US P&C Primer

22 November 2021 | 5:00PM EST
Americas Insurance: Property & Casualty
Pricing Drives Profitable Growth - Initiate on P&C; Buy

AIG (on CL) & WRB, Sell ALL
We are optimistic on commercial P&C insurance as favorable pricing dynamics Alex Scott, CFA
+1(212)902-9592 | alex.scott@gs.com
are more than offsetting challenges of overcoming an inflationary Goldman Sachs & Co. LLC
environment. The hard market (increasing price per unit of risk) in commercial Robert Cox
+1(212)902-9813 | robert.x.cox@gs.com
insurance has provided benefits that we believe are deeper and longer lasting than Goldman Sachs & Co. LLC
appreciated. In our view, the length of the repricing cycle and compounding benefit Marly Reese
+1(212)357-1956 | marly.reese@gs.com
for loss ratios will be felt in underwriting margin improvement, but also through Goldman Sachs & Co. LLC
reserve releases and BV growth for years to come. Our approach is to 1) identify Will Nedelman
+1(212)357-2320 |
companies best positioned for profitable growth in a favorable pricing environment will.nedelman@gs.com
Goldman Sachs & Co. LLC
while 2) maintaining a strong balance sheet to adequately navigate inflationary
For the exclusive use of AZENG@MFS.COM
pressures. This, combined with a bottom-up company analysis suggests that AIG
(Buy, on CL) and WRB (Buy) are best positioned to thrive in this environment while
in personal insurance we see secular growth headwinds for captive agent
distribution as a risk for ALL (Sell). We have a favorable bias towards companies
that are 1) getting more significant price in excess of loss costs, 2) geared to
casualty lines = less exposed to climate change and financial inflation, 3) benefiting
from terms and conditions changes, and 4) positioned to lean into growth.
We see inflation as a key risk, but it’s more nuanced than just CPI. Inflated loss
costs can harm an insurance company’s balance sheet, but it’s more about the
tort/verdict environment and medical cost inflation specifically. Our analysis
98a0da0f8a7a476db6fed0be696fc2eb
suggests commercial insurers have already heavily considered social inflation
in reserves which has been evident for years now. Personal Lines has more direct
financial inflation impact and faces declining profitability. While we think auto
profitability needs about 2 more quarters to bottom at our below-consensus margins,
Buy-rated PGR is an opportunity to own a long-term secular leader that is out of
favor.
Our Top Ideas: We favor AIG and WRB among the non-life underwriters driven by: 1)
the compounding of pricing benefits; 2) persisting pricing power in casualty lines; 3)
both companies leaning hard into growth; and 4) terms and conditions changes.
Additionally, we are particularly optimistic on AIG as we see a potentially additional
benefit from an expense-driven ROE improvement strategy with the separation of
Life & Retirement serving as a potential catalyst.
Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result,
investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this
report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC
certification and other important disclosures, see the Disclosure Appendix, or go to
www.gs.com/research/hedge.html. Analysts employed by non-US affiliates are not registered/qualified as research
analysts with FINRA in the U.S.
Goldman Sachs Americas Insurance: Property & Casualty
Table of Contents
PM Summary 3
P&C Insurance Comp Sheet 10
Our Key Drivers for P&C Value Creation 11
1. Underwriting in a Favorable Commercial Environment: Seizing Opportunity 12
2. Inflationary Pressure: Mitigating one of the Primary Risks 15
3. Operating leverage: Top-line growth fuels expense margin expansion 17
4. Balance sheet strength: How much restoration from price is necessary? 19
5. Shifting Distribution in Personal Markets 21
Valuation Methodology 22
Commercial Lines 25
Personal Lines 33
Catastrophes & Reinsurance 43
The Allstate Corporation (ALL; Sell; TP: $106) 48
American International Group (AIG; Buy, on CL; TP: $74) 55
Chubb Limited (CB; Buy; TP: $230) 62
The Hartford Financial Services Group (HIG; Buy; TP: $84) 71
Progressive Corp (PGR; Buy; TP: $104) 82
The Travelers Companies, Inc. (TRV; Neutral; TP: $165) 91
W.R. Berkley Corporation (WRB; Buy; TP: $99) 100
Disclosure Appendix 107
22 November 2021 2
PM Summary
Looking for profitable growth, while avoiding pressures of a maturing hard market
We see significant pockets of upside despite inflationary pressures. We see a mixed
environment for the non-life underwriters as commercial and personal insurers find
themselves at different stages of hard markets, both with lingering unknowns about the
way social/tort and financial inflation will impact loss costs. While an inflationary
environment will continue to challenge parts of the industry, we do see significant
opportunities in 1) commercial insurers where inflation is prolonging one of the longest
hard markets on record, and 2) long-term secular leaders in personal insurance where
the market may begin to look through trough profitability. In commercial insurance, we
think significant pricing that is compounding into earnings from a hard market that
began in 2017 will allow for deeper and longer lasting underwriting benefits, particularly
in casualty lines where tort/social inflationary pressures have been known for years (Buy
AIG - on CL, WRB, CB). Personal lines insurers are in the earlier stages of a hard pricing
market driven by financial inflationary pressures on losses. While we think profitability
needs about 2 more quarters to bottom out at our below consensus margins, the equity
markets have shown an ability to be very forward-looking, and we think Buy-rated PGR
is an opportunity to own a long-term secular leader that is out of favor.
Exhibit 1: GS P&C insurance total return metrics Exhibit 2: Price-to-book ex AOCI history for coverage insurers
2.5x
2.0x
1.5x
1.0x
0.5x
0.0x
Nov-01
Nov-04
Nov-06
Nov-07
Nov-09
Nov-10
Nov-12
Nov-13
Nov-15
Nov-18
Nov-21
Nov-02
Nov-03
Nov-05
Nov-08
Nov-11
Nov-14
Nov-16
Nov-17
Nov-19
Nov-20
Coverage P/B ex AOCI Average +/- STDEV
Source: Thomson Reuters, Goldman Sachs Global Investment Research Includes AIG, ALL, CB, HIG, PGR, TRV, and WRB.
Source: FactSet, SNL Financial, Goldman Sachs Global Investment Research
Stock calls and key drivers

Our assessment of the industry and key investment views are underpinned by several
factors that we expect to drive valuation creation over the next few years. These drivers
include:
1. Leverage to the favorable commercial pricing environment

2. Ability to navigate inflationary pressures
3. Operating leverage spurred by top-line growth
4. A strong balance sheet to weather pressures on reserves from the soft market
accident years
22 November 2021 3
5. Distribution positioning, particularly in personal lines
Through this lens, we come away with the following ratings:
n Buy: AIG (on CL), WRB, CB, HIG, PGR

n Neutral: TRV
n Sell: ALL
Why we favor our top picks AIG (on CL) and WRB: We favor AIG and WRB among the
non-life underwriters driven by: 1) the compounding of pricing benefits that is expected
to continue to drive underwriting margin improvement; 2) our belief that casualty lines
and excess and surplus line will have persistent pricing power; 3) both companies
leaning hard into growth in what we think will ultimately prove to be very good vintages;
and 4) our belief in the terms and conditions contractual changes that should contribute
to positive reserve revisions over the next few years. Additionally, we are particularly
optimistic on AIG as we see a potentially additional benefit from an expense-driven ROE
improvement strategy with the separation of Life & Retirement serving as a potential
catalyst.
Where we are most out of consensus: Our Buy rating on PGR is most out of
consensus, with ~75% of covering analysts rated either Neutral or Sell and
short-interest indicators suggesting a fair amount of inflation-driven negativity in the
stock. While we recognize inflation’s impact on severity and continued reopening
influences on accident frequencies are key risks for PGR’s profitability, we think the
early rate action and strong track record of execution are reasons to look through
near-term volatility in the company’s profitability. Further, we believe the company is well
positioned for long-term growth in home and auto as well as eventual expansion deeper
into commercial lines. While we don’t see auto margins bottoming for another two
quarters at lower-than-consensus combined ratios, we think the company’s ability to
achieve exceptional levels of profitable growth will continue to allow it to take market
share for many years. Additionally, the pandemic has sped up the already-accelerating
shift to direct-to-consumer purchased auto insurance, and we think the company will
benefit by its focus on this distribution channel and scale/expense ratio advantage.
What could make us more optimistic on our Sell-rated company: Our Sell rating on
ALL is driven mainly by the heightened risk around repricing in an inflationary
environment, while trying to reposition for growth. Allstate, which is two years into a
transformative growth plan, may opt for a harder push towards showing progress on
growing its business with the risk of greater negative impacts to profitability as drivers
begin commuting back to work. We could become more optimistic on the company to
the extent it is able to execute on shifting its growth while maintaining adequate pricing.
Driver 1: Leverage to the favorable commercial underwriting environment

The current firm/hard market for commercial insurance has persisted longer than typical
hard markets offering compounding benefits to offset underwriting concerns around 1)
social inflation, 2) climate change, 3) low interest rates, and 4) covid-19 uncertainty. One
of the key differentiators versus previous hard markets is the emergence of a global
22 November 2021 4
pandemic which has closed courts and prevented the industry from having clear
visibility on the profitability impact of pricing. While we believe the drivers of price action
are still significant influences, we see the prolonged pricing cycle and evidence of a low
level of paid (cash out) vs incurred (estimated) claims over the past couple of years
during the pandemic offering the potential for further improvement to loss ratios and
ultimately reserve releases on near-term vintages (PYD from accident years 2020-2023).
We view this as an opportunity in commercial lines-focused insurers AIG, WRB,
and CB, who are 1) leaning into more significant growth, 2) more focused on
casualty lines where we expect pricing power to persist, and 3) adjusting terms
and conditions - a benefit that is difficult to quantify but should ultimately reduce
loss costs further.
Exhibit 3: Length of hard market offers potentialy longer and deeper benefits
Source: SNL Financial , Company data, Goldman Sachs Global Investment Research, CIAB
Exhibit 4: Commercial Insurance Price vs Estimated Loss Trend Exhibit 5: We favor commercial insurers leaning into growth in a
favorable pricing environement
12%
11%
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
CB WRB AIG HIG TRV
NPW growth 22E Gse pricing 22E
Source: Company data, Goldman Sachs Global Investment Research Source: Company data, Goldman Sachs Global Investment Research
Driver 2: Ability to navigate the inflationary environment

Risks of inflationary pressure are top of mind for us over the next 12 months as it
becomes more clear how much of the current environment is transitory vs more
permanent. Our key considerations for commercial and personal include:
n Commercial insurance: While some commercial liabilities have a longer tail (i.e., a
longer time period until claim costs become more certain) resulting in more
22 November 2021 5
sensitivity to changes in loss cost trends, most of these risks are much more geared
towards tort/social inflation and medical cost inflation than to financial inflation
(wage, building materials etc.). As a result we see the former two types of inflation
as a more material consideration. In the case of tort/social inflation (higher loss
severity from settlement amounts and jury verdicts), this has been a key driver of
the hard market that has been in progress for a few years. While there is still
uncertainty around how it will progress as courts reopen, we believe it has already
been heavily factored in through the combination of 1) conservative estimates in
recent loss picks while there was court closure uncertainty, and 2) the prolonged
hard market benefits that are having a compounding effect. As a result, we think
commercial insurers AIG, WRB, and CB that are showing less underlying loss
ratio improvement than their pricing in excess of loss cost would suggest are
well positioned to successfully navigate the inflationary environment.
n Personal insurance: Personal insurers face a more difficult environment as financial

inflation impacting the cost of replacing automobiles and homes has significantly
increased. The auto insurers are further challenged by the increasing frequency of
collisions as the economy continues to reopen and difficulties in estimating what
return to work normalization looks like. We see these dynamics putting pressure on
ALL and PGR and note that we think consensus estimates are still underestimating
where underwriting margins will bottom out, leading to our below-consensus
estimates for ALL and PGR of 22% and 9% below the Street, respectively. That
said, sentiment indicators suggest that investors are already concerned over these
dynamics. With profitability likely bottoming over the next couple of quarters, we do
think it is time to begin thinking beyond this pressure despite our below-consensus
2022E estimates. We see PGR as the Buy opportunity for a faster-paced
recovery to profitability and higher growth coming out of the pricing cycle,
while we are less optimistic on ALL given that it is trying to balance a difficult
growth transition that may lead to a more drawn-out impact from inflationary
pressures.
Driver 3: Executing on operating leverage during a period of heightened

top line growth
We have delved deeper into operating leverage expense benefits given the prolonged
hard market for commercial, early stage increasing of personal lines rate, and economic
rebound helping growth in unit exposure. Additionally, companies continue to execute
on expense efficiency initiatives, offering an additional source of expense flexibility as
the industry experiences outsized top-line growth. Our key conclusions coming away
from the analysis are:
n PGR is positioned well as the company that has the greatest EPS sensitivity to
improvement in its expense ratio. In the near term, this expense flexibility can be
used more as a tool to offset inflation driven pressure on the loss ratio. However,
looking beyond the next few quarters we believe PGR will continue to benefit from
increasing market share, which should allow it to continue to utilize its scale and
expense ratio as a key advantage.
22 November 2021 6
n WRB is well positioned due to a combination of factors including 1) leaning into

growth in the hard market, 2) recovery of workers’ compensation exposure units,
and 3) hub and spoke structure with many of its underlying companies hitting better
scale.
n We see AIG generating the most expense-driven ROE improvement. We believe
AIG is executing well on its plans to improve underwriting results, but the ROE still
remains below peer averages. In our view this is driven in large part by the heavy
corporate expense load of the company which we expect to become a bigger focal
point for ROE improvement over the next 12 months. We think the company now
has a significant ROE improvement opportunity with the commercial underwriting
turnaround already well on its way and AIG now seeing significant growth vs the
compounded growth rate of -6.5% over the past 5 years which has made it more
difficult to deal with expense inefficiencies.
Driver 4: Balance sheet strength coming out of a soft market

