Good morning, ladies and gentlemen. Welcome to the Second Quarter Results Power Conference for Travelers. We ask that you hold all questions until the completion of formal remarks at which time you will be given instructions for the question-and-answer session. As a reminder this conference is being recorded on July 20, 2021. At this time, I would like to turn the conference over to Ms. Abby Goldstein, Senior Vice President of Investor Relations. Ms. Goldstein, you may begin.

Thank you. Good morning, and welcome to Travelers discussion of our second quarter 2021 results. We released our press release, financial supplement and webcast presentation earlier this morning. All of these materials can be found on our website at travelers.com under the Investors section. Speaking today will be, Alan Schnitzer, Chairman and CEO; Dan Frey, Chief Financial Officer; and our three segment Presidents, Greg Toczydlowski of Business Insurance; Tom Kunkel of Bond & Specialty Insurance; and Michael Klein of Personal Insurance. They will discuss the financial results of our business and the current market environment. They will refer to the webcast presentation as they go through prepared remarks and then we will take questions. Before I turn the call over to Alan, I would like to draw your attention to the explanatory note included at the end of the webcast presentation. Our presentation today includes forward-looking statements. The company cautions investors that any forward-looking statements involves risks and uncertainties and is not a guarantee of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described under forward-looking statements in our earnings press release and in our most recent 10-Q and 10-K filed with the SEC. We do not undertake any obligation to update forward-looking statements. Also, in our remarks or responses to questions, we may mention some non-GAAP financial measures. Reconciliations are included in our recent earnings press release, financial supplements and other materials available in the Investors section on our website. And now, I would like to turn the call over to Alan Schnitzer.

Thank you, Abby. Good morning, everyone, and thank you for joining us today. We are very pleased to report excellent underwriting investment results for the second quarter and first half of the year. Core income for the quarter was $879 million or $3.45 per diluted share, generating a total return on equity of 13.7%. In terms of underwriting results, higher underlying underwriting income and net favorable prior-year reserve development, as well as the lower level of catastrophe losses, all contributed to higher core income. Underlying underwriting income was 8% higher than in the prior quarter driven by record net earned premiums of $7.6 billion and an excellent underlying combined ratio of 91.4%. We are particularly pleased with the continued strong underlying fundamentals of each of our three business segments. In Business Insurance, net earned premiums were higher and the underlying combined ratio improved by 3.7 points and the Specialty Insurance and Personal Insurance, both delivered meaningful increases in net earned premiums and continued strong margins. Turning to investments, our high-quality investment portfolio generated net investment income of $682 million after-tax, reflecting very strong returns on our non-fixed income portfolio. These excellent results together with our strong balance sheet enabled us to grow adjusted book value per share by 13% over the past year after making important investments for the future and returning significant excess capital to our shareholders. During the quarter, we returned $625 million of excess capital to shareholders including $401 million of share repurchases. Turning to the top-line, the combination of the strong franchise value we offer to our customers and distribution partners, together with excellent execution by our field organization produced terrific results. During the quarter we grew net written premiums to $8.1 billion, an increase of 11% or 8% after adjusting for the audit premium refunds…

Thank you, Alan. Core income for the second quarter was $879 million compared to a core loss of $50 million in the prior year quarter. The significant improvement was the result of positive factors across the business, including a lower level of catastrophe losses, improved results in our non-fixed income investment portfolio, more favorable prior year reserve development and increased underwriting income. Our second quarter results include $475 million of pre-tax Cat losses compared to $854 million from last year's second quarter. This quarter's cash were somewhat below what we have assumed for typical second quarter, but year-to-date Cat losses are still above what we would have assumed given the high level of losses in the first quarter. On a year-to-date basis, we have accumulated about $1.5 billion of qualifying losses toward the aggregate retention of $1.9 billion on a property to aggregate catastrophe XOL Treaty. The treaty provides $350 million of coverage on the first $500 million losses above aggregate retention in a month. Underlying underwriting income increased 8% to $617 million pre-tax reflecting a higher level of earned premium in each of our segments and a strong underlying combined ratio of 91.4% consistent with the prior year. As you'll hear from Greg, Tom and Michael, improvements in the underlying combined ratio in both Business Insurance and Bond & Specialty were offset by an increase in the underlying combined ratio in Personal Insurance. Some of the increase in Personal Insurance was expected given that last year's quarter benefited from unusually low auto losses as a result of the pandemic. The underlying loss ratio came in at 61.7%, up 1.3 points from last year's second quarter as the beneficial impact of earned pricing in excess of loss trend was more than offset by the comparison to a very low pandemic…

