hard to replicate competitive advantages and the best team in the industry, we are well positioned to continue to deliver meaningful shareholder value over time.”

Third Quarter 2021 Results
(All comparisons vs. third quarter 2020, unless noted otherwise)

Net income of $662 million decreased $165 million due to lower core income and lower net realized investment gains. Core income of $655 million decreased $143 million primarily due to net unfavorable prior year reserve development compared to net favorable prior year reserve development in the prior year quarter and higher catastrophe losses, partially offset by higher net investment income and a higher underlying underwriting gain. The underlying underwriting gain benefited from higher business volumes. Catastrophe and non-catastrophe weather-related losses in the third quarter of 2021 were reduced by $95 million of recoveries available under the Company’s 2021 Underlying Property Aggregate Catastrophe Excess-of-Loss Reinsurance Treaty. Catastrophe and non-catastrophe weather-related losses in the third quarter of 2020 were reduced by $280 million of recoveries available under the Company’s 2020 Underlying Property Aggregate Catastrophe Excess-of-Loss Reinsurance Treaty. Net realized investment gains were $8 million pre-tax ($7 million after-tax) compared to $37 million pre-tax ($29 million after-tax) in the prior year quarter.

Combined ratio:

• The combined ratio of 98.6% increased 3.7 points due to net unfavorable prior year reserve development compared to net favorable prior year reserve development in the prior year quarter (2.7 points) and higher catastrophe losses (1.1 points), partially offset by a lower underlying combined ratio (0.1 points).

• The underlying combined ratio of 91.4% improved 0.1 points. See below for further details by segment.

• Net unfavorable prior year reserve development in Business Insurance was partially offset by net favorable prior year reserve development in Personal Insurance and Bond & Specialty Insurance. Net prior year reserve development in the third quarter of 2021 included a $225 million increase to asbestos reserves, compared to a $295 million increase in the prior year quarter. Net favorable prior year reserve development in the prior year quarter also included a $403 million subrogation benefit from PG&E related to the 2017 and 2018 California wildfires. See below for further details by segment.

• Catastrophe losses primarily resulted from Hurricane Ida and severe storms in several regions of the United States.

Net investment income of $771 million pre-tax ($645 million after-tax) increased 15%. Income from the non-fixed income investment portfolio increased over the prior year quarter, primarily due to higher private equity partnership returns. Non-fixed income returns are generally reported on a one-quarter lagged basis and directionally follow the broader equity markets. Income from the fixed income investment portfolio decreased slightly from the prior year quarter, primarily due to lower interest rates, partially offset by a higher average level of fixed maturity investments.

Net written premiums of $8.324 billion increased 7%. See below for further details by segment.

Year-to-Date 2021 Results
(All comparisons vs. year-to-date 2020, unless noted otherwise)

Net income of $2.329 billion increased $942 million due to higher core income and net realized investment gains in the current period compared to net realized investment losses in the prior year period. Core income of $2.233 billion increased by $809 million primarily due to higher net investment income, higher net favorable prior year reserve development and a higher underlying underwriting gain, partially offset by higher catastrophe losses (net of recoveries under the property aggregate catastrophe reinsurance treaties discussed above). The underlying underwriting gain benefited from higher business volumes. Net realized investment gains were $113 million pre-tax ($88 million after-tax) compared to net realized investment losses of $48 million pre-tax ($37 million after-tax) in the prior year period.

Combined ratio:

• The combined ratio of 96.8% improved 1.1 points due to higher net favorable prior year reserve development (1.1 points) and a lower underlying combined ratio (0.6 points), partially offset by higher catastrophe losses (0.6 points).

• The underlying combined ratio of 90.8% improved 0.6 points. See below for further details by segment.

• Net favorable prior year reserve development occurred in all segments. See below for further details by segment.

• Catastrophe losses included the third quarter events described above, as well as winter storms and severe wind and hail storms in several regions of the United States in the first six months of 2021.

Net investment income of $2.290 billion pre-tax ($1.917 billion after-tax) increased 48%. Income from the non-fixed income investment portfolio increased over the prior year period, primarily due to higher private equity partnership returns. Income from the fixed income investment portfolio decreased slightly from the prior year period, primarily due to lower interest rates, partially offset by a higher average level of fixed maturity investments.

Net written premiums of $23.964 billion increased 7%. See below for further details by segment.