While we are optimistic on getting longer and deeper benefits from stronger price
adequacy in commercial insurance, we remain aware of the potential for negative
impacts to the balance sheet from loss pick estimates during the softer market years of
the pricing cycle (2015-2018). We note that development during the hard market
beginning in 2001 was significantly unfavorable for the softer pricing accident years
leading up to the hard market. In our view, the greatest risk for commercial insurers in
the current environment is the possibility that loss picks develop materially unfavorable
for accident years 2015-2018 related to the tort/social inflation environment.
Exhibit 6: Loss Pick Development Over Time Exhibit 7: Reserve Development by Calendar Year
Initial loss pick Most recent loss pick 10,000

100%
95%
(favorable) / adverse PYD ($mn)
90% 5,000 -AY1
85% -AY2
80% - -AY3
75% -AY4
70% -AY5
(5,000)
-AY6
65%
-AY7
60% (10,000)
-AY8
55%
-AY9
50%
(15,000)
AY1987
AY1988
AY1990
AY1991
AY1992
AY1993
AY1994
AY1995
AY1996
AY1997
AY1999
AY2001
AY2002
AY2003
AY2004
AY2005
AY2006
AY2007
AY2008
AY2010
AY2011
AY2012
AY2013
AY2014
AY2015
AY2016
AY2017
AY2019
AY2020
AY1989
AY1998
AY2000
AY2009
AY2018
CY1988
CY1990
CY1992
CY1994
CY1996
CY1998
CY2000
CY2002
CY2004
CY2006
CY2008
CY2010
CY2012
CY2014
CY2016
CY2018
CY2020
Source: SNL Financial, Company Data Source: SNL Financial, Company data
Our main takeaway from our reserve work include:
n We believe industry balance sheets are likely still modestly redundant driven by 1)
our favorable view of workers’ compensation reserves and 2) more broad
redundancies in the 2020 accident year benefiting from benign frequency of claims
against which companies booked conservative reserves. We see this being partly
offset by continued social inflation pressures, some of which are already reflected
and some still to come as the industry learns more following court reopening. We
see moderate reserve redundancies for CB, HIG, and TRV and a modest
22 November 2021 7
redundancy for WRB. Of the commercial insurers we find AIG continues to be

the hardest to gauge given the Schedule P influences of the Berkshire
Hathaway adverse development cover initiated in 2016.
n In terms of social inflation, the loss severity increases for commercial auto insurance
and other liability (occurrence) are clear in the loss severity metrics we can derive
from our Schedule P loss reserve analysis. We think the greater loss trends (likely in
the high single digits in recent years for some more challenged lines) are fairly well
understood and see the largest verdicts (so-called “nuclear verdicts”) as the bigger
potential driver of unfavorable reserve development. As a result, we think there is
some risk for AIG, TRV, and CB on larger national accounts while we think WRB
and HIG may be a bit more insulated from nuclear verdicts through the
2015-2018 time period.
Driver 5: Distribution positioning will continue to be a key driver in personal lines

Given the shorter duration of auto and home policies (6 months - 1 year), it is less a
matter of if the industry is able to reprice but rather a matter of how long it takes.
Repricing cycles always seem to take a bit longer than expected and the current
environment is complicated by regulators approving rate a year after auto insurers

registered record favorable margins due to lockdowns. However, we think the market is
quite forward-looking and there is still the possibility of inflation being more transitory
for auto repairs and used car prices. As a result, we think it may be an appropriate time
to consider buying the medium to longer term winners in personal insurance. Over the
next several years we believe distribution will continue to play a key role and see direct
to consumer continuing to take share from captive distribution. We believe this benefits
PGR and GEICO, and we anticipate that the long-term trends in market share will
continue or even accelerate.
Exhibit 8: Auto Insurance Distribution by Channel Exhibit 9: Auto Market Share - Direct Written Premium Share
25%
32% 32% 33% 32% 31% 31% 31% 30% 30% 31% 31%
20%
16%
15% 14%
13%
48% 46% 45% 43%
52% 50% 50% 49% 48% 10% 10%
53% 49%
5%
21% 22% 24% 25% 26%

16% 17% 18% 18% 19% 20%
0%
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Direct Exclusive Agent Independent Agent GEICO PGR State Farm Allstate
Source: Independent Insurance Agents & Brokers of America Source: Company data, Goldman Sachs Global Investment Research
22 November 2021 8
Exhibit 10: Company breakdowns by product, geography, type, and class

Revenue breakdown by product line U.S. P&C net premiums written by type
3% 8% 12%
14% 29%
39% 36%
41%
5% 53% 54% 55%
68% 62%
15% 88% 83%
20% 95%
88%
6% 75%
64%
49% 59%
34% 47% 46% 45%
32% 38%
12% 17%
AIG ALL CB HIG PGR TRV WRB
P&C Commercial Insurance P&C Commercial Reinsurance P&C Personal Insurance
Property Casualty
Life & Retirement Group Benefits/A&H
Revenue by geography U.S. P&C net premiums written by class
7% 6%
18% 22%
31% 30% 33%
100% 98% 100% 98% 100% 100% 98%

93% 94%
82% 78%
69% 70% 67%
AIG ALL CB HIG PGR TRV WRB AIG ALL CB HIG PGR TRV WRB
North America International U.S. Standard U.S. Excess & Surplus (E&S)
FY2020 aside from premiums by class, which is based on 2019 A.M. Best E&S data. GS estimates used in select areas where full data not available.
Source: SNL Financial, A.M. Best, Company data, Goldman Sachs Global Investment Research
22 November 2021 9
P&C Insurance Comp Sheet

Exhibit 11: P&C Insurer Comp Sheet
As of market close 11/19/2021
P&C Underwriters Group
Market GS 12 month Target Price GS EPS Estimates P/E P / BV ROE Share Performance Market
Company Ticker Price Rating Tgt Price +/- Divi Yld Tot Retrn NTM 2021E 2022E 2023E NTM 2021E 2022E 2023E 4Q21E 2021E 2022E 2023E NTM 2021E 2022E 2023E MTD QTD YTD 1-YR Cap
American International Group, Inc AIG $54.95 Buy $74 34.7% 2.5% 37.2% $5.26 $4.70 $5.66 $6.97 10.5x 11.7x 9.7x 7.9x 0.8x 0.8x 0.7x 0.7x 7.2% 6.8% 7.7% 8.7% -6.3% 0.1% 45.1% 42.6% $ 45.6b
Allstate Corporation ALL $111.94 Sell $106 -5.3% 3.0% -2.3% $7.89 $13.17 $8.35 $12.68 14.2x 8.5x 13.4x 8.8x 1.4x 1.4x 1.4x 1.3x 9.8% 16.4% 10.4% 15.1% -11.5% -12.1% 1.8% 11.5% $ 32.1b
Chubb Limited CB $188.25 Buy $230 22.2% 1.7% 23.9% $14.98 $12.26 $15.56 $16.93 12.6x 15.4x 12.1x 11.1x 1.4x 1.4x 1.3x 1.2x 10.6% 9.3% 10.9% 10.9% 3.3% 8.5% 22.3% 27.7% $ 81.1b
Hartford Financial Services Group HIG $69.68 Buy $84 20.6% 2.2% 22.7% $6.98 $5.79 $7.41 $8.35 10.0x 12.0x 9.4x 8.3x 1.4x 1.4x 1.3x 1.1x 13.3% 11.8% 13.9% 14.3% -3.7% -0.8% 42.3% 50.7% $ 23.7b
Progressive Corporation PGR $90.30 Buy $104 15.2% 1.5% 16.7% $4.14 $3.30 $4.68 $6.75 21.8x 27.4x 19.3x 13.4x 2.8x 2.8x 2.5x 2.3x 12.6% 11.1% 13.8% 17.9% -2.5% -0.1% -8.7% -4.2% $ 52.8b
Travelers Companies, Inc. TRV $152.53 Neutral $165 8.2% 2.4% 10.6% $12.06 $12.67 $12.49 $14.35 12.6x 12.0x 12.2x 10.6x 1.3x 1.3x 1.3x 1.2x 10.4% 11.6% 10.6% 11.4% -1.8% 0.3% 8.7% 13.9% $ 37.5b
W. R. Berkley Corporation WRB $80.29 Buy $99 23.3% 2.0% 25.3% $5.20 $4.83 $5.43 $6.02 15.4x 16.6x 14.8x 13.3x 2.0x 2.0x 1.8x 1.6x 12.6% 12.8% 13.0% 13.0% 3.6% 9.7% 20.9% 20.1% $ 14.2b
Market GS 12 month Target Price Consensus EPS Estimates P/E P / BV ROE Share Performance Market
Company Ticker Price Rating Tgt Price +/- Divi Yld Tot Retrn NTM 2021E 2022E 2023E NTM 2021E 2022E 2023E 4Q21E 2021E 2022E 2023E NTM 2021E 2022E 2023E MTD QTD YTD 1-YR Cap
American Financial Group, Inc. AFG $140.45 NC $9.99 $10.43 $9.80 $10.29 14.1x 13.5x 14.3x 13.7x 2.4x 2.4x 2.4x 2.2x 17.1% 16.4% 17.0% 16.2% 4.8% 11.6% 60.3% 57.8% $ 11.9b
Markel Corporation MKL $1,241.50 NC $72.43 $58.20 $74.84 $86.17 17.1x 21.3x 16.6x 14.4x 1.2x 1.2x 1.1x 1.0x 6.9% 7.6% 6.8% 6.2% -5.3% 3.9% 20.1% 23.1% $ 17.0b
Cincinnati Financial Corporation CINF $118.81 NC $4.97 $5.87 $5.17 $5.43 23.9x 20.2x 23.0x 21.9x 1.7x 1.7x 1.6x 1.6x 7.0% 7.5% 7.0% 6.7% 0.8% 4.0% 36.0% 51.6% $ 19.1b
CNA Financial Corporation CNA $43.68 NC $4.38 $4.02 $4.55 $4.93 10.0x 10.9x 9.6x 8.9x 1.0x 1.0x 0.9x 0.9x 9.6% 9.5% 9.5% 9.3% -3.4% 4.1% 12.1% 24.4% $ 11.9b
Intact Financial Corporation IFC-CA $165.37 NC $10.92 $11.29 $11.07 $12.50 15.1x 14.7x 14.9x 13.2x 2.2x 2.2x 2.0x 1.9x 16.5% 13.8% 12.9% -0.8% -1.3% 9.7% 11.9% $ 29.1b
Mercury General Corporation MCY $51.57 NC $3.39 $3.60 $3.33 $3.25 15.2x 14.3x 15.5x 15.9x 1.3x 1.4x 1.3x 1.3x 8.7% 9.4% 8.9% 8.6% -6.0% -7.4% -1.2% 14.1% $ 2.9b
Horace Mann Educators Corporat HMN $38.32 NC $3.18 $3.40 $3.40 $3.71 12.1x 11.3x 11.3x 10.3x 1.0x 1.0x 1.0x 0.9x 8.4% 8.9% 8.4% 7.9% -3.9% -3.7% -8.8% -5.8% $ 1.6b
Kemper Corporation KMPR $58.02 NC $1.18 -$1.44 $2.78 $6.12 49.2x -40.3x 20.8x 9.5x 1.0x 1.0x 1.0x 0.9x 2.0% 2.0% 2.0% 1.9% -10.5% -13.1% -24.5% -19.5% $ 3.7b
RLI Corp. RLI $110.93 NC $3.68 $3.48 $3.71 $3.93 30.2x 31.8x 29.9x 28.2x 4.1x 4.1x 3.9x 3.7x 13.1% 14.1% 13.2% 12.5% 5.6% 10.6% 6.5% 8.3% $ 5.0b
Palomar Holdings, Inc. PLMR $83.64 NC $2.63 $1.96 $2.89 $3.53 31.9x 42.6x 29.0x 23.7x 5.3x 5.3x 4.5x 4.0x 15.6% 17.6% 15.4% 13.3% 3.1% 3.5% -5.9% 14.9% $ 2.1b
James River Group Holdings Ltd JRVR $28.94 NC $1.94 -$3.26 $2.40 $2.72 14.9x -8.9x 12.1x 10.6x 1.3x 1.3x 1.3x 1.2x 8.8% 8.2% 8.8% 8.3% -24.3% -23.3% -41.1% -40.1% $ 1.1b
Selective Insurance Group, Inc. SIGI $78.15 NC $5.57 $6.12 $5.70 $6.27 14.0x 12.8x 13.7x 12.5x 1.7x 1.7x 1.5x 1.4x 11.5% 12.6% 11.5% 10.4% 1.4% 3.5% 16.7% 27.4% $ 4.7b
Hanover Insurance Group, Inc. THG $126.02 NC $10.21 $7.90 $10.46 $11.18 12.3x 15.9x 12.0x 11.3x 1.5x 1.5x 1.4x 1.2x 11.8% 11.6% 10.3% -5.5% -2.8% 7.8% 9.4% $ 4.5b
ProAssurance Corporation PRA $23.64 NC $0.69 $0.93 $0.79 $1.02 34.3x 25.4x 29.9x 23.3x 0.9x 0.9x 0.9x 0.9x 2.7% 2.7% 2.7% 2.7% 6.5% -0.6% 32.9% 46.7% $ 1.3b
P&C Underwriters (Equal Weighted) 17.0% 2.2% 19.1% 13.8x 16.4x 13.8x 1.8x 1.8x 1.7x 1.5x 10.6% 10.3% 10.4% -2.7% -0.2% 12.0% $ 19.2b
P&C Underwriters (MCap Weighted) 12.7% 1.5% 14.2% 15.5x 14.2x 11.9x 1.7x 1.7x 1.5x 1.4x 10.8% 11.0% 12.0% -1.9% 1.7% 18.1%
Note: Shares of AIG are on the Americas Conviction List
Source: FactSet, Company data, Goldman Sachs Global Investment Research
22 November 2021 <0
Our Key Drivers for P&C Value Creation