Thanks Dan. Business Insurance had a great quarter with strong financial results and terrific execution in the marketplace. Segment income was $643 million for the quarter compared to a loss of $58 million in the prior year quarter. Higher net investment income, lower catastrophe losses, higher underlying underwriting incomes and favorable prior year reserve development, all contributed to the year-over-year improvement. We're particularly pleased with the underlying combined ratio of 93.3% which improved by 3.7 points from the second quarter of 2020, primarily attributable to three things. First, about 2 points of the improvement resulted from earned pricing exceeding loss cost trends. Another capital point reserve resulted from lower non-Cat weather. And third, the improvement also reported the comparison to the modest net charge we took in the prior year quarter related to the pandemic. In terms of non-Cat weather, while the year-over-year improvement was about 0.5 point favorable as I've just mentioned, this quarter's result was about 1.5 better than what we assumed for the quarter. Turning to the top-line, net written were up 5% benefiting from strong renewal premium change including both strong renewal rate and the exposure levels that are trending back to pre-pandemic levels and higher year-over-year new business volume. As for domestic production, renewal premium change was 9.5%, but historically higher result and up almost 4 points from the second quarter of last year. Underlying the RPC, we achieved strong renewal rate change of 7.1% and healthy exposure growth that reflects improving trends in our customers outlook for their businesses. As Alan said, our ability to continue to achieve historically high pricing with improved retention, speaks to the stability of pricing in the markets. New business was up more than 9% with both select and middle markets contributing. I'll discuss those results in more detail…

Thanks Greg. Bond & Specialty posted excellent returns and growth in the quarter. Segment income was $187 million, considerably more than double the prior year quarter, driven by favorable prior-year reserve developments and significantly improved underlying underwriting margin and higher business volumes. The underlying combined ratio of 83.4 improved by over 3.5 points from the prior year quarter as pricing that exceeded loss cost trends drove a lower underlying loss ratio. Turning to the top-line, net written premiums grew an exceptional 16% in the quarter with solid contributions from all our businesses. In management liability, renewal premium change was a record 12.7%, driven by near record rate. Retention remained strong at 86%. New business increased 6% from the second quarter of last year, our first quarterly increase since the beginning of the pandemic with strong new business pricing. Surety also grew for the first time since the beginning of the pandemic and international again posted meaningful growth including strong retention and rate. So Bond & Specialty results were excellent and reflect our ability to successfully manage this business through a variety of business and economic cycles. And now I'll turn it over to Michael for Personal Insurance.

Thanks Tom and good morning everyone. We're very pleased with our second quarter Personal Insurance results. Segment income of $121 million was up $111 million from the prior year quarter, benefitting from lower catastrophes, higher net investment income and higher net favorable prior year reserve development. Partially offsetting these improvements was a lower underlying underwriting gain which I will discuss in more detail in a moment. Our second quarter combined ratio improved from the prior year quarter by about 1.5 points to 99.7%. Net written premiums grew 16%. Recall that in the prior year quarter we provided $216 million of premium refunds to automobile customers in response to the impact of the pandemic. Adjusting for these premium refunds, net written premiums grew a very strong 8% with domestic homeowners up 12% and domestic automobile up 4%. Automobile delivered another excellent quarter with a combined ratio of 91.6%. The underlying combined ratio was an impressive 92%, although up 6 points from the prior year quarter, which reflected lower loss activity during the initial months of the pandemic. The current quarter results reflect the benefits of modestly lower claim frequency compared to pre-pandemic levels. As we exited the quarter, claim frequency was closer to pre-pandemic levels and we would expect that trend to continue into the third quarter. Our strong current quarter profitability also reflects increased severity, particularly in collision and third-party physical damage claims driven primarily by higher costs of used vehicles and parts. As auto loss experience approaches pre-pandemic levels, we plan to begin filing for rate increases in selected states later this year, as we continue to balance business volumes and profitability. While it will take some time for future rate actions to earn into our results, we are well positioned to continue to profitably grow in auto. In…

Thanks, Michael. Before we open it up for Q&A, I'd like to turn the call back over to Alan for a moment.