Shareholders’ Equity

Shareholders’ equity of $28.474 billion decreased 2% from year-end 2020, primarily due to lower net unrealized investment gains resulting from higher interest rates and common share repurchases and dividends to shareholders, partially offset by net income of $2.329 billion. Net unrealized investment gains included in shareholders’ equity were $3.426 billion pre-tax ($2.699 billion after-tax) compared to $5.175 billion pre-tax ($4.074 billion after-tax) at year-end 2020. Book value per share of $115.74 increased 5% from September 30, 2020 and was comparable to year-end 2020. Adjusted book value per share of $104.77, which excludes net unrealized investment gains, increased 10% from September 30, 2020 and increased 5% from year-end 2020.

The Company repurchased 3.8 million shares during the third quarter at an average price of $155.56 per share for a total of $601 million. At the end of the quarter, statutory capital and surplus was $22.987 billion, and the ratio of debt-to-capital was 20.4%. The ratio of debt-to-capital excluding after-tax net unrealized investment gains included in shareholders’ equity was 22.0%, within the Company’s target range of 15% to 25%.

The Board of Directors declared a regular quarterly dividend of $0.88 per share. The dividend is payable on December 31, 2021 to shareholders of record at the close of business on December 10, 2021.

Third Quarter 2021 Results
(All comparisons vs. third quarter 2020, unless noted otherwise)

Segment income for Business Insurance was $558 million after-tax, an increase of $193 million. Segment income increased primarily due to a higher underlying underwriting gain, lower net unfavorable prior year reserve development and higher net investment income, partially offset by higher catastrophe losses. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

• The combined ratio of 97.5% improved 4.8 points due to a lower underlying combined ratio (3.8 points) and lower net unfavorable prior year reserve development (3.1 points), partially offset by higher catastrophe losses (2.1 points).

• The underlying combined ratio of 90.2% improved by 3.8 points, primarily reflecting earned pricing that exceeded loss cost trends, a favorable impact associated with the pandemic and a lower level of property losses.

• Net unfavorable prior year reserve development was primarily driven by an increase in asbestos reserves of $225 million, partially offset by better than expected loss experience in domestic operations in the workers’ compensation product line for multiple accident years. Net unfavorable prior year reserve development in the prior year quarter included an increase in asbestos reserves of $295 million, which was partially offset by $81 million of recoveries from the PG&E subrogation described above.

Net written premiums of $4.021 billion increased 5%, reflecting strong renewal premium change and retention.

Year-to-Date 2021 Results
(All comparisons vs. year-to-date 2020, unless noted otherwise)

Segment income for Business Insurance was $1.518 billion after-tax, an increase of $922 million. Segment income increased primarily due to higher net investment income, a higher underlying underwriting gain and net favorable prior year reserve development compared to net unfavorable prior year reserve development in the prior year period, partially offset by higher catastrophe losses. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

• The combined ratio of 98.7% improved 5.1 points due to a lower underlying combined ratio (3.7 points) and net favorable prior year reserve development compared to net unfavorable prior year reserve development in the prior year period (2.8 points), partially offset by higher catastrophe losses (1.4 points).

• The underlying combined ratio of 92.4% improved 3.7 points, primarily reflecting earned pricing that exceeded loss cost trends and a favorable impact associated with the pandemic.

• Net favorable prior year reserve development was primarily driven by better than expected loss experience in domestic operations in the workers’ compensation product line for multiple accident years and in the commercial automobile and commercial property product lines for recent accident years and better than expected loss experience in the segment’s international operations, partially offset by an increase in asbestos reserves of $225 million, an increase in other reserves related to run-off operations and an increase to environmental reserves. Net unfavorable prior year reserve development in the prior year period included an increase in asbestos reserves of $295 million, which was partially offset by $81 million of recoveries from the PG&E subrogation described above.

Net written premiums of $12.126 billion increased 3%. The benefits of continued strong retention and higher renewal rate change were partially offset by lower net written premiums in the workers’ compensation product line due to the impact of the pandemic on payrolls.

Third Quarter 2021 Results
(All comparisons vs. third quarter 2020, unless noted otherwise)

Segment income for Bond & Specialty Insurance was $174 million after-tax, an increase of $59 million. Segment income increased primarily due to a higher underlying underwriting gain and net favorable prior year reserve development in the current quarter compared with no net prior year reserve development in the prior year quarter. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

• The combined ratio of 81.1% improved 8.2 points due to a lower underlying combined ratio (5.6 points) and net favorable prior year reserve development in the current quarter compared to no net prior year reserve development in the prior year quarter (2.6 points).