Exhibit 12: Key Drivers in P&C Insurance
Favorably Less Favorably
Theme Drivers
Positioned Positioned
1) Significant ultimate loss ratio improvement in pockets of commercial insurance: The commercial underwriting
environment is favorable with price in excess of loss costs = margin improvement. We focus on improvement of ultimate CB, AIG, WRB TRV
expected loss ratios which we think is the key for value creation / BV growth.
2) Favorable Casualty Pricing more Sustained in our view: We see the favorable commercial pricing environment
WRB, CB, HIG,
being deeper and longer lasting for casualty lines business (excluding workers' comp) as well as smaller account
AIG
business.
Driver 1
Leverage to a Favorable Commercial

3) Terms & conditions: The benefit of the harder market that is more difficult to calculate is the significant changes to
Insurance Environment
terms and conditions that have occurred over the past few years. In particular, we think sub-limits and deductibles will
WRB, AIG
likely have benefits to loss trend that will prove merit through better development. We see E&S underwriters with more
underwriting terms flexibility benefiting the most from this trend.
4) Leaning into growth: We believe that ultimate loss ratios and valuation creation from commercial lines business
written from 2020 -2023 will be quite favorable. Companies that are positioned in a way that they can lean into profitable WRB, CB
growth during this period should see the most benefit to BV growth over time.
1) P&C loss costs are more geared towards medical cost inflation (which continues to be fairly benign) and
social inflation (which has been considered in pricing for a couple of renewal cycles now). Financial inflation is only
WRB, CB, AIG ALL, PGR
around 20% of loss cost inflation. While courts reopening is a risk, we think casualty and exposure to social inflation is
Driver 2
Managing Inflationary more factored into price already relative to business exposed to financial inflation such as personal lines and property.
Pressures
2) Speed of action for personal lines: For Personal Lines companies with significant financial inflation exposure, being
nimble and navigating a period of pressured margins will be critical. We believe early action will determine winners and PGR ALL
losers as the pricing environment continues to harden in home and auto.
1) The hard commercial lines market and improving efficiency to benefit expense margins: Companies who are able to take
Driver 3
advantage of the growth friendly environment should see an additional meaningful tailwind in operating leverage. Much investor
focus has been on the loss ratio recently given the hard market in commercial lines and inflation more broadly, though we WRB, CB, PGR,
Operating Leverage expect expense leverage to be a meaningful differentiator over the coming years. AIG
1) Balance sheet strength during the restoration period: Hard markets develop when loss costs face pressure and right now social
inflation, financial inflation, climate change, low interest rates, & Covid-19 are all key considerations. While forward looking margins
Balance sheet strength
Driver 4
look good, there are questions about the reserve adequacy, particularly for vintages of business written during the depths of the
CB, HIG, TRV
coming out of a soft market soft market (2015-2018). While we are optimistic on the value some firms are creating in commercial lines on current accident years,
we also think avoiding balance sheets with the most need for restoration is important.
Accelerating shift to Direct-to-consumer: Prior to the pandemic the share of business sold through the direct-to-consumer channel
was already evident. However, we believe this trend has accelerated through the pandemic and will continue to accelerate. PGR ALL
Theme 5
Distribution Positioning in Personal

Lines Labor markets and sales trends are likely to cause further pressure on captive distribution forces: Large captive
distribution forces are being restructured and becoming less productive. Additionally, the average age of producers is
PGR ALL
climbing and new recruiting will likely feel significant pressure from a tight labor market all leading to low growth of captive
agents.
Source: Goldman Sachs Global Investment Research
22 November 2021 <<

1. Underwriting in a Favorable Commercial Environment: Seizing

Opportunity
The commercial insurance market’s hardening over the past few years has significantly
improved conditions for underwriters after years of grappling with softer markets and
increasing loss costs. We believe the benefits of the current environment will be deeper
and longer lasting, which should drive further underlying margin improvement as well as
favorable reserve development over the next several years. Underpinning this view is
our analysis comparing pricing trends vs loss cost trends, which we have conducted on
both a short-term and long-term basis. The analysis indicates to us that companies are
broadly getting price in excess of loss cost, which should translate to underlying margin
improvement. But it also suggests to us that some companies have been more
aggressive in improving pricing through this environment, potentially leading to favorable
development of reserves as well. Importantly, we don’t necessarily think the benefit
will be spread equally across insurers, with casualty lines benefiting more in our
view from price in excess of loss cost as well as tightening of terms and
conditions. We see this trend having the most beneficial impact on WRB, CB, and
AIG.
We have run an analysis on each company using disclosure on price and loss costs
supplemented with our own assumptions where explicit stats have not been provided.
We are particularly focused on where ultimate loss picks should settle out (underlying
loss ratios as well as future PYD adjustments) from the upcoming accident years during
what we consider to be the “restoration” phase of the P&C pricing cycle when
companies have historically been more conservative with actuarial assumptions. To this
end, we have analyzed pricing increases vs estimated loss cost trends under a couple of
approaches: 1) starting off of recent 2020 loss ratios and 2) a longer-term analysis based
off of 2012 where we have fuller information about ultimate actual loss ratios. Our main
takeaways coming away from the analysis are:
n AIG, CB, and WRB are getting the greatest benefit from price above loss cost mostly
driven by the sheer magnitude of the pricing increases. When we roll this forward
into what it implies for future loss ratios, we think there is reason to believe the
companies are allowing only a portion of it to come through in accident year loss
ratios being reported. For these companies, we see a strong mix of accident year
loss ratio improvement as well as more favorable development forming in future
periods.
n We think TRV is largely showing the benefit of price over loss cost in accident year
loss ratio improvement and this benefit appears to be anticipated by the Street. We
don’t read too much into our analysis implying even less improvement that they are
showing as there are nuances to the loss cost and workers’ compensation
concentration that could be impacting the analysis. Additionally, the company has
made greater strides than peers in claims analytics which may also be benefiting
loss costs to a greater degree than the analysis depicts as well.
22 November 2021 12
Exhibit 13: Approach 1: GSe Estimated loss picks vs Analysis Exhibit 14: Approach 2: GSe Estimated loss picks vs Analysis
Implied Ultimate losses Implied Ultimate losses
75% GSe Underlying loss ratio pick Implied ultimate loss ratio 68% GSe Underlying loss ratio pick Implied ultimate loss ratio
66%
70% 64%
62%
65%
60%
58%
60%
56%
55% 54%
52%
50% 50%
2021E
2022E
2023E
2021E
2022E
2023E
2021E
2022E
2023E
2021E
2022E
2023E
2021E
2022E
2023E
2021E
2022E
2023E
2021E
2022E
2023E
2021E
2022E
2023E
2021E
2022E
2023E
2021E
2022E
2023E
AIG CB HIG TRV WRB AIG CB HIG TRV WRB
We use a multi-pronged approach to analyzing loss ratios that leverages both

historical and estimated pricing and loss trends, tailored for each company based
on business mix.
n Approach #1 - historical loss trend build: For this approach, we take historical
ultimate loss ratio picks (Example - 2012 accident year loss ratio trued-up for reserve
changes), and model forward historical loss trend and pricing. Historical pricing and
loss trend assumptions are taken from company disclosures where available and are
GS assumptions if not available (loss trend is not typically disclosed). Using this
approach allows us to estimate loss ratio adequacy over a longer period and aims to
inform us as to the accuracy of the companies’ most recent loss picks, so that we
can use an accurate base to which project our future estimates. This approach
creates earned premium and claim cost indices for each company throughout the
analyzed period, and is another tool for analyzing reserve adequacy. We believe this
forms an important piece in determining future loss picks, as we believe a
company’s confidence level in their reserves supports its future loss pick
decision-making process. Namely, that those companies that are most confident
about reserves are likely to pick the favorable end of actuarial implied ranges
for future loss picks.
o This approach is used primarily for commercial lines underwriters given the
long duration nature of their claims and recognizes that several factors go into
an initial loss ratio pick, including reserve adequacy. We also use it for
personal lines, but only go back 1-2 years, as claim duration is far lower versus
commercial. There are certainly factors such as back book non renewal actions
(a consideration for AIG) and also claims adjusting improvements (a possible
consideration for TRV), but we still believe this analysis does provide some
valuable information about how ultimate loss ratios may develop.
o We supplement this approach with Schedule P reserve analysis in order to
check if the conclusions reached are in agreement.
Approach #2 - assume most recent year loss picks are accurate: In our
secondary approach, we aim to acknowledge the potential downfalls of approach #1
22 November 2021 13
by assuming each company’s 2020 initial loss pick is completely accurate (however,
historically this is almost never true) and then building loss ratios off of the same
future pricing and loss trend assumptions used in approach #1. Inherently, our
historical analysis in approach #1 is not perfect and it can be particularly difficult to
asses and account for things like business mix shifts (especially within product lines)
and changes in terms and conditions.
o This approach is more commonly used as it is simple. We place a larger
weighting on approach #1 because it is more detailed and predictive, in our
view.
Exhibit 15: Summary Analysis - Price in Excess of Loss Cost and Impacts on Margins
Earned pricing estimate Implied ultimate loss ratio Consensus loss ratio GSe loss ratio pick Implied vs. GS GS vs. Consensus
GS Adj. 2020 GSe
underlying Loss 2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E 2021E 2022E 2023E
Approach #1
loss ratio trend

AIG 74.9% 5.5% 14.3% 11.6% 8.4% 69.2% 65.4% 63.7% 67.0% 65.9% 65.4% 66.9% 65.3% 64.3% 2.3% 0.1% -0.6% -0.1% -0.7% -1.1%
CB 64.7% 5.5% 13.5% 10.8% 8.1% 60.1% 57.3% 55.9% 62.6% 62.1% 61.7% 62.7% 61.4% 61.2% -2.5% -4.1% -5.4% 0.0% -0.8% -0.4%
HIG 59.2% 3.7% 7.1% 5.8% 5.3% 57.4% 56.2% 55.4% 56.7% 56.0% 55.8% 56.5% 55.7% 55.7% 0.9% 0.4% -0.4% -0.1% -0.3% -0.1%
TRV 65.4% 5.0% 7.1% 5.9% 4.7% 63.4% 63.6% 63.7% 61.6% 61.2% 60.7% 61.5% 61.2% 60.7% 1.9% 2.4% 3.0% -0.1% 0.0% 0.0%
WRB 61.7% 4.0% 10.1% 8.1% 6.5% 58.3% 56.1% 54.8% 59.4% 58.7% 58.5% 59.4% 58.4% 58.0% -1.1% -2.3% -3.2% 0.1% -0.3% -0.5%
Actual 2020 GSe
Approach #2
loss ratio trend