Thanks, Abbe. As bittersweet as it is, we have one last piece of business this morning before we turn to Q&A. I want to acknowledge and thank our partner and friend, Tom Kunkel will be retiring in September after a spectacular 37-year career at Travelers and to impact as the leader of our very successful Surety and Management Liability businesses has been profound. In addition to delivering exceptional financial results over many years, Tom and his leadership team fostered a culture of care, community and excellence that extends throughout our Bond & Specialty organization and throughout Travelers. It's one of the many reasons why I'm so pleased with Jeff Klenk, currently a member of Tom's leadership team and Head of our Management Liability business will succeed Tom. Jeff has been Travelers for more than 20 years. He's a proven leader and the perfect candidate to take up the reins from Tom. You'll hear from Jeff in October on our third quarter earnings call. Tom, we're all going to miss you personally and professionally. And with that, we're happy to take your questions.

Thank you. [Operator Instructions] We have our first question from the line of Michael Phillips from Morgan Stanley. Please go ahead.

Thank you, and good morning everybody. I want to drill first, I guess, Michael, in some of your comments on personal auto and your comment, I think towards the end, you said you'll begin to file some rate increases later in the year. A question kind of centered around the timing of that frequency benefit for you seemed to be lasting a little bit longer than some of your peers. Maybe that's some mix of business issue that you might have a little more preferred. Maybe you can confirm that. But what's driving -- if frequency is starting to come back to pre-pandemic levels, and you expect that to continue, I guess why not take rate now, why wait till later in the year and what's driving that need for rate, if it's not frequency and maybe it is, is it more of the severity? So kind of a couple pronged question there, but more on the timing of the rate, why not now? And then really kind of what's driving it? Is it more of the frequency or severity that's driving your need for rate? Thank you.

Sure, Michael. Thanks for the question. Really, the timing is really just a function of the process. We're actively putting together, filing packages and engaged in conversations with State Insurance Departments as we speak. So it's not a question of waiting to get rate. It's just a function of the process of working with regulators to get rate increases filed and approved. And to your question about frequency and severity, again I think in my comments about the quarter in particular, we're seeing frequency coming out of the quarter returning more towards pre-pandemic levels and we are seeing severity pressure, I flagged out some of the physical damage pressures and I can give you just a quick example there, right? You've all seen the news about used car prices being up 50%. That particularly impacts us in the case of total losses, where the average cash value of that total loss is up pretty significantly. There's a little bit of an offsetting good guy there, because we get more for the salvage recovery on that total vehicle. But net-net that's putting upward pressure on severity and that's one example total -- cost to repair vehicles is up while the injury severity is also got upward pressure on it. So we're responding really to both frequency and severity to answer your question on the drivers.

Okay, that's helpful Mike and maybe just a follow up on that. If the timing, you say is more of a process, it sounds like you'd rather do something sooner rather than later. Does the, I mean, your margins today in the second quarter, were still better than 2Q 2020, 2Q 2019 I'm sorry, still better than pretty good, but you expect things to change. So -- with margins still better do you expect much of a pushback from anybody at the state level to say, you guys, and maybe some of the industry still have really good profit here. So that might be a bit of a push back on, I don't know how much you expect to get from rate, but there might be some pushback on the ability to get rate that you want given pretty decent returns still?