• The underlying combined ratio of 83.4% improved 5.6 points, primarily reflecting a lower level of losses related to the pandemic, earned pricing that exceeded loss cost trends and a lower expense ratio.

• Net favorable prior year reserve development was primarily driven by better than expected loss experience in the segment’s domestic operations in the fidelity and surety product lines for recent accident years.

Net written premiums of $894 million increased 19%, reflecting strong retention and renewal premium change in management liability and strong production in surety.

Year-to-Date 2021 Results
(All comparisons vs. year-to-date 2020, unless noted otherwise)

Segment income for Bond & Specialty Insurance was $498 million after-tax, an increase of $189 million. Segment income increased primarily due to a higher underlying underwriting gain, net favorable prior year reserve development in the current year compared to net unfavorable prior year reserve development in the prior year period and higher net investment income, partially offset by higher catastrophe losses. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

• The combined ratio of 81.4% improved 8.3 points due to net favorable prior year reserve development in the current year compared to net unfavorable prior year reserve development in the prior year period (5.0 points) and a lower underlying combined ratio (4.1 points), partially offset by higher catastrophe losses (0.8 points).

• The underlying combined ratio of 83.6% improved 4.1 points, primarily reflecting earned pricing that exceeded loss cost trends, a lower level of losses associated with the pandemic and a lower expense ratio.

• Net favorable prior year reserve development was primarily driven by better than expected loss experience in the segment’s domestic operations in the fidelity and surety product lines for recent accident years, partially offset by higher than expected loss experience in the general liability product line for management liability coverages for multiple accident years.

Net written premiums of $2.471 billion increased 15%, driven by the same factors described above for the third quarter of 2021.

Third Quarter 2021 Results
(All comparisons vs. third quarter 2020, unless noted otherwise)

Segment loss for Personal Insurance was $2 million after-tax, compared with segment income of $392 million after-tax in the prior year quarter. The difference was primarily due to lower net favorable prior year reserve development and a lower underlying underwriting gain. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

• The combined ratio of 104.6% increased 18.2 points due to lower net favorable prior year reserve development (11.8 points) and a higher underlying combined ratio (6.5 points), partially offset by a smaller impact from catastrophe losses (0.1 points).

• The underlying combined ratio of 95.2% increased 6.5 points, primarily driven by higher losses in the automobile product line due to a comparison to a low level of loss activity in the prior year quarter as a result of the pandemic, partially offset by lower losses in the homeowners and other product line due to a comparison to a high level of loss activity in the prior year quarter.

• Net favorable prior year reserve development was primarily driven by better than expected loss experience in the segment’s domestic operations in the homeowners and other product line for recent accident years. Net favorable prior year reserve development in the prior year quarter included $322 million of recoveries from the PG&E subrogation described above.

Net written premiums of $3.409 billion increased 7%. Domestic Automobile net written premiums increased 3%, driven by strong retention and higher levels of new business. Domestic Homeowners and Other net written premiums increased 11%, driven by strong retention, renewal premium change of 8.8% and higher levels of new business.

Year-to-Date 2021 Results
(All comparisons vs. year-to-date 2020, unless noted otherwise)

Segment income for Personal Insurance was $433 million after-tax, a decrease of $305 million. Segment income decreased primarily due to a lower underlying underwriting gain and lower net favorable prior year reserve development, partially offset by higher net investment income. The underlying underwriting gain benefited from higher business volumes.

Combined ratio:

• The combined ratio of 98.3% increased 6.6 points due to a higher underlying combined ratio (5.1 points) and lower net favorable prior year reserve development (2.2 points), partially offset by a smaller impact from catastrophe losses (0.7 points).

• The underlying combined ratio of 90.7% increased 5.1 points, primarily driven by higher losses in the automobile product line due to a comparison to a low level of loss activity (net of premium refunds) in the prior year period as a result of the pandemic and higher losses in the homeowners and other product line.

• Net favorable prior year reserve development was primarily driven by better than expected loss experience in the segment’s domestic operations in both the homeowners and other and automobile product lines for recent accident years. Net favorable prior year reserve development in the prior year period included $322 million of recoveries from the PG&E subrogation described above.

Net written premiums of $9.367 billion increased 10%. Excluding premium refunds provided to personal automobile customers primarily in the second quarter of 2020, net written premiums increased 7%. Domestic Automobile net written premiums increased 9%. Excluding the impact of the premium refunds, Domestic Automobile net written premiums increased 3%, driven by strong retention and higher levels of new business. Domestic Homeowners and Other net written premiums increased 12%, driven by strong retention, renewal premium change of 8.2% and higher levels of new business.