AIG 70.9% 5.5% 14.3% 11.6% 8.4% 65.5% 61.9% 60.3% 67.0% 65.9% 65.4% 66.9% 65.3% 64.3% -1.4% -3.3% -4.0% -0.1% -0.7% -1.1%
CB 64.3% 5.5% 13.5% 10.8% 8.1% 59.7% 56.9% 55.5% 62.6% 62.1% 61.7% 62.7% 61.4% 61.2% -2.9% -4.5% -5.7% 0.0% -0.8% -0.4%
HIG 58.5% 3.7% 7.1% 5.8% 5.3% 56.7% 55.5% 54.7% 56.7% 56.0% 55.8% 56.5% 55.7% 55.7% 0.2% -0.3% -1.1% -0.1% -0.3% -0.1%
TRV 64.6% 5.0% 7.1% 5.9% 4.7% 62.6% 62.8% 62.9% 61.6% 61.2% 60.7% 61.5% 61.2% 60.7% 1.1% 1.6% 2.2% -0.1% 0.0% 0.0%
WRB 60.1% 4.0% 10.1% 8.1% 6.5% 56.8% 54.7% 53.4% 59.4% 58.7% 58.5% 59.4% 58.4% 58.0% -2.6% -3.7% -4.6% 0.1% -0.3% -0.5%
Source: Company data, Goldman Sachs Global Investment Research
22 November 2021 14
2. Inflationary Pressure: Mitigating one of the Primary Risks
We have reviewed inflationary impacts and the sensitivity to the different types of
inflation given uncertainty around the path of CPI over the next few years. We come
away with the conclusion that while longer-tail liabilities are indeed more sensitive to
inflationary pressures, medical cost inflation and tort/social inflation are a large portion of
the inflationary consideration for these type of liabilities vs wage inflation and
replacement cost inflation (cost of building materials, parts, etc.). We note that
tort/social inflation has been present for several years now and a focal point of the hard
market while medical cost inflation has continued to be fairly benign to date. As a result,
we don’t see a negative surprise in the development of loss reserve estimates for
the more casualty focused commercial insurers (WRB, HIG) related to financial
inflation / CPI growth. Personal lines insurers are already feeling the negative
impacts of the inflationary environment for home and auto insurance business
lines, and we think the key differentiator over the next year will be the speed of
repricing and ability to restore profitability in the businesses (favor PGR over ALL).
Exhibit 16: A variety of inflation inputs make up total exposure to Exhibit 17: Estimated surplus impact from a 100bps change in loss
inflation cost from various inflation types
Estimated Percentage of exposure to various types of inflation
Not Exposed Social Medical Wage Replacement Cost AIG ALL CB HIG PGR TRV WRB Average
0.0%
-0.4% -0.3% -0.5% -0.3% -0.3% -0.4% -0.4% -0.4%
11% -0.2% -0.2%
14% 12%
18% -0.5% -0.5% -0.4%
21% 19% 20% -0.3% -0.5% -0.5% -0.5%
26% -0.5% -0.7%
14% 13% -1.0%
14% -0.3%
12% 10% 12% -0.9% -0.4% -1.1%
10%
10% -1.5% -1.3% -1.6% -1.4%
-1.3%
-1.5% -1.8%
-2.0%
29% 32% 39% -1.0%
47% 45% 39% -0.8%
43% -2.5%
37%
-1.2% -0.8%
-3.0% -1.2% -2.7%
-2.8%
-1.0%
37% -3.5% -3.2%
34% 34%
23% 25% 26% 29% -3.5% -3.5%
26% -4.0% -3.7%
3% 3% 2% 2% 1% 2% 1% 2% Replacement Cost Wage Medical Social Total
AIG ALL CB HIG PGR TRV WRB AVERAGE
Our conclusions from the analysis include:
n Tort/ social inflation are the key considerations, in our view, for longer-tailed casualty
lines and this pressure has been a known risk/pressure for the past several years.
For product lines such as Commercial Auto and Other Liability (Occurrence), we see
the progression of the environment for settlements and verdicts continuing to be
more critical than financial inflation. It remains somewhat of an unknown how these
trends will develop over the next few years given the closures of courts obscuring
the industries’ visibility. However, increasing sizes of settlements and verdicts was
one of the original key drivers of the hard market that developed, and we are now
deeper into the cycle with companies getting compounding rate benefits to deal
with this pressure. We favor WRB on this dynamic given 1) the company has
taken significant rate related to social inflation, 2) paid-to-incurred ratios
suggest the company is booking reserves with conservative assumptions
related to social inflation, 3) the focus on smaller commercial accounts should
22 November 2021 15
insulate the company from so called nuclear verdicts, and 4) its casualty
insurance focus makes financial / replacement cost inflation less impactful for
the company.
Exhibit 18: Industry Loss Severity - Other Liability (Occurence) Exhibit 19: Industry Loss Severity - Commercial Auto
Paid Losses in $thousands / Paid Claim Count Paid Losses in $thousands / Paid Claim Count
$7 $18
$16
$6
$14
$5
$12
$4 $10
$3 $8
$6
$2
$4
$1
$2
$- $-
Source: SNL Financial, Company data, Goldman Sachs Global Investment Research Source: SNL Financial, Company data, Goldman Sachs Global Investment Research
22 November 2021 16
3. Operating leverage: Top-line growth fuels expense margin expansion
Given robust P&C price increases and consensus expectations for another year of
strong GDP growth, we think that companies who are able to take advantage of the
growth friendly environment should see an additional meaningful tailwind in operating
leverage. Much investor focus has been on the loss ratio recently given the hard market
in commercial lines and inflation more broadly, though we expect expense leverage to
be a meaningful differentiator over the coming years. At first blush investors should
expect companies with the strongest net premiums earned growth to see the greatest
benefits, and we take this a step further by estimating fixed expenses per company and
layering in EPS sensitivity to underwriting to outline a full economic sensitivity.
Ultimately, we conclude that PGR and WRB will be the greatest beneficiaries of
operating leverage over the 2021-2024 period based on EPS impact, benefiting
from both strong premium growth and above-average sensitivities to
underwriting (see Exhibit 20).
Exhibit 20: NPE growth, operating leverage, and EPS sensitivty to the combined ratio
35% 33%
10.7% 10.5%
5.1% 29%
30%
4.5%
25% 23% 23% 8.0%
22%
20% 7.0%
20% 18%
2.5% 4.9%
15% 4.5%
2.1% 4.0%
1.8% 11% 11%
1.6%
1.4% 1.3% 10% 8%
1.3% 1.1% 1.1% 1.2% 7% 7%
0.9% 0.9% 6% 5%
5%
0%
PGR WRB ALL TRV CB AIG HIG PGR WRB ALL TRV CB AIG HIG ALL PGR TRV WRB CB AIG HIG
Implied cumulative Operating leverage as a % of NPE Average annual impact on EPS % NPE growth CAGR % of expenses fixed EPS sensitivity to 100bps change in P&C combined ratio
Implied cumulative operating leveage and average annual impact to EPS is for the 2021E-2024E period. % of expenses that are fixed is a GS estimate based on a detailed breakdown of statutory
expenses. P&C NPE growth CAGR is for 2020-2024E. EPS senstivity is based on GS 2023E EPS estimates.
Our approach:
1. In order to analyze each companies operating leverage potential, we first estimated
the portion of each company’s expenses that are fixed. We leveraged the statutory
expense schedule to define the types of expenses that we think exhibit operating
leverage based on a historical analysis, and summed these same expense types
across companies. On average, we concluded that roughly 1/4th of expense dollars
are at least partially fixed across our coverage group, with the primary fixed expense
types being a portion of employee salaries (we estimate ~65%), real estate, rent,
surveys and underwriting reports, and equipment. Acknowledging that most of
these expenses are not fully fixed, we modeled all of them forward at a 2% annual
pace.
2. We then isolated the impact that these expenses would have when combined with
our net premiums earned estimates and translated this into a combined ratio
impact. WRB stands out in this regard as having the largest impact to the combined
ratio, followed by PGR and CB.
3. Finally, we blend the combined ratio impact of operating leverage with EPS
sensitivity to underwriting, which shows that despite WRB’s nearly 2x as high
combined ratio impact from operating leverage versus PGR, PGR’s outsized
22 November 2021 17
underwriting sensitivity leads to a greater EPS impact for the personal lines’ insurer.
This discrepancy stems from lower net investment income as a % of EPS given the
shorter-tail nature of personal insurance claims.
Ultimately, we balance implied operating leverage with 1) expense initiatives (AIG, ALL,
HIG), 2) business reinvestment (i.e. technology, processes, etc.), and 3) a partial return
of pandemic-related T&E expense savings which we estimate amounted to 30-50bps for
most coverage names. We see the most expense ratio improvement driven by AIG
and HIG, two beneficiaries of defined expense savings programs.
Exhibit 21: US Statutory travel and

We estimate that travel & entertainment (entertainment not shown below)
has benefitted insurers expense ratios by 30-50bps per quarter, though the
benefit has reduced as of 3Q21
80% 0.30%
71% 72%
69% 69%
70% 64% 64%
YoY decline in Travel as a % of NPE

61% 0.25%
59%
60%
YoY decline in Travel
0.20%
50%
40% 0.15%
30%
0.10%
20%
0.05%
10%
0% 0.00%
Industry AIG ALL CB HIG PGR TRV WRB
2020 YoY decline in Travel YoY decline as a % of NPE
Source: SNL Financial, Company data, Goldman Sachs Global Investment Research
Exhibit 22: P&C expense ratio improvement vs. 2019 levels

We estimate that by 2023E AIG, HIG, and WRB will have improved their expense ratios the most versus 2019
Gse Improvement through..
2019 2020 2021E 2022E 2023E 2021E 2022E 2023E
AIG 34.4% 33.3% 31.6% 30.4% 29.9% -2.9% -4.1% -4.5%
ALL 24.0% 26.8% 24.2% 23.2% 22.8% 0.2% -0.8% -1.2%
CB 28.4% 27.5% 26.5% 26.1% 26.1% -2.0% -2.3% -2.4%
HIG 32.6% 31.9% 31.0% 29.8% 29.6% -1.6% -2.8% -3.0%
PGR 20.5% 23.7% 19.8% 20.0% 19.8% -0.7% -0.6% -0.7%
TRV 29.6% 29.9% 29.5% 29.4% 29.4% -0.1% -0.2% -0.2%
WRB 31.5% 30.5% 28.6% 28.3% 28.3% -3.0% -3.2% -3.2%
22 November 2021 18
4. Balance sheet strength: How much restoration from price is necessary?
While we expect social inflation related adverse loss development to continue to

emerge (as is largely consensus in our view), we believe its unlikely that industry
commercial loss reserves are going to surprise to the downside in a material way, as
they did in 2001 (Exhibit 23). Among the primary reasons for our view are (1) we
continue to see favorable offsets from products such as workers’ comp (as of YE2020
the National Council on Compensation Insurance estimates the overall reserve position
for private WC carriers as $14bn redundant, with $4bn accumulating in 2020) among
others, (2) carriers have been steadily taking adverse development for nearly 3 years
now (including 2021), particularly in other liability and commercial auto, (3) the social
inflation-centric accident years (often noted as 2015-2018) continue to mature and have
yet to move the needle, (4) our bottom-up Schedule P analysis for covered companies
points to stable reserves, and (5) Visible Alpha consensus estimates generally embed a
lower levels of favorable reserve development versus recent years.
Additionally, we believe its quite likely that AY2020 and beyond will increasingly develop
favorably following years of compounding rate increases and the necessity for greater
underwriting income amidst a lower interest rate environment.
Exhibit 23: 2001 insurance industry prior year reserve development Exhibit 24: 2020 insurance industry prior year reserve development
by accident year and calendar year by accident year and calendar year
The majority of adverse development stemmed from WC, medical
profesional liability, and A&E.
15,000 AY2001 15,000

AY2000 AY2019
10,000 10,000 AY2018
AY1999
AY1998 AY2017
5,000 5,000
AY2016
AY1997
AY2015
- AY1996 -
AY2014
AY1995
AY2013
(5,000) (5,000)
AY1994
AY2012
AY1993 AY2011
(10,000) (10,000)
AY1992 Prior
(15,000) Prior (15,000) Total PYD

CY1993 CY1994 CY1995 CY1996 CY1997 CY1998 CY1999 CY2000 CY2001 CY2012 CY2013 CY2014 CY2015 CY2016 CY2017 CY2018 CY2019 CY2020
Total PYD
Source: SNL Financial, Goldman Sachs Global Investment Research Source: SNL Financial, Goldman Sachs Global Investment Research
In an effort to dig deeper into the reserving adequacy of the coverage universe, we have
run a loss development factor analysis of paid losses. While the analysis is somewhat
crude relative to the more granular approaches used internally by insurers, we still think
it is helpful in our understanding of overall reserve adequacy and relative conservatism
in stated balance sheets. Our analysis suggests that the coverage group is modestly
redundant more broadly, with redundant workers’ compensation reserves more than
offsetting some estimated deficiencies in commercial auto and other liability
(occurrence). We see the most notable redundancy in HIG’s reserves for workers’
compensation and note that the conclusion is also consistent with the companies’
recent comment that it is reserving for 5% workers’ compensation loss cost trend
despite experience trending much lower than that in recent years. For the other
22 November 2021 19
insurers the analysis suggests modest redundancies, and we view this conclusion
positively as it relates to commercial insurers’ ability to allow the benefits of hard
market pricing to flow through into earnings.
Exhibit 25: Schedule P reserves vs GS Estimates by Accident Year
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-
AY2011
AY2014
AY2015
AY2018
AY2019
AY2012
AY2016
AY2019
AY2020
AY2013
AY2017
AY2020
AY2011
AY2014
AY2018
AY2011
AY2012
AY2015
AY2016
AY2019
AY2012
AY2013
AY2016
AY2017
AY2020
AY2011
AY2013
AY2014
AY2015
AY2017
AY2018
AY2011
AY2012
AY2014
AY2015
AY2016
AY2018
AY2019
AY2012
AY2013
AY2015
AY2016
AY2017
AY2019
AY2020
AY2013
AY2014
AY2017
AY2018
AY2020
TRV AIG CB HIG WRB
Stated Reserves GS Estimated Reserves
Exhibit 26: Schedule P reserves vs GS estimated reserves by product