Yes, Michael, I think it's a -- I think it's a great observation and it is part of that process that I described is really a conversation with regulators about what the historical experience has been. But also pointing out that part of that favorable experience is really due to the extraordinary event that was the thing that is the pandemic. And so we're in conversations with them about how to weight historical experience versus prospective views of trend. And also, state-by-state experience varies and our starting point varies by state. We've talked in prior quarters about the fact that we did take rate reductions in over 20 states across the country. And so those are certainly some of the places we're looking initially to see if we could take some of that rate back, which is a different conversation maybe than in the state where we didn't file a rate increase historically. So again, great observation and really all part of that process that we're engaging in as we speak.

Okay, Michael, thank you very much for the details. I appreciate it.

Thank you. The next question is from the line of Ryan Tunis from Autonomous Research. Your line is open.

Hey, thanks. Good morning. Can you guys hear me?

Yes.

Sorry about that, just got back to the office today, so getting used to the old phone. So I just wanted to keep it on personal auto, when we think about where you're seeing some of the elevated loss trend, Michael, is it more geographic or is it preferred versus more standard? I mean, like what are kind of the variables that you're looking at the most to kind of think about? Where you're seeing loss trying to come back the most?

Yes, great question, Ryan and good morning. Welcome back to the office. We are seeing it, there are variations across geographies. We look at things like return to normal indices. We look at driving data by state and by geography. But broadly speaking, most areas of the country are seeing driving activity return again to a close to a pre-pandemic levels, closer in some places than others. We also continue to monitor as we've talked about the past, commuting miles versus non-commuting miles. And there is still a different mix of miles today than there has been historically, but when you put all that together, and you look at clean frequency, the frequency benefits we saw and that's part of my comment about as we exited the quarter, the frequency benefits we've seen over the past few months and quarters, have started to wane and wanes throughout the second quarter, which is part of our comment about trends returning to pre-pandemic levels.

Got it. And I guess my follow up is one the home side. So the home attritional loss ratio is above 60. That's clearly somewhat elevated. But we've seen the price of something like lumber, timber is come down quite a bit since mid 2Q, how much of an alleviating factors should we think about that moving forward in terms of the type of pressure that's putting on the loss ratio on home, or was putting on the loss ratio on home?

Sure. It's a great question Ryan. I would say a couple things. First, in my remarks I did talk about frequency and severity and particularly, frequency and severity of fire and non-weather water losses driving some of that underlying deterioration. So clearly, the lumber prices are a severity item, not a frequency item and we are seeing, we did see uptick in the quarter in both. I would take just a quick step back as we're talking about auto and property though and just make a couple of observations and then come back and finish the answer to your question. If you take a step back and look at the segment combined ratio on both an overall and an underlying basis, it's very consistent with the long run average for this business. And when you look at the Auto combined ratio, not surprisingly in the quarter, it still ran below the long term average. And in property in the quarter, the combined ratio is, call it, 4 to 6 points above those long-term averages on a total and an underlying basis. So that just sort of gives you a little bit of an order of the magnitude of what we're talking about here. I'd also remind you that property, in property, the combined ratio, the highest combined ratio we see in the year is the second quarter. So you got to sort of put the second quarter into context. But that said, the severity pressure we saw on the quarter was a combination of labor and materials. So certainly the 50% plus increase in the lumber are in there. Double-digit increase in roofing materials is in there. High single-digit to low double-digit increases in labor is in there. And when we look at our property loss cost mix, it's really labor followed by contents, followed by materials. So even if the short answer to your question I think is even if lumber prices come back down, that's still a relatively small component of the loss costs. But we do see period-to-period volatility in frequency and severity in attritional office property. So, again, that's part of why I gave you that long run view of where the quarter was relative to history. And at the end of the day, we take a step back, and we look at the renewal premium change we're driving in property, and our focus really is to continue to drive rate in property to address some of those pressures.

That's really helpful. Thank you.

Thank you. The next one is from the line of David Motemaden from Evercore ISI. Please go ahead.

Hi, thanks. Good morning. I just wanted to just follow-up a bit more on the on the auto side. So maybe, Michael, I'm just wondering, I guess, obviously you're taking rate, but how are you thinking about balancing taking rate versus what could be maybe short lived severity increases or is the view that these increases in severity that you're witnessing are not transitory and might be more sustainable?