Financial Supplement and Conference Call

The information in this press release should be read in conjunction with the financial supplement that is available on our website at www.travelers.com. Travelers management will discuss the contents of this release and other relevant topics via webcast at 9 a.m. Eastern (8 a.m. Central) on Tuesday, October 19, 2021. Investors can access the call via webcast at http://investor.travelers.com or by dialing 1.844.895.1976 within the United States and 1.647.689.5389 outside the United States. Prior to the webcast, a slide presentation pertaining to the quarterly earnings will be available on the Company’s website.

Following the live event, replays will be available via webcast for one year at http://investor.travelers.com and by telephone for 30 days by dialing 1.800.585.8367 within the United States or 1.416.621.4642 outside the United States. All callers should use conference ID 1999992.

About Travelers

The Travelers Companies, Inc. (NYSE: TRV) is a leading provider of property casualty insurance for auto, home and business. A component of the Dow Jones Industrial Average, Travelers has approximately 30,000 employees and generated revenues of approximately $32 billion in 2020. For more information, visit www.travelers.com.

Travelers may use its website and/or social media outlets, such as Facebook and Twitter, as distribution channels of material Company information. Financial and other important information regarding the Company is routinely accessible through and posted on our website at http://investor.travelers.com, our Facebook page at https://www.facebook.com/travelers and our Twitter account (@Travelers) at https://twitter.com/travelers. In addition, you may automatically receive email alerts and other information about Travelers when you enroll your email address by visiting the Email Notifications section at http://investor.travelers.com.

Travelers is organized into the following reportable business segments:

Business Insurance - Business Insurance offers a broad array of property and casualty insurance and insurance-related services to its customers, primarily in the United States, as well as in Canada, the United Kingdom, the Republic of Ireland and throughout other parts of the world as a corporate member of Lloyd’s.

Bond & Specialty Insurance - Bond & Specialty Insurance provides surety, fidelity, management liability, professional liability, and other property and casualty coverages and related risk management services to its customers in the United States and certain specialty insurance products in Canada, the United Kingdom and the Republic of Ireland, as well as Brazil through a joint venture, utilizing various degrees of financially-based underwriting approaches.

Personal Insurance - Personal Insurance writes a broad range of property and casualty insurance covering individuals’ personal risks, primarily in the United States, as well as in Canada. The primary products of automobile and homeowners insurance are complemented by a broad suite of related coverages.

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Forward-Looking Statements

This press release contains, and management may make, certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “views,” “estimates” and similar expressions are used to identify these forward-looking statements. These statements include, among other things, the Company’s statements about:

• the Company’s outlook, the impact of trends on its business and its future results of operations and financial condition;
• the impact of COVID-19 and related economic conditions;
• the impact of legislative or regulatory actions or court decisions taken in response to COVID-19 or otherwise;
• share repurchase plans;
• the sufficiency of the Company’s asbestos and other reserves;
• the impact of emerging claims issues as well as other insurance and non-insurance litigation;
• catastrophe losses;
• the impact of investment, economic and underwriting market conditions, including inflation;
• strategic and operational initiatives to improve profitability and competitiveness;
• the Company’s competitive advantages and innovation agenda;
• new product offerings; and
• the impact of developments in the tort environment.

The Company cautions investors that such statements are subject to risks and uncertainties, many of which are difficult to predict and generally beyond the Company’s control, that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.

Some of the factors that could cause actual results to differ include, but are not limited to, the following:

Insurance-Related Risks

• high levels of catastrophe losses;
• actual claims may exceed the Company’s claims and claim adjustment expense reserves, or the estimated level of claims and claim adjustment expense reserves may increase, including as a result of, among other things, changes in the legal/tort, regulatory and economic environments;
• the Company’s potential exposure to asbestos and environmental claims and related litigation;
• the Company is exposed to, and may face adverse developments involving, mass tort claims; and
• the effects of emerging claim and coverage issues on the Company’s business are uncertain, and court decisions or legislative changes that take place after the Company issues its policies can result in an unexpected increase in the number of claims.

Financial, Economic and Credit Risks

• a period of financial market disruption or an economic downturn;
• the Company’s investment portfolio is subject to credit and interest rate risk, and may suffer reduced or low returns or material realized or unrealized losses;
• the Company is exposed to credit risk related to reinsurance and structured settlements, and reinsurance coverage may not be available to the Company;
• the Company is exposed to credit risk in certain of its insurance operations and with respect to certain guarantee or indemnification arrangements that it has with third parties;
• a downgrade in the Company’s claims-paying and financial strength ratings; and
• the Company’s insurance subsidiaries may be unable to pay dividends to the Company’s holding company in sufficient amounts.