45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
Stated Resv
Stated Resv
Stated Resv
Stated Resv
Stated Resv
GSe Resv
GSe Resv
GSe Resv
GSe Resv
GSe Resv
TRV AIG CB HIG WRB
Comm. Auto Liab Comm. Multi Peril Other Liab. (Claims) Other Liab. (OC) Priv. Pass. Auto Liab. Workers' Comp All other
22 November 2021 20
5. Shifting Distribution in Personal Markets
We expect auto premium growth and market share gains to favor companies with
strong brands, direct distribution capabilities, and efficient expense profiles. Over
multiple decades, auto leaders PGR and GEICO have leveraged these capabilities to go
from a combined ~5% market share to 27% today, taking share from those distributing
via the agency channel (mostly exclusive agents). We think branding and direct
distribution will become even more important as the insured population becomes
increasingly digitally oriented and seeks a seamless shopping experience, but recognize
that the agency channel will be important over near- and medium-term timelines. Within
the agency channel, we prefer independent agency distribution over exclusive
relationships, as we believe the channel provides greater efficiency and choice for
insureds, who are making their purchase decision based primarily on price.
Within our coverage universe we expect PGR and to benefit more than ALL from direct
distribution while others produce a relatively immaterial, but above-average growth from
the channel. ALL stands out as deriving the majority of its premium from exclusive
agents, while AIG, CB, HIG, and TRV largely leverage the independent agency channels.
We expect 5% average growth for our coverage group over each of the next three
years, supported by positive rate increases. This compares to 5% average annual NPW
growth for the personal auto industry over the last 5 years.
22 November 2021 21
Valuation Methodology
Insurers leverage their balance sheets to take on the risk of others, with the expectation
of generating a return that clears their cost of capital. Given this dynamic, it is our view
that a book-value to ROE methodology is the most appropriate valuation measure for
P&C insurers. Furthermore, as risk takers, insurers often face material
catastrophe-driven volatility or see earnings meaningfully impacted by legacy reserve
true-ups. These can have a significant impact on quarterly and even annual earnings,
making earnings-based valuations less meaningful.
We apply a price-to-book valuation excluding AOCI (accumulated other comprehensive

income), which reflects unrealized gains and losses. The timing of the realization of
these gains/losses is difficult to predict and is often irrelevant - with companies often
holding assets to maturity.
The price-to-book multiple is determined by an ROE-driven regression, to which we may

assign a premium or multiple depending on the company’s business mix, underwriting
margin stability, revenue growth outlook, reserving practices, and other adjustments.
We apply the adjusted multiple to one-year ahead book value per share ex-AOCI.
Exhibit 27: Coverage group Price-to-book multiple vs. Operating Exhibit 28: P&C insurer group Price-to-book vs. Factset Consensus
ROE; trailing 5-year average NTM Operating ROE regression
Operating ROE has proven to be a meaningful determinant of book-value The regression for a wider group of P&C stocks is less meaningul, but
multiples still material. Correlation became less meaningful over the pandemic.
4.5x
4.0x Commercial lines PGR
y = 49.281x2 + 1.3959x + 0.7503
Personal lines R² = 0.9186 4.0x
3.5x
5-year average P/B multiple ex AOCI
Price-to-Book-Value, excl AOCI
3.5x
3.0x
3.0x
2.5x 2018-2019
2.5x
y = 84.87x2 - 9.5173x + 1.436
WRB
2.0x ALL R² = 0.644
TRV 2.0x
1.5x CB 1.5x Trailing 2 Yr from today
AIG y = 95.026x2 - 9.6845x + 1.3547
1.0x HIG 1.0x R² = 0.5632
0.5x 0.5x
0.0x
0.0x
0% 5% 10% 15% 20% 25% 30%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24%
Operating ROE (NTM)
5-year average Operating ROE
Source: SNL Financial, Company data, Goldman Sachs Global Investment Research Source: FactSet, Company data, Goldman Sachs Global Investment Research
22 November 2021 22
Exhibit 29: Regression implied P/B ex AOCI Multiples vs. GS Exhibit 30: 5-year average Operating ROE vs. Operating ROE
assigned multiples and current market multiples stability
3.5x
3.0x
2.5x
2.0x
1.5x
1.0x
0.5x
PGR WRB CB HIG TRV ALL AIG
Regression Implied P/B ex AOCI (trailing 2 Yr) GS Assigned P/B ex AOCI Current P/B ex AOCI
Source: Company data, Goldman Sachs Global Investment Research P/B multiple shown next to company ticker, and represents the trailing 5-year average. For ALL
and PGR the data represented for both 3 and 5 year periods exlcudes 2020 due to the outsized
pandemic related impact on profitability. Timeframes still represent trailing 3 and 5 year periods,
yet are pushed back one year.
Source: SNL FInancial, Company data, Goldman Sachs Global Investment Research
Exhibit 31: underwriting margin vs. underlying loss ratio stability Exhibit 32: Combined ratio coefficient of deviation
While insurers have generally improved underwriting margin variability

in recent years, WRB has maintained stability over longer time frames
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
10 Yr 5 Yr 3 Yr
P/B multiple shown next to company ticker, and represents the trailing 5-year average. For ALL Source: Company data, Goldman Sachs Global Investment Research
and PGR the data represented for both 3 and 5 year periods excludes 2020 due to the outsized
pandemic related impact on profitability. Timeframes still represent trailing 3 and 5 year periods,
yet are pushed back one year.
22 November 2021 23
Share Performance
Exhibit 33: Stock Price change Attribution YTD Exhibit 34: Stock price change vs. consensus EPS revisions:
YTD price perofrmance has been driven by a mix of multiple expansion Beginning of 3Q21 P&C Earnings - Present
and earnings revisions for P&C insurers and driven by multiple the correlation between insurance stock performance and EPS
expansion for the broader stock market. revisions improved has steadlily improved over recent quarters,
following a lack of correlation during 2020
EPS revisions P/E multiple change Stock price change 8%

CB
60% 6%
53% S&P 500 WRB
48% 4%
Stock price change

50%
2%
40%
0% PGR TRV
30% 26% 25% -2%
HIG
20% 14% -4%
AIG
10% 5% -6%
-4% -8%
0% y = 0.7732x + 0.0037
-10% R² = 0.7094
-10% ALL
-12%
-20% -14%
HIG
ALL
CB
PGR
AIG
TRV
S&P 500
-15% -10% -5% 0% 5% 10%
EPS revisions
EPS revisions are based on 2022 estimates. EPS revisions are based on 2022 estimates. Data from 10/18/21 (day before TRV earnings) -
11/19/2021.
Source: FactSet, Goldman Sachs Global Investment Research
Exhibit 35: Historical stock price performance for given shifts in 10 yr yield
Life insurers are most levered to interest rates, followed by P&C insurers, and brokers.
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
S&P P&C S&P Life S&P Ins. S&P P&C S&P Life S&P Ins. S&P P&C S&P Life S&P Ins. S&P P&C S&P Life S&P Ins.
Group Group Broker Group Group Broker Group Group Broker Group Group Broker
Group Group Group Group
10yr Yield Sharp Decrease 10yr Yield Sharp Increase 10yr Yield Downtrend 10yr Yield Uptrend
Price return vs. S&P 500 Price return vs. S&P Financials
For selected periods within the years 2000 - 2021. A sharp increase/decrease represents a period of less than 6 months, whereas a uptrend/downtrend is
for a period of greater than 1.5 years.
22 November 2021 24
Commercial Lines
Our outlook on commercial lines is favorable, largely stemming from several years of
compounding rate increases that serve to positively impact these companies’ economic
outlooks in two ways. First and foremost, pricing is in excess of loss trend, which
should lead to margin improvement. Secondly, companies tend to conservatively book
loss ratios at this stage in the hardening phase of the P&C cycle, which implies there
could be reserve releases from recent accident years. In our view, this second point has
partially alleviated concerns about prior year reserve development going forward (in
aggregate), as there have been concerns regarding social inflation and loss reserves for
certain prior years (particularly AY2015-AY2018). Additionally, the combination of higher
pricing and a strong/rebounding economy sets the stage for premium growth, which
leads to operating leverage.
The potential downside for this group, in our view, surrounds either a deceleration in
pricing that is either quicker or more extreme than the market currently expects, or a
revived social inflation narrative. Nonetheless, we think the group currently has tailwinds
and that continued rate increases should be supported by climate change, low
investment yields and the recognition (to at least some extent) of social inflation factors.
Exhibit 36: Commercial lines market share

Global Commercial P&C DPW - $692bn U.S. Commercial P&C DPW by Product U.S. Commercial P&C DPW market share
Medical Professional Liability, $10, 3%

Tokio Marine
Other, $34, 9% Chubb
6%
Nationwide 15%
7%
Marine Lines Other and Product
Combined, $30, 8% Liability Lines The Hartford
Combined, $92, 25% 7%
Travelers
International, $328, 15%
CNA
47% United States, $364, Commercial Auto, 9%
53% $46, 13%
Berkshire Hathaway
Fire and Allied Lines
Inc.
Commercial Combined, $54, 15%
9% Liberty Mutual
Multiple Peril, $47,
13%
13% Workers'
AIG
Compensation, $51,
9% Zurich
14%
10%
Exhibit 37: Commercial lines direct premiums written (DPW) by Exhibit 38: Pricing vs. loss trend for covered companies
distribution channel Industry pricing is in excess of loss trend
Commercial distribution is dominated by independent agents, with
immaterial direct penetration that is centered around small account
business
100%
90%
80%
70%
60% 79% 80% 80% 79% 79% 81% 83% 84% 84% 84% 84%
50%
40%
30%
20%
10% 20% 19% 19% 20% 20% 18% 16% 16% 15% 15% 15%
0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Direct Exclusive Agent Independent Agent
Source: Independent Insurance Agents & Brokers of America, A.M. Best, Goldman Sachs Global Forward estimates are GSe.
Investment Research
22 November 2021 25
Given the magnitude and breadth of price increases at this point in the insurance cycle,
we see pricing continuing as the primary factor driving premium growth
We believe that exposure growth will be a secondary determinant of premium growth,
with differences in business mix driving less meaningful deviations in premium growth
across our coverage names given a more stable economic environment. That said, we
do think there is room for smaller accounts, and business levered to payroll growth, to
see a greater-than-average rebound in exposures. We also see several tailwinds for the
excess and surplus lines market. Note that distribution across our commercial coverage
universe largely represents that of the market (PGR is an exception) in that penetration
remains quite small for direct distribution (Exhibit 37) and distribution is dominated by
independent agents.
Price increases are being led by large accounts, the excess and surplus (E&S)
marketplace, and financial/professional lines + we expect sustained increases for
E&S and international lines. We anticipate a longer-than-typical hard cycle driven by 1)
revaluation of insurer risk appetite driven by climate change and social inflation, and 2)
historically low interest rates which demand a higher portion of insurer ROE from
underwriting. While price increases have begun to decelerate, we saw evidence of
leveling out in several insurers’ 3Q21 market commentary. One can observe pricing
increases in virtually all lines of business aside from workers’ compensation, with
pricing exceeding loss cost for the majority. We are also seeing severe increases in lines
such cyber and UK professional lines.
While we see an extended pricing cycle generally for the commercial group, we see the
increases in E&S and international markets as having more staying power. In regard to
E&S markets, we see pricing power stemming from a revaluation of risk by standard
lines insurers, with E&S participants benefiting from greater freedom in pricing and
terms and conditions versus standard lines participants that must work within stricter
rules. E&S is where the marketplace houses unusual and complex risks, and we think
that climate change, technological innovation, and the general increased prevalence of
complex risk will lead to both growth and continued pricing power. This bodes well for
WRB, AIG, and CB.
International pricing increases lagged domestic pricing prior to 2021, though they are
currently in excess of US increases, led by the UK. As such, we see the delayed
international repricing cycle serving to extend the hard cycle beyond that of the
domestic insurers, and there is evidence of this already. Primary beneficiaries include
AIG and CB.
22 November 2021 26
Exhibit 39: GS 2022 Commercial NPW growth and pricing estimates Exhibit 40: Commercial lines pricing by account size
we expect WRB to capture the most exposure growth, stemming from Large accounts have seen the greatest price increases
E&S lines
12%
20%
11%
10% 15%
9% 10%
8%
5%
7%
6% 0%
5%
-5%
4%
3% -10%
2% -15%
1%
-20%
0%
2Q03
4Q03
2Q04
4Q04
2Q05
4Q05
2Q06
4Q06
2Q07
4Q07
2Q08
4Q08
2Q09
4Q09
2Q10
2Q12
4Q12
2Q13
4Q13
2Q14
4Q14
2Q15
4Q15
2Q16
4Q16
2Q17
4Q17
2Q18
4Q18
2Q19
4Q19
2Q20
4Q20
2Q21
4Q10
2Q11
4Q11
CB WRB AIG HIG TRV
NPW growth 22E GSe pricing 22E

Small Medium Large Average
Source: Goldman Sachs Global Investment Research Source: CIAB, Data compiled by Goldman Sachs Global Investment Research
Exhibit 41: Commercial lines pricing by line of business