Yes, it's a great question. And certainly, as we've talked about severity trend over time, we've pretty consistently talked about the fact that, that we take a long run view of trend when we set our prices. Now, if the starting point is elevated, because we've seen an uptick in severity, and that's in our loss costs, the question is, is your starting point elevated and are you training off that elevated starting point? Or is your experience you're seeing or is the experience we're seeing in this quarter an anomaly? I think if I broke apart frequency and severity for you, I'd say again, we continue to see the frequency trending towards the pre-pandemic level that's continuing. How much of the auto materials cost, physical damage cost inflation is transitory or not, is a key question. And, there's a lot of varying opinions around that and we'll factor our best estimate into that assessment as we factor in what we think we need to rate on a go forward basis.

Yes, let me just add to that, weather inflation, our view on weather inflation is transitory. We're certainly looking out over the duration of the liability. So what we're talking about CPI type inflation, again lumber, used cars, et cetera, that's impacting your relatively short tail line. So we don't really have to forecast long term in that case. And because it's short tail, the claim activity comes in pretty quickly, we see it reasonably quickly and we can react to it pretty quickly.

Yes. Great point, Alan.

Got it. That makes sense, that's helpful. And then maybe a question for Alan just on the investment in Fidelis. I was hoping maybe you could elaborate on the thought process behind that, and maybe sort of the thinking around your own non admitted offering and sort of aspirations there?

Yes, thanks. Thanks for that question. We've got a fair amount of interest in this, which I'm thrilled to have any interest in, we're interested in it as well. Let me just put it in a little bit of context. As you can infer from the fact that we didn't disclose terms it is not a material investment for us. So I think that's just important background to start with. But having said that, when we think about investment activities, we're and as we said, we're interested in things that provide some strategic capability. And, we've said for a long time that we're underweight E&S and this gives us a window into a successful innovative management team that, that has a lot of expertise in the niche, not even non-admitted space. And in progress and geographies that could teach us something as well. So it really is about a learning exercise for us.

Got it. Thank you.

Thank you.

Thank you. The next one is from the line of Jimmy Bhullar from JP Morgan.

Hi, good morning. So first, just sort of a question on what you're seeing in the Workers Comp market in terms of pricing? I think there's been an expectation that things would begin to turn are you seeing that? And then I have a follow up.

Good morning, this is Greg. Yes Workers Comp continues to bounce around. We thought that we were going to hit the bottom a couple of quarters back and then with the pandemic, there's clearly been some favorable frequency activity around Workers Comp and bank wages, payrolls, et cetera. As we continue to work with the bureaus in terms of their loss cost recommendations, they are coming in less negative and I think the key will be around how they treat 2020. That's an anomalous year, or if they're going to factor that into the overall ratemaking. So the overall book of business, we didn't quite hit a positive rate number. We were slightly negative in the quarter, but we do see improvement on it every quarter.

And then on toward costs and sort of social inflation with sort of the reopening of courts, should we assume that we should start to see a little bit of a pickup in social inflation? And how does that affect your loss ratio and have you been assuming, have you been incorporating continued high social inflation in your loss fix through the past few quarters?

Hi Jimmy, it is, Dan, I'll take that one. We have taken the view that social inflation has gone nowhere, and that the elevated level of losses that we saw, call it pre-pandemic are going to persist and that the elevated level of loss trend even off of that higher level of losses was going to persist. So that's what we've assumed as we continue to make our loss picks and assess and assess our reserves. And I think it's going to be a while before we see courts work through the backlog of having been closed for much of the past year. Priority in some jurisdictions is going to be given to criminal cases over civil cases, whether the courts are reopening for in-person discussions or virtual is still a question in some jurisdictions. So I think it's going to be a while before we know the answer. I think we said pretty consistently last year that there's uncertainty in that environment and because there's uncertainty, we were taking a cautious view in our view of loss trends and reserves. But the short answer to the question is, we think social inflation is as strong as ever and that's reflected in our numbers.

Okay, and then just lastly, I think Alan noted that the fact that you didn't disclose the price on Fidelis means that it wasn't a large investment, should we assume that there should be any impact from the investment on your share buyback plans for this year?