Business and Operational Risks

• the impact of COVID-19 and related risks, including with respect to revenues, claims and claim adjustment expenses, general and administrative expenses, investments, inflation, adverse legislative and/or regulatory action, operational disruptions and heightened cyber security risks and foreign currency exchange rate changes;
• the intense competition that the Company faces, and the impact of innovation, technological change and changing customer preferences on the insurance industry and the markets in which it operates;
• disruptions to the Company’s relationships with its independent agents and brokers or the Company’s inability to manage effectively a changing distribution landscape;
• the Company’s efforts to develop new products, expand in targeted markets, improve business processes and workflows or make acquisitions may not be successful and may create enhanced risks;
• the Company’s pricing and capital models may provide materially different indications than actual results;
• loss of or significant restrictions on the use of particular types of underwriting criteria, such as credit scoring, or other data or methodologies, in the pricing and underwriting of the Company’s products; and
• the Company is subject to additional risks associated with its business outside the United States.

Technology and Intellectual Property Risks

• as a result of cyber attacks or otherwise, the Company may experience difficulties with technology, data and network security or outsourcing relationships;
• the Company’s dependence on effective information technology systems and on continuing to develop and implement improvements in technology; and
• the Company may be unable to protect and enforce its own intellectual property or may be subject to claims for infringing the intellectual property of others.

Regulatory and Compliance Risks

• changes in regulation, including higher tax rates; and
• the Company’s compliance controls may not be effective.

In addition, the Company’s share repurchase plans depend on a variety of factors, including the Company’s financial position, earnings, share price, catastrophe losses, maintaining capital levels commensurate with the Company’s desired ratings from independent rating agencies, changes in levels of written premiums, funding of the Company’s qualified pension plan, capital requirements of the Company’s operating subsidiaries, legal requirements, regulatory constraints, other investment opportunities (including mergers and acquisitions and related financings), market conditions, changes in tax laws and other factors, including the ongoing level of uncertainty related to COVID-19.

Our forward-looking statements speak only as of the date of this press release or as of the date they are made, and we undertake no obligation to update forward-looking statements. For a more detailed discussion of these factors, see the information under the captions “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Forward Looking Statements” in the quarterly report on Form 10-Q filed with the Securities and Exchange Commission (SEC) on October 19, 2021, and in our most recent annual report on Form 10-K filed with the SEC on February 11, 2021, in each case as updated by our periodic filings with the SEC.

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GLOSSARY OF FINANCIAL MEASURES AND RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

The following measures are used by the Company’s management to evaluate financial performance against historical results, to establish performance targets on a consolidated basis and for other reasons as discussed below. In some cases, these measures are considered non-GAAP financial measures under applicable SEC rules because they are not displayed as separate line items in the consolidated financial statements or are not required to be disclosed in the notes to financial statements or, in some cases, include or exclude certain items not ordinarily included or excluded in the most comparable GAAP financial measure. Reconciliations of these measures to the most comparable GAAP measures also follow.

In the opinion of the Company’s management, a discussion of these measures provides investors, financial analysts, rating agencies and other financial statement users with a better understanding of the significant factors that comprise the Company’s periodic results of operations and how management evaluates the Company’s financial performance.

Some of these measures exclude net realized investment gains (losses), net of tax, and/or net unrealized investment gains (losses), net of tax, included in shareholders’ equity, which can be significantly impacted by both discretionary and other economic factors and are not necessarily indicative of operating trends.

Other companies may calculate these measures differently, and, therefore, their measures may not be comparable to those used by the Company’s management.

RECONCILIATION OF NET INCOME TO CORE INCOME AND CERTAIN OTHER NON-GAAP MEASURES

Core income (loss) is consolidated net income (loss) excluding the after-tax impact of net realized investment gains (losses), discontinued operations, the effect of a change in tax laws and tax rates at enactment, and cumulative effect of changes in accounting principles when applicable. Segment income (loss) is determined in the same manner as core income (loss) on a segment basis. Management uses segment income (loss) to analyze each segment’s performance and as a tool in making business decisions. Financial statement users also consider core income (loss) when analyzing the results and trends of insurance companies. Core income (loss) per share is core income (loss) on a per common share basis.