Umbrella excess & D&O are seeing some of the greatest pricing increases
15%
12%
9%
6%
3%
0%
-3%
-6%
Apr-16
Apr-20
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jul-19
Jul-20
Jul-21
Apr-13
Apr-14
Apr-15
Jan-16
Apr-17
Apr-18
Apr-19
Jan-20
Apr-21
Oct-12
Jan-13
Jan-14
Oct-14
Jan-15
Jan-17
Jan-18
Oct-18
Jan-19
Jan-21
Oct-13
Oct-15
Oct-16
Oct-17
Oct-19
Oct-20
Oct-21
Comm BOP Umbrella / General Liab D&O Prof. Liab Comm Auto Workers' Overall
Property Excess Comp Commercial
Source: MarketScout, Data compiled by Goldman Sachs Global Investment Research
22 November 2021 27
Exhibit 42: Commercial lines pricing by geography Exhibit 43: US surplus lines premium, items (transactions) data
International business should extend the global repricing cycle for from stamping Offices
those that have exposure to it Surplus lines stamping offices point to strong double-digit rate
increases in 1H21, partially rebounding exposure growth
50% 25%
40% 20%
15%
30%
10%
20%
5%
10%
0%
0% -5%
Q3 2018
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
Q4 2018
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
2H16
1H17
2H17
1H18
2H18
1H19
2H19
1H20
2H20
1H21
-10%
TTM items YoY change TTM premium per items YoY change
Global U.S. U.K.
TTM premiums YoY change
Marsh Global Insurance Pricing Index. Data skewed towards large accounts. Comprises data from 15 states (incl. CA, TX, FL, NY). Note 1H20 TTM data is impacted by
extended filing dates in many states. Stamping office filings may serve as a lagging indicator as
filings are not due until several months after the business was placed. In the wake of the
Source: Marsh, Data compiled by Goldman Sachs Global Investment Research pandemic, several states extended filing deadlines for surplus lines brokers.
Source: Wholesale & Specialty Insurance Association, Goldman Sachs Global Investment
Research
Exhibit 44: E&S Pricing by Line of Business Exhibit 45: Standard lines vs. surplus lines premium (DPW) growth
E&S pricing has increased since early 2016, and is currently in the and combined ratio
mid-double-digit range on average. E&S pricing has exceeded standard
commercial lines pricing.
20% 25% the surplus lines CR was an average 11pp

better than standard lines CR in years
15% 20%
when surplus lines premium growth was
negative (based on 1 yr lag vs 07 - 11
15%
10% period)
10%
5%
5%
0%
0%
-5% -5%
-10% -10%
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Jul-16
Jul-17
Jul-18
Jul-19
Jul-20
Jul-21
Jan-17
Apr-17
Oct-16
Jan-18
Apr-18
Apr-20
Oct-18
Apr-19
Jan-20
Apr-21
Oct-20
Oct-17
Jan-19
Oct-19
Jan-21
Surplus Lines DPW growth

E&S Property E&S Casualty E&S Professional Lines Standard Commercial Standard Lines DPW growth
Standard lines CR less Surplus lines CR (above 0% = surplus lines better)
Surplus lines combined ratio (CR) represents A.M. Best’s Domestic Professional Surplus Lines
(DPSL) composite which has historically accounted for 67-75% of the total surplus lines market.
DPSL companies must write atleast 50% of their premium on a nonadmitted basis.
Source: A.M. Best, SNL Financial
We use a multi-pronged approach to analyzing loss ratios that leverages both historical
and estimated pricing and loss trend, tailored for each company based on business mix
n Approach #1 - historical loss trend build (Exhibit 46 and approach #1 in Exhibit
47): For this approach, we take historical ultimate loss ratio picks for a given “index”
year, and model forward historical loss trend and pricing. Historical pricing and loss
trend assumptions are taken from company disclosures where available and are GS
assumptions if not available (as noted above, loss trend is not typically disclosed).
Using this approach allows us to estimate loss ratio adequacy over a longer period
and aims to inform us as to the accuracy of the companies most recent loss picks,
so that we can use an accurate base to which project our future estimates. This
22 November 2021 28
approach creates earned premium and claim cost indices for each company
throughout the analyzed period, and is another tool for analyzing reserve adequacy.
We believe this important piece to determining future loss picks, as we believe a
company’s confidence level in its reserves supports its future loss pick
decision-making process. Namely, that those companies that are most confident
about reserves are likely to pick the favorable end of actuarial implied ranges
for future loss picks.
o This approach is demonstrated in Exhibit 46 where we take the cumulative
impact of modeled loss ratio picks versus reported picks, and translate it into a
percentage of book value impact in the hypothetical scenario in which the
modeled difference was immediately corrected.
Approach #2 - assume most recent year loss picks are accurate (Exhibit 47): In
our secondary approach, we aim to acknowledge the potential downfalls of approach
#1 by assuming each company’s 2020 initial loss pick is completely accurate
(however, historically this is almost never true) and then build loss ratios from the
same GS estimated pricing and loss trend assumptions used in approach #1.
Inherently, our historical analysis in approach #1 is not perfect and falls short
particularly when attempting to account for things like changes in terms and
conditions and business mix shifts (especially within product lines).
o This approach is more commonly used as it is simple. We place a larger
weighting on approach #1 because it is more detailed and predictive, in our
view.
22 November 2021 29
Exhibit 46: Commercial underwriting analysis: past + future underwriting considered together
Red dotted lines indicate where we beleive average historical loss trend has been for each company; index year through 2020. On a go forward basis
(2021E-2023E) for each company and scenario, we use our own estimate of forward loss trend and pricing.
Prior underwriting (index Prior underwriting + reported reserve Future underwriting (built
Prior + future underwriting
year - AY2020) adjustements off prior trends)
A B C=A-B D E=C+D
Cumulative Gse
Gse
after-tax Cumulative
Cumulative Gse Implied
(Adverse)/ Total after-tax
after-tax 2021E - 2023E
As a % of Favorable (deficiency)/Re As a % of As a % of reserve As a % of
reserve Reserve
Book Value development dundancy $ Book Value Book Value (deficiency)/R Book Value
(deficiency)/Re (deficiency)/Re
for applicable through 2020 edundancy $
dundancy $ dundancy $
AY's since index through
through 2020
year 2023E
AIG - indexed 2016 - NA Commercial
@ 2% loss trend -1141 -2.0% ($136) ($1,005) -1.7% $693 1.2% ($312) -1%
@ 3% loss trend ($1,654) -2.8% ($136) ($1,518) -2.6% $75 0.1% ($1,443) -2%
@ 4% loss trend ($2,178) -3.7% ($136) ($2,041) -3.5% ($561) -1.0% ($2,602) -4%
@ 5% loss trend ($2,711) -4.7% ($136) ($2,575) -4.4% ($1,216) -2.1% ($3,790) -6%
CB - indexed 2016 - NA Commercial
@ 2% loss trend 764 1.3% ($467) $1,231 2.1% $4,001 6.9% $5,232 9%
@ 3% loss trend $138 0.2% ($467) $605 1.0% $3,153 5.4% $3,758 6%
@ 4% loss trend ($501) -0.9% ($467) ($34) -0.1% $2,280 3.9% $2,246 4%
@ 5% loss trend ($1,153) -2.0% ($467) ($686) -1.2% $1,381 2.4% $695 1%
HIG - indexed 2012 - Commercial Insurance
@ 2% loss trend $313 1.8% $243 $70 0.4% $992 5.7% $1,062 6%
@ 3% loss trend ($829) -4.8% $243 ($1,072) -6.2% ($36) -0.2% ($1,108) -6%
@ 4% loss trend ($2,029) -11.7% $243 ($2,272) -13.1% ($1,135) -6.5% ($3,407) -20%
@ 5% loss trend ($3,288) -19.0% $243 ($3,531) -20.4% ($2,312) -13.3% ($5,843) -34%
TRV - indexed 2012 - Business Insurance
@ 2% loss trend $3,410 12.5% $173 $3,237 11.8% $2,143 7.8% $5,380 20%
@ 3% loss trend $1,112 4.1% $173 $939 3.4% $377 1.4% $1,316 5%
@ 4% loss trend ($1,298) -4.7% $173 ($1,471) -5.4% ($1,513) -5.5% ($2,985) -11%
@ 5% loss trend ($3,826) -14.0% $173 ($3,999) -14.6% ($3,535) -12.9% ($7,535) -28%
WRB - indexed 2012 - Insurance
@ 2% loss trend $399 6.0% $21 $378 6.0% $1,474 22.0% $1,852 28%
@ 3% loss trend ($499) -7.4% $21 ($520) -7.8% $696 10.4% $176 3%
@ 4% loss trend ($1,440) -21.5% $21 ($1,462) -21.8% ($136) -2.0% ($1,598) -24%
@ 5% loss trend ($2,428) -36.2% $21 ($2,449) -36.6% ($1,026) -15.3% ($3,476) -52%
22 November 2021 30
Exhibit 47: Commercial underwriting margin analysis: rate vs loss trend build
GS Adj. 2020 GSe
Approach #1
loss ratio trend

AIG 74.9% 5.5% 14.3% 11.6% 8.4% 69.2% 65.4% 63.7% 67.0% 65.9% 65.4% 66.9% 65.3% 64.3% 2.3% 0.1% -0.6% -0.1% -0.7% -1.1%
CB 64.7% 5.5% 13.5% 10.8% 8.1% 60.1% 57.3% 55.9% 62.6% 62.1% 61.7% 62.7% 61.4% 61.2% -2.5% -4.1% -5.4% 0.0% -0.8% -0.4%
HIG 59.2% 3.7% 7.1% 5.8% 5.3% 57.4% 56.2% 55.4% 56.7% 56.0% 55.8% 56.5% 55.7% 55.7% 0.9% 0.4% -0.4% -0.1% -0.3% -0.1%
TRV 65.4% 5.0% 7.1% 5.9% 4.7% 63.4% 63.6% 63.7% 61.6% 61.2% 60.7% 61.5% 61.2% 60.7% 1.9% 2.4% 3.0% -0.1% 0.0% 0.0%
WRB 61.7% 4.0% 10.1% 8.1% 6.5% 58.3% 56.1% 54.8% 59.4% 58.7% 58.5% 59.4% 58.4% 58.0% -1.1% -2.3% -3.2% 0.1% -0.3% -0.5%
Actual 2020 GSe
Approach #2
loss ratio trend

AIG 70.9% 5.5% 14.3% 11.6% 8.4% 65.5% 61.9% 60.3% 67.0% 65.9% 65.4% 66.9% 65.3% 64.3% -1.4% -3.3% -4.0% -0.1% -0.7% -1.1%
CB 64.3% 5.5% 13.5% 10.8% 8.1% 59.7% 56.9% 55.5% 62.6% 62.1% 61.7% 62.7% 61.4% 61.2% -2.9% -4.5% -5.7% 0.0% -0.8% -0.4%
HIG 58.5% 3.7% 7.1% 5.8% 5.3% 56.7% 55.5% 54.7% 56.7% 56.0% 55.8% 56.5% 55.7% 55.7% 0.2% -0.3% -1.1% -0.1% -0.3% -0.1%
TRV 64.6% 5.0% 7.1% 5.9% 4.7% 62.6% 62.8% 62.9% 61.6% 61.2% 60.7% 61.5% 61.2% 60.7% 1.1% 1.6% 2.2% -0.1% 0.0% 0.0%
WRB 60.1% 4.0% 10.1% 8.1% 6.5% 56.8% 54.7% 53.4% 59.4% 58.7% 58.5% 59.4% 58.4% 58.0% -2.6% -3.7% -4.6% 0.1% -0.3% -0.5%
Approach #1 Approach #2
75% GSe Underlying loss ratio pick Implied ultimate loss ratio 68% GSe Underlying loss ratio pick Implied ultimate loss ratio
66%
70% 64%
62%
65%
60%
58%
60%
56%
55% 54%
52%
50% 50%
2021E
2022E
2023E
2021E
2022E
2023E
2021E
2022E
2023E
2021E
2022E
2023E
2021E
2022E
2023E
2021E
2022E
2023E
2021E
2022E
2023E
2021E
2022E
2023E
2021E
2022E
2023E
2021E
2022E
2023E
AIG CB HIG TRV WRB AIG CB HIG TRV WRB
HIG 2020 underlying loss ratio ex COVID for comparison purposes. HIG and TRV 2021E implied ultimate loss ratios adjusted for one-time loss ratio impacts disclosed as of 3Q21. Reflects NA commercial
segment for AIG and CB.
Conclusions and explanations from our underlying loss ratio analysis:
n AIG: Consistent with AIG’s multi-year re-underwriting process and business mix, the
company has seen the greatest price increases amongst our commercial coverage
commercial group, and the greatest positive impact from changes in terms and
conditions. We model a 5.5% loss trend going forward given the company large
account orientation, similarities to CB, and company commentary (most recently
surrounding commercial loss trends by line in the range of 3.5%-10%). This
combination of rate vs. loss trend has led to the greatest underlying loss ratio
improvement YTD across our coverage universe, and we expect more to come, with
inherent conservatism built in going forward with respect to our loss picks vs.
implied levels in approach 2 above (Implied vs. GS). Approach #1, however implies a
less positive picture as our historical rate vs. loss trend analysis indicates the need
to worsen our starting pick. We take this with a grain of salt as the approach fails to
capture changes in terms and conditions within which AIG has had the most
meaningful changes and has indicated these changes can have an impact that rivals
price. As such, we assume a position that roughly averages the two approaches,
resulting in our belief that 22E/23E loss picks will be booked quite conservatively,
and 2021E less conservative and with potential for reserve strengthening.
n CB: The company screens as the best positioned amongst our coverage group
in that we feel quite good about reserves and the company’s 2020 pick, and we
expect the company to show margin improvement while also booking quite
conservatively, implying future favorable reserve development. We expect
double-digit rate increases to earn in over 2022 combined with the companies
22 November 2021 31
disclosed loss trend of 5.5%. Given the company’s exposure to large accounts and
E&S, we also expect the company to have benefited from meaningful changes in
terms and conditions, though to a lesser degree than AIG.
n HIG: The company screens in the middle of our coverage group based on this
analysis. Despite its 2019 acquisition of Navigators Group, the company is not a
primary beneficiary of hard market pricing given its small commercial and workers’
compensation weighting. However, we do assign HIG the lowest expected loss
trend given favorable frequency trends in WC. We note that our backward looking
analysis in approach #1 implies an upward adjustment for our 2020 loss ratio starting
point, yet our Schedule P analysis implies a much more positive reserve picture. So
ultimately, as with AIG, we see reasons to be more optimistic than the implications
from approach #1, but note that even in approach #2 the company appears to be
booking loss ratios with less conservatism than some peers. Additionally, it is
difficult to capture the portion of exposure in the case of workers’ comp that acts
like price, leading us to believe that HIG is better positioned than this analysis may
imply.
n TRV: On a relative basis amongst our coverage group we see TRV as stretching the
most for the margin improvement that it is booking. In both approaches we see that
the underlying margin improvement expected by GS and the Street is not explained
by rate and trend. That being said, we recognize the company’s weighting to WC and
certain property lines that have exposures which act like rate, and our schedule P
analysis for the company implies solid reserves. TRV management has also been
vocal about changes in terms and conditions. Nonetheless, the magnitude of the
discrepancy between the implied ultimate and recent picks/Street expectations is
the largest amongst our coverage.
n WRB: The company screens just below CB for margin improvement and
conservatism over the next several years, even when we adjust our 2020 loss ratio
1.5pp higher in approach #1 to capture the reserve uncertainty posed by our analysis
in Exhibit 46. We estimate that the company’s exposure to smaller accounts
warrants a lower average loss trend (GS 4.0%) versus many coverage peers, and its
E&S exposure aids its ability to get rate increases.
22 November 2021 32
Personal Lines
In contrast to commercial lines, we have a more cautious near-term outlook on personal