Jimmy it’s - and part of our overall capital management strategy, that's not going to be sort of almost by definition, it's not going to have a meaningful impact on our capital position.

Thank you.

Thank you. The next one is from the line of Josh Shanker from Bank of America. Please go ahead.

Yes, good morning, everyone. I just want to talk about, I know there's been a lot of questions on personal auto, but I have one more. You -- this has been the best month for growth in terms of new policies that you guys have seen since back in 2016. Given that you firmly expected frequency to return, is there a risk that you've put on customers who came in because of a good price in the pandemic, but the price won't be adequate price post pandemic and they might leave?

Yes, Josh. It’s Michael, I suppose there's always a risk and certainly there's pressure on retention when you start to increase prices. That said, we feel comfortable with the pricing levels that we've been putting business on the books. I mentioned IntelliDrive, as a key driver of some of our growth distribution expansions. It has been a driver of some of our growth, there's a lot of things that you can point to, including elevated quote activity, that are drivers of growth and auto. We've seen some slight improvement in close rate in auto over the past few months, as we've maintained our PC essentially flat. But there are a lot of other drivers of growth than just price that we can point to you that probably alleviates some of that.

Hey Josh, it's Dan, just want to comment on that. I think we've done a terrific job in the auto book over recent years in terms of understanding our appetite and having a consistent appetite, and I've pointed to the last time we did take significant pricing in auto back in 2017, 2018 timeframe. We did not shrink discount in that environment.

Good point, good point and an unrelated topic, but sort of interest with the court reopening and whatnot. Can you talk about whether in 2Q you're seeing convergence between model loss cost trends and actual experience? I assume that you prepare for a lot more losses on an incurred basis during the pandemic that didn't occur because of the nature of courts. Is that narrowing right now are we still experiencing loss cost far below the model overall?

To make sure I understand the question, Josh, you mean, the trend in the loss ratio or you mean the level of incurred losses relative to ultimate losses?

I mean, in every line of business, you assume that the loss cost turns to be 4%, 5%, 6%. But during the pandemic, it wasn't that because of courts and other reasons, but you assume that, that's just the delay. Is your loss experience coming closer in line with your model protections? Or are we still have a huge backload of reserves for claims that haven't come through because pandemic conditions persist?

Yes, I think closer to the latter. So, we still have, for example, low paid to incur ratios. We still have, for example, the majority of the ultimate losses we recognized were from COVID, sitting in IBNR. And to the earlier question on court reopening, again, I think people are maybe jumping the gun on that. I think it's going to be quite a while before we work through the backlog here and see. So we are still expecting longer periods of development in terms of how long it's going to take to get to ultimate. And again, as we said previously, even though the data itself looked good, we took a cautious view in terms of our loss picks and our reserves, with assumptions more in line with our normal long term loss trend.

All right, well I'll dig in a little bit later. But I don't want to keep up the line. Thank you very much.

Thanks Josh.

Thank you. The next one is from Tracy from Barclays. Please go ahead.

Thank you. Dan, you mentioned that Travelers is less leveraged to overall CPI type inflation. Are there better macroeconomic indicators we should be looking at if CPI is a lesser measure for long tail lines? I have muscle memory from a formal role that there are other indices you look at, that is more nuanced for your businesses to measure claims inflation?

Let Tom Kunkel start and Dan can fill in whatever I miss. We're actually not trying to forecast CPI or inflation generally. We're trying to forecast loss costs. And we do that by analyzing our own data and incorporating forecasts from third parties. And we do that on a very granular basis. So, take Workers Comp, for example. We're not forecasting medical inflation. We're looking at components. So, think prescription drug prices, durable medical equipment, et cetera. And we're doing that in the same niche that those lost costs, contribute to our actual losses. So, it's hard, I mean, obviously, we can't give you a single number and it's hard to say, if we go look at this index or that index, because we're doing it on a very granular basis, in part by combining our own data and squaring triangles and by reference to third party sources.

Okay. So all those nuance factor that you're looking at, does that worry with respect to inflation, if CPI is not the indicator we should be super focused on?

No, there's nothing about, there's nothing about loss costs or inflation that's worrying us at all. In fact, the way we -- the emphasis in the conversation here is because to a degree, we are seeing it but we saw pretty good profitability and personal lines. And it's into the short term line. And the consequences of that is, we can see it very quickly and react to it very quickly. And contrast that to say social inflation, which was an issue for us a few years ago, where takes a little bit longer for us, although I will say that I think as compared to many we saw that very, very quickly. And there's not nearly as much leverage on the balance sheet. So, there's not as much risk in the reserves, and we can pay for it relatively quickly. So, there's actually nothing at all about the inflation environment that's of concern to us at the moment in short term lines or long term ones.

Okay, great. Just one follow-up on Fidelis it's also reinsurer, so I'm just wondering if this partnership could look like a sidecar where you can see your own premiums, this platform where could potentially compete what reinsurers on your panel?

Certainly not at the moment, not as the way we've contemplated this. It really is just the way we've presented it. It's pretty simple. It's a really interesting business model. It's a fantastic management team. They've got a great track record. There, that the cultures are very compatible. What they do is very interesting to us and we wanted to learn more. And that's for the time being that's really all there is to it. And maybe over time we'll collaborate with them and there will be business opportunities. Who knows, but for the time being, it really is just as we've laid it out.

Thank you for taking my questions.

Thanks, Tracy.

Thank you. The next one is from Elyse Greenspan from Wells Fargo.

Hi, thanks. Good morning. Alan, I guess my first question is on the Fidelis investment as well. Through the years, you've said, you guys weren't interested in reinsurance deals. Obviously, there are unique features of this investment away from just reinsurance. But I just want to get a sense of just as we think about M&A, like because your stance on reinsurance changed. And then you guys issued $750 million of debt in the quarter, and it was earmarked for business growth. So, I'm just trying to -- are you tying that capital into potential M&A or is that more earmarked for organic business growth?

Let me start with Fidelis and I'll ask Dan to comment on the capital raise. So, there's just nothing at all about this that signals any shift in our thinking about reinsurance. We are primarily focused on being a primary writer with very limited interest in reinsurance and that remains the case it, it just so happens that Fidelis writes some of their business in the form of reinsurance, but that's just one of their four pillars of business. There are some interesting aspects of their reinsurance business. They've got really powerful risk management tools, are really powerful with risk and reward. And so, there's the potential for us to learn something in terms of managing our own cap portfolio. And I will point out why it hasn't been and I don't expected to be any significant focus for us. We do write a little bit of reinsurance where it's complimentary to our core business. So for example, we've got a Boiler Re business. So it's not completely foreign to us. It's a very, very, very small part of what we do. No change in strategic focus. But it's not alarming to us and in this respect, we think that there's something for us to learn.

And Elyse, regarding the capital, capital question, no change at all in our philosophy or urgency around M&A or lack of urgency around M&A. It's really coincidental the timing of when these things came together. And again, the Fidelis investment was small enough that it wouldn't have necessitated much in the way of capital management anyways, I think if you go back into transcripts, six, or even eight quarters ago, we were talking about, eventually we would have the need to issue more debt just to keep up with growth in the top-line and to maintain the debt-to-capital ratio that we're comfortable with.

Okay, thanks. And then my second question on, can you guys quantify the impact that exposure had on your premium growth in the quarter, and then within select accounts within Business Insurance, I noticed that the premiums declined in the quarter, but I thought exposure would have benefited that business line as well.

So Elyse it's Dan. I'm going to, I guess resist the temptation to sort of try to do a reconciliation of written premiums at the degree that there's positive exposure, the same way that to the degree that there's positive rate, that just means that the accounts that renewed would have renewed at that much more. Having said that, it's applicable to the accounts that renewed, that's the measure that it would apply to. Alan do you want…?

Yes, I mean, just a little bit more color on select. We've shared with you that we've been very focused on improving the profitability of that business. And so, we've certainly been very thoughtful around production and pursuing margin improvement for rates and terms and conditions and that sort. I will tell you also in the Select business, during the pandemic because of some of our ability to have a little more flexibility for a customer, we suspended some billing and some cancellation activity. And now that's back in play in the marketplace, so you have a little bit of drag in the top-line with that just back to normal activity, but when comparing that to the base period that has a little bit of an impact also Elyse.