lines stemming from more direct near-term inflationary pressures, as well as an abating
pandemic-related accident frequency benefit in auto, and to a lesser extent, the
increased prevalence of weather events in homeowners’. The personal lines group
reported mixed underwriting results in the pandemic era as auto profitability increased
(despite premium rebates) due to less driving activity and homeowners’ posted below
average results due to heightened weather activity. We see a difficult 6-9 month period
for personal lines insurers underwriting profitability as inflationary pressures on key
claim related costs remain - such as home building/repair materials and used/rental cars.
Given the short duration of personal lines claims relative to many commercial products,
we see near-term pricing increases across both lines to counteract inflation.
Exhibit 48: US personal lines market share

Personal Lines DPW $Bn Auto market share $Bn Home market share $Bn
State Farm State Farm

16% 17%
All Other, 24%
Travelers All Other, 39% Allstate Corp
2% Berkshire 9%
Home, $115 ,
American Family Hathaway Inc.
32%
Insurance 14%
Auto, $249 , 68% USAA
2%
Nationwide 6%
2% Progressive
13% Farmers
Liberty Mutual Insurance
5% USAA 6%
Allstate Corp Progressive Chubb
Farmers 6%
11% 2% 3%
Insurance American Family Liberty Mutual
5% Nationwide Insurance Travelers 6%
3% 4% 5%
Source: SNL Financial, Data compiled by Goldman Sachs Global Investment Research
Exhibit 49: Personal Lines Combined Ratio (US statutory)
130%
120%
110%
100%
90%
80%
70%
60%
50%
P&C AIG ALL CB HIG PGR TRV P&C AIG ALL CB HIG PGR TRV
Industry Industry
Auto Home
20 yr avg 10 yr avg 5 yr average 2020
22 November 2021 33
Personal Auto
We expect auto premium growth and market share gains to favor companies with
strong brands, direct distribution capabilities, and efficient expense profiles. Over
multiple decades, auto leaders PGR and GEICO have leveraged these capabilities to go
from a combined ~5% market share to 27% today, taking share from those distributing
via the agency channel (mostly exclusive agents). We think branding and direct
distribution will become even more important as the insured population becomes
increasingly digitally oriented and seeks for a seamless shopping experience, but
recognize that the agency channel will be important over near- and medium-term
timelines. Within the agency channel, we prefer independent agency distribution over
exclusive relationships, as we believe the independent agency channel provides greater
efficiency and choice for insureds, who are primarily making their purchase decision
based on price.
Exhibit 50: Personal auto net premium written growth

We expect 5% growth on average across our coverage group over each of
the next three years
20%
15%
10%
5%
0%
-5%
-10%
-15%
2017 2018 2019 2020 2021E 2022E 2023E 2024E
ALL HIG PGR TRV P&C Industry
Within our coverage universe we expect PGR and to a lesser extent ALL to benefit from
direct distribution while others produce relatively immaterial, but above-average growth
from the channel. ALL stands out as deriving the majority of its premium from exclusive
agents, while AIG, CB, HIG, and TRV largely leverage the independent agency channels.
We expect 5% average growth for our coverage group over each of the next three
years, supported by positive rate increases. This compares to 5% average annual NPW
growth for the personal auto industry over the last 5 years.
22 November 2021 34
Exhibit 51: Personal auto market share (US) Exhibit 52: Indexed personal auto premium growth
GEICO and PGR gained share while market leaders lost share PGR, BRK (GEICO), and USAA are the most efficient personal lines
insurers by expense and LAE ratio
61% 1,100
1,000
49% 900
800
700
600
500
400
14% 300
13%
3% 200
100
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
1996
1997
1999
2000
2002
2003
2005
2006
2008
2009
2011
2012
2014
2015
2017
2018
2020
1998
2001
2004
2007
2010
2013
2016
2019
ALL GEICO PGR USAA P&C Industry
GEICO PGR Top 10 (ex PGR & GEICO)
Source: SNL Financial, Company data, Goldman Sachs Global Investment Research Source: SNL Financial, Company data, Goldman Sachs Global Investment Research
Exhibit 53: Private Auto Direct Premium Written (DPW) by Exhibit 54: Share of the Direct Auto Market
Distribution Channel GEICO and PGR have dominated the DTC Auto market, with PGR taking
Today, we beleive direct distribution could represent 30%+ of auto the most share over last several years (for which we have data).
premiums
100%
90% 23% 22% 22% 22% 23% 20% 19%
28% 28% 27% 24%
32% 32% 33% 32% 31% 31% 31% 30% 30% 31% 31%
80% 3% 3%
4% 4% 4% 3% 3%
3%
70%
20% 20% 21% 20% 22% 24%
20% 20% 20% 20% 20%
60%
50%
48% 46% 45% 43%
52% 50% 50% 49% 48%
53% 49% 40%
30%
53% 52% 52% 52% 53% 54% 54% 54% 54% 54% 54%
20%
21% 22% 24% 25% 26%
16% 17% 18% 18% 19% 20% 10%
0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Direct Exclusive Agent Independent Agent GEICO PGR ALL Other
Source: Independent Insurance Agents & Brokers of America, A.M. Best, Goldman Sachs Global Source: Independent Insurance Agents & Brokers of America, A.M. Best, Goldman Sachs Global
Investment Research Investment Research
Given recent inflationary trends and the consensus expectation for inflationary pressure
to remain for at least the next 6-9 months, we see price increases for personal auto
insurers continuing. Insurers regularly price for claim severity given its predictable
nature, whereas claim frequency is more difficult to predict. Despite evidence of
inflationary pressures, however, historically high underwriting profitability over the past
1.5 years due to less driving activity is still fresh in regulators’ minds, as insurers look to
receive future rate increase approvals on a state-by-state basis. While we see that
insurers have started to get approvals on mid-single-digit price increases, we expect
aggregate price increases to still trail severity, which is currently in the double-digit
range.
Amongst our coverage group, we think PGR has the greatest ability to recognize
changing trends and re-price quickly, with evidence of this dynamic coming through
already in rate filings. Policies typically have 6-month duration, allowing for pricing action
to quickly move through the book, yet we note HIG largely has 12-month policies, which
should translate into delayed repricing.
22 November 2021 35
Exhibit 55: Trailing 6 months personal auto rate filings based on submitted date
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
Jul-18
Nov-19
Jul-20
Nov-15
Nov-17
Jul-16
Nov-16
Jul-17
Nov-18
Nov-20
Nov-21
Sep-16
Jul-21
May-16
May-17
Sep-17
May-18
Mar-19
Jul-19
Sep-18
May-20
Sep-20
Jan-21
Mar-21
Sep-21
Jan-16
Mar-16
Jan-17
Mar-17
Jan-18
Mar-18
May-19
Sep-19
May-21
Jan-19
Jan-20
Mar-20
Industry ALL PGR GEICO State Farm
TRV HIG Nationwide Liberty Mutual USAA
Source: SNL Financial, Data compiled by Goldman Sachs Global Investment Research
Accident severity: We are seeing supply chain pressures as a result of the economic
reopening having clear and direct impacts on auto claim costs, with the impact most
pronounced on rental/used cars. The average accident has also been more severe, as
speeding levels increased with the onset of the pandemic and remain elevated, and as a
greater degree of lower severity commuting-related accidents occur amidst an increase
in work-from-home. We believe speeding may be contributing to higher bodily injury
severity YTD (double-digit increases for PGR), as we see benign medical cost inflation. In
our view, the supply chain related impacts to inflation should directionally track the CPI,
and the GS view and FactSet consensus CPI estimates are largely aligned, with inflation
remaining elevated in the 4%+ range in 1H22, but trending towards ~2% in 2023. We
see high-single digit severity increases on average through at least 1H22 and impacting
our coverage names to a roughly similar degree.
Accident frequency: Accident frequency remains below 2019 levels for most covered
names, though it has increased gradually (albeit, non-linearly) following ~40%+ declines
in 2Q20 amidst stay-at-home measures. Frequency decreased 3% on average from
2017-2019, and we expect this trend to continue over the longer term and as vehicles
become safer and leverage technology such as advanced driver-assistance systems
(ADAS; see GS auto analyst Mark Delaney’s ADAS note here). In addition, permanently
increased levels of remote work would have a meaningful impact on driving activity as
commuting accounts for nearly 30% of household vehicle miles traveled (VMT).
Commuting time periods account for an outsized portion of accidents and as such
reduced congestion during these times has a greater impact than the reduced VMT
might imply, partially offset by the fact that commuting accidents are often lower
severity.
Intuitively, we expect accident frequency to continue increasing YoY from depressed

levels in 2020. However, we expect it to remain below 2019 levels. Near term, we also
see elevated gasoline prices (highest levels since late 2014) as aiding accident frequency
as we observe a correlation of gas price increases and VMT on a lagged basis. The
22 November 2021 36
pandemic-related VMT declines are now primarily centered around northeast states,
which translates into favoring TRV, ALL, and HIG on a purely geographical premium
basis. We also note that HIG’s AARP customer base may elect to drive less during
pandemic uncertainty. Additionally, ALL has contended that it has benefited from its
exclusive agents selling primarily in urban areas, noting that there has been a 4-5pp
favorable difference between the net change in urban driving being down more than
rural driving.
Exhibit 56: Personal auto claim inflation trends Exhibit 57: Trailing 6M change in gas price vs YoY change in VMT
Claim costs have increased in recent months Currently elevated gas prices will likely lead to a continuation of lower
VMT levels
20% 30%
15% +73% on avg.

20%
April - August
10% 2021
10%
5%
change in gas price

0%
0%
-5% -10%
-10%
-20%
-15%
-30%
-20%
y = -12.138x + 0.1648
-40% R² = 0.4989
-1% 0% 1% 1% 2% 2% 3% 3% 4% 4% 5%
motor vehicle repair new cars and trucks motor vehicle body work car and truck rental YoY change in vehicle miles driven
30%
Source: BLS, Data compiled by Goldman Sachs Global Investment Research data for 5 year period from July 2014 through July 2019.
Source: BLS, FactSet, Goldman Sachs Global Investment Research
Exhibit 58: GSe average VMT benefit for June 2021 - August 2021 based on state private auto marketshare
1.0%
0.5%
0.0%
-0.5%
-1.0%
-1.5%
-2.0%
-2.5%
-3.0%
-3.5%
-4.0%
Nation TRV Liberty ALL HIG GEICO State Farm PGR USAA ROOT
wide Mutual
Nation Liberty State
wide TRV Mutual ALL HIG GEICO Farm PGR USAA ROOT
Jun-21 0.0% -0.3% 0.0% 0.1% 0.2% 0.0% 0.7% 1.0% 0.7% 2.1%
Jul-21 -2.5% -2.9% -2.6% -2.4% -2.3% -2.5% -1.8% -1.8% -1.6% -0.4%
Aug-21 -7.9% -7.1% -6.7% -6.9% -6.8% -6.3% -7.0% -6.6% -6.4% -5.3%
Average -3.5% -3.4% -3.1% -3.1% -3.0% -2.9% -2.7% -2.5% -2.4% -1.2%
Source: Federal Highway Administration, SNL, Goldman Sachs Global Investment Research
22 November 2021 37
Exhibit 59: VMT Change vs. 2019 on All Estimated Roads by Region and State
Mar-21 Apr-21 May-21 Jun-21 Jul-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21
Connecticut -10% -15% -9% -3% -6% Alabama -3% -7% -5% 0% -3%
Maine -6% -10% -3% 3% -4% Arkansas 4% 0% 6% 5% 3%
Massachusetts -13% -18% -13% -9% -12% Kentucky 1% -4% -2% 2% 0%
New Hampshire -10% -10% -6% 0% -6% Louisiana 0% 2% 3% -3% -2%
New Jersey -13% -22% -11% -6% -8% Mississippi -3% -2% 0% 3% 3%
New York -8% -15% -10% -4% -8% Oklahoma 5% -4% 1% 1% -2%
Pennsylvania -7% -14% -9% -3% -5% Tennessee 3% -2% -1% 6% 5%
Rhode Island -8% -16% -7% 3% -10% Texas 1% -5% -2% 2% -1%
Vermont -13% -20% -12% -10% -8% South Gulf 1% -4% -1% 2% 0%
Northeast -10% -16% -10% -4% -8%
Alaska 1% 1% -2% 8% 5%
Delaware -4% -19% -7% 2% -17% Arizona 10% 8% 10% 12% 9%
District of Columbia 6% 42% -13% -3% -8% California -8% -12% -5% -2% -4%
Florida -3% -10% -4% 5% 2% Colorado 0% -10% -3% 3% -2%
Georgia -4% -6% -6% 2% -1% Hawaii -14% -22% -16% -8% -10%
Maryland -9% -16% -11% -6% -3% Idaho 12% 8% 9% 15% 10%
North Carolina -6% -9% -8% 1% -3% Montana 13% 2% 4% 9% 7%
South Carolina -3% -8% -4% 3% 1% Nevada -2% -5% -2% 7% 1%
Virginia -8% -13% -11% -2% -2% New Mexico -1% -3% 2% 3% 2%
West Virginia -6% -12% -10% -5% -5% Oregon -2% -4% -6% -3% -2%
South Atlantic -5% -10% -7% 1% -1% Utah 3% 3% 4% 5% 6%
Washington -2% -11% -5% -2% -1%
Illinois -7% -8% -7% -7% -8% Wyoming 2% -7% -2% 3% 2%
Indiana -1% -5% -1% 3% 4% West -3% -7% -2% 1% -1%
Iowa 0% -3% 1% 1% 0%
Kansas -4% -12% -2% -2% -3%
Michigan -4% -21% -8% 0% -8%
Minnesota -1% -8% -4% 1% -3%