Okay, thanks for the color.

Thank you. The next one is from Brian Meredith from UBS.

Yes, thanks. Most of them have been asked. Just I'm curious, wildfires are kind of kicking up here in the West Coast. Maybe you can talk a little bit about what you've kind of been doing over the last couple of years to kind of manage your exposure to wildfires?

Sure, Brian, this is Michael and certainly we're managing our exposure to wildfire across the business, but I'll start with Personal Insurance. I think a lot of the actions are common across the place, but Greg can chime in if I miss anything on the commercial line side. It really is a continuation of the conversation that we've been having with you in terms of the way we've been managing it. I think, we've talked a lot about California, in particular, in the context of wildfires, but certainly the parallel is a parallel that exposes us across more states in the West, then just California. So one specific development I would point you to in 2021 is, we've extended our agreement with Wildfire Defense Systems to apply to Colorado in addition to California. So we've got that sort of risk prevention partnership extending across an additional state in the West, which we think on the margin is helpful. And then maybe just an update on our progress in California, in addition to the launch of the new product, which we successfully got in market in 2020, we're now converting California policies to that new product. So think new pricing, segmentation, think new rate level, think new eligibility, as respect to wildfire exposure. And just last month, we got an additional 6.9% rate increase approved on the Property product in the state. So we continue to manage through rate eligibility our terms and conditions. And we do continue to work our way through the non-renewal activity, subject to the lifting of the moratoriums as they expire, as another level we're polling and again, a lot of those are specific California comments, but you can think about those in terms of again, segmentation modeling, exposure management, applying more broadly across the west.

Thanks. I guess, a quick follow up here. Just curious, you continue to have some really strong growth in your commercial property lines, can you talk a little bit about what the kind of market dynamics are in that line? That's the one area that I thought we're seeing pricing really kind of moderate the quickest.

Yes, as you saw we had plus 9% across the property line. And really those are primary amount of growth underneath that is RPC growth. And that's why, we gave you that supplement exhibit where Excess Casualty and National Property were two of our many specialty lines that we have, but two have certainly been the poster children for some REIT momentum over the last couple of years, and as I said, still get in double-digits but moderating, somewhat, but that's what's driving that growth.

Great. Thank you.

Thank you. We have time for one more question and that will be from Meyer Shields from KBW. Your line is open.

Great, thank you so much for fitting me in. One last -- well, obviously last question on personal auto, can you talk about the trajectory of frequency month-by-month in the second quarter just so we can assess what's going on?

Meyer, I don't know if I'm going to give you a numbers more specifically inside the quarter. I think what you said, we'll let stand which is, that as we exited the quarter frequency was closer to pre pandemic levels. You sort of know where it had been running, I think coming into the quarter and again, it approached pre-pandemic levels as we left the quarter.

Okay, fair enough. And then I guess this is for Greg. When we look at the presentation on Select accounts, the RPC for the first quarter of 2021 showed up as 8.8%. When you actually reported 1Q, it was 6.7. That seems from the outside like a big change. I thought you could talk about the process, and how we should think about the inherent estimates in the RPC?

Yes, Meyer both of those quarters, both the fourth quarter and the first quarter developed up, as you said, about 2 points. And I'll just remind you, that's an estimate of what we believe the current force is going to look like in terms of the exposure growth. So we're always estimating that and when you have a V impact in the economy, your models sometimes don't keep up with that really quick and adroit change that's happening. So we basically shorten the model period. So if we were using a six-month moving average, think we moved to a three-month moving average to try to keep up with that change in the marketplace. And that gives us a little bit changed the development. So we think we'll be in front of that going forward, but that was basically the methodology underneath that.

Okay, perfect. That's exactly what we needed, thank you.

Thank you. There are no further questions at this time. Ms. Abbe Goldstein, please continue.

Thank you very much. I appreciate everyone's time and for joining us this morning, and as always, if there are any follow-up questions get in touch with Investor Relations and good day everyone.

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