Missouri 5% -5% 3% 11% 3%
Nebraska 8% -6% 0% 1% 2%
North Dakota -7% -7% -7% -4% -9%
Ohio -3% -8% -5% 1% -2%
South Dakota 13% 9% 9% 5% 6%
Wisconsin -3% -7% -6% 2% 0%
North Central -2% -9% -4% 1% -2%
TOTALS -3% -9% -4% 1% -2%
Source: Federal Highway Administration, Data compiled by Goldman Sachs Global Investment Research
Exhibit 60: Breakdown of Vehicle Miles Traveled (VMT) by Type
15%, Shopping 18%, Other
Family/Personal
5%, Errands
External
28%, To
or from
Household, 80%
work
24%, Social
and
15%, Commercial 15%, Other
Recreational
Source: 2009 National Household Travel survey, Sacramento Area Council of Governments
In our view, underwriting margins will be pressure over the coming quarters with
inflation and its duration representing the biggest unknown in the margin
equation. Our base case scenario has claim inflation deceleration following a path
similar to that of the FactSet consensus CPI forecasts over the coming years. Were
confident that accident frequency has several factors that should make it a positive
factor on absolute levels, and pricing should follow claim inflation. Ultimately, while the
next several quarters may be pressured, we don’t see 2022 industry underwriting
22 November 2021 38
profitability being much worse than the historical average, and may even remain
stronger than the historical average. We note that while we model deteriorating
underwriting margins in 2022 for most of our coverage compared to 2019 levels, auto
insurers were already over-earning in 2019, so deterioration doesn’t necessarily imply
poor absolute margins.
To date, PGR’s margins have deteriorated the most versus 2019 levels stemming from
lower pricing prior to the pandemic and a geographical footprint that is underweight the
northeast and heavy in Florida. However, we see PGR’s margins improving as compared
to ALL given earlier recognition and action as it relates to inflation.
Exhibit 61: Personal Auto Underlying Loss ratio Improvement versus 2019 (+fav/-unfav)
25%
20%
15%
10%
5%
0%
-5%
-10%
1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21E 1Q22E 2Q22E 3Q22E 4Q22E
ALL PGR TRV HIG
HIG margin improvement reflects underlying combined ratio as underlying loss ratio not reported. We do not specifically model auto loss ratios for AIG, CB,
or HIG.
Exhibit 62: Statutory Private Auto Industry combined ratio

Industry combined ratios are well below the 10 year average
110%
105%
102%
100%
95% ?
90%
85%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E
P&C Industry 10 yr average
Source: SNL Financial, Goldman Sachs Global Investment Research
22 November 2021 39
Homeowners’
Similar to auto, we expect homeowners’ premium growth and market share gains
to favor those with strong consumer brands and efficient expense profiles, yet we
estimate that material direct distribution penetration (<10% today) is further down
the road versus auto. Homeowners’ is less commoditized than auto, which gives
insurers more ability to differentiate when it comes to claims and service, especially
given the heightened importance of a person’s home versus a vehicle. Additionally,
those that have strong policy bundling rates also stand to advantage themselves as
bundling products has proven to increase the lifetime value of an insured, and may even
provide for a better absolute underwriting margin. As a property exposed line of
business, home insurers are directly impacted by climate change and will need to
balance growth while navigating related impacts.
Industry homeowners’ premiums grew +4.4% in 2020, supported by +3% pricing

increases and a strong housing market. With current home insurance pricing in the
mid-single-digits and average home price increases in the high-single to mid-double
digits, we expect 2021 industry home insurance premiums could grow in the
mid-to-high single-digit range. FactSet consensus GDP growth is 4%/2% in 2022/2023
and with 6%/5% housing price increases estimated by the Federal Housing Finance
Agency (FHFA), which we estimate will likely lead to mid-single-digit NPW growth
for the industry in 2022/2023, in line with the historical average.
Amongst our coverage group we expect 5% average NPW growth over 22E-24E to be
lead by PGR at +11% which benefits from its strong auto brand (bundling) and direct
distribution (24% of book in 3Q21). We expect ALL and TRV to maintain market share,
and for HIG to keep premiums flat as it continues the process of re-underwriting its
book.
Exhibit 63: Homeowners Direct Premium Written (DPW) by Exhibit 64: Homeowners’ net premium written growth
Distribution Channel We expect ~5% growth on average across our coverage group over the
Indepent agents and to a lesser extent, direct distribution, have taken next three years
share from exclusive agents
35%
30%
38% 38% 42% 41% 41% 44% 44% 45% 46% 47% 48% 25%
20%
15%
10%
57% 56% 53% 5%

52% 53% 50% 49% 48% 47% 46% 45%
0%
-5%
5% 5% 6% 6% 6% 6% 6% 7% 7% 7% 7% -10%
2017 2018 2019 2020 2021E 2022E 2023E 2024E
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
ALL HIG PGR TRV P&C Industry
Direct Exclusive Agent Independent Agent
Source: Independent Insurance Agents & Brokers of America, A.M. Best, Goldman Sachs Global ALL 2021 figures include National General acquisition.
Investment Research
22 November 2021 40
Exhibit 65: Homeowners’ NPW growth vs. average home sales price
15.0%
11.9% y = -8.0207x2 + 2.0229x - 0.0427
R² = 0.4025
11.4%
10.0%
8.4% 7.9%
Home NPW growth %
7.1%
6.8% 7.5%
5.0% 5.2% 4.7%
3.0% 2.0%
1.7% 2.1%
1.2%
0.0% 0.4%
-0.6%
-3.0%
-5.0% -6.4%
-7.2%
-10.0%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%
Average Home Sales Price %
Source: National Association of Realtors (NAR), SNL Financial, Goldman Sachs Global Investment
Research
We think home insurance pricing will continue at a mid-single-digit pace or

greater for the foreseeable future. Insurers are currently repricing for
reopening-related inflation pressures, and above average catastrophes YTD. This is
inclusive of an estimated $45bn of global catastrophes in 3Q21. There is a concern that
climate change has brought about a new era of weather frequency and severity events
in excess of historical levels. In our view, insurers’ primary method of tackling the
potential of increasing weather events will be on loss exposure management, as pricing
is used primarily in a reactionary basis - meaning losses will need continue to come
through over a longer period before regulators are comfortable with significantly higher
prices.
Exhibit 66: Trailing 6 months homeowners’ rate filings based on submitted date
10%
8%
6%
4%
2%
0%
-2%
Nov-16
May-17
May-18
Nov-18
May-20
Nov-20
May-21
Nov-17
May-19
Nov-19
Nov-21
Jul-17
Sep-17
Jul-18
Jul-19
Sep-19
Jul-20
Jul-21
Jan-17
Sep-18
Jan-19
Sep-20
Sep-21
Jan-18
Mar-18
Jan-20
Mar-20
Jan-21
Mar-21
Mar-17
Mar-19
Industry ALL PGR USAA State Farm TRV HIG Nationwide Liberty Mutual
Source: SNL Financial
Loss cost trends and inflation: Similar to auto we are observing claim inflation that
revolves around an economic reopening and supply chain constraints. ALL saw paid
22 November 2021 41
claim severity increase 15% in 3Q21, largely a function of the rising materials and
equipment cost highlighted in the below charts. While severity is higher than the CPI,
we expect deceleration to more normal levels in-line with the deceleration in the CPI
over time. The GS view and FactSet consensus CPI estimates are largely aligned, with
inflation remaining elevated in the 4%+ range in 1H22, but trending towards ~2% in
2023.
Exhibit 67: Homeowners’ claim inflation trends

YoY %-change Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21
Tenants’ and Household Insurance 0.3 0.1 0.1 (0.3) - (0.5) (0.2) (0.8) (1.1) (0.9) (0.6) (0.6) (0.5) (0.1) 0.1 0.8 (0.7) (0.2) (0.4) - 0.1 (0.1) (0.3) 0.1 (0.4)
Maintenance and Repair (PPI) (2.6) (1.0) 1.2 2.4 0.7 (2.4) (8.6) (8.1) (4.1) (2.7) (0.3) 1.1 0.7 0.7 2.5 4.8 8.0 13.4 21.2 25.1 23.9 21.7 19.3 17.9 20.4
Materials and Components for Construction 0.5 0.5 0.4 0.6 0.5 1.2 0.4 0.4 1.0 1.2 3.0 4.8 4.7 4.3 5.2 6.7 8.3 10.3 13.9 18.0 20.6 20.4 19.0 16.6 18.4
Steel Mill Products (12.8) (15.1) (16.1) (15.2) (13.0) (12.5) (11.6) (13.2) (12.0) (10.0) (10.3) (9.8) (7.3) (3.2) 2.0 11.1 22.1 41.2 65.5 76.2 89.2 108.6 123.1 134.2 141.6
Copper and Brass Mill Shapes (0.8) 0.8 (0.1) 3.0 (5.0) (8.4) (11.8) (10.3) (3.2) 2.4 7.8 10.8 13.1 12.5 20.0 25.2 30.2 44.2 51.7 64.8 60.7 49.0 45.3 39.5 37.2
Plumbing Fixture Fittings and Trim 6.2 4.1 4.1 3.3 2.3 2.5 2.5 2.3 2.3 1.8 1.8 1.8 1.9 1.9 1.9 1.6 1.9 1.7 1.9 2.4 2.8 3.1 4.1 4.0 3.5
Heating Equipment 3.4 3.1 4.2 2.6 2.1 2.5 2.0 1.7 2.0 1.6 1.8 1.4 1.1 1.2 0.9 0.5 2.9 3.7 6.2 6.7 9.4 10.7 13.3 13.8 15.5
Concrete Products 3.6 3.0 2.7 3.6 3.7 4.4 3.4 3.2 2.2 2.6 1.6 2.2 2.2 1.6 2.4 1.8 2.3 2.2 3.4 3.6 4.0 4.5 6.0 5.6 6.5
Insulation Materials (2.9) (2.1) (2.9) 0.7 0.5 1.9 1.4 2.5 2.1 0.5 (0.3) 0.2 0.4 2.1 1.8 4.1 5.1 4.8 5.1 6.7 9.2 11.8 17.2 19.0 17.1
Brick and structural clay tile 2.2 2.2 1.8 1.6 1.7 1.5 1.4 1.7 1.7 2.4 2.4 2.5 3.2 3.2 3.2 3.3 3.4 3.7 3.9 5.5 5.5 4.3 4.5 4.4 6.0
Glass 1.3 1.4 1.3 0.8 1.5 1.7 1.6 1.7 1.7 1.3 1.1 0.9 1.4 1.2 3.3 3.3 2.0 2.1 2.5 3.0 4.2 6.2 6.2 6.4 8.4
Lumber and Wood Products (1.9) (0.4) (0.5) (0.5) (0.3) 1.3 (1.0) (0.2) 3.1 5.9 12.5 21.1 18.7 13.3 16.1 24.1 26.1 29.2 37.9 50.6 48.2 32.5 5.4 2.5 6.2
Millwork 0.7 0.9 1.0 1.3 1.4 1.6 1.4 1.5 1.6 2.7 5.0 8.1 8.5 7.9 7.8 9.8 10.6 12.2 15.0 19.5 22.1 21.8 16.8 14.0 14.4
Plywood (15.0) (10.9) (8.7) (8.1) (7.7) (3.9) (5.2) (5.0) 3.3 14.6 30.6 43.8 38.7 34.8 29.8 42.0 51.1 59.8 83.6 110.8 123.7 102.8 61.3 (2.2) (4.4)
Gypsum Products (7.1) (4.8) (5.2) (0.6) (1.5) 0.3 (2.2) (0.1) 1.4 0.5 - (0.1) (0.3) 4.0 4.0 3.6 5.5 6.6 12.1 14.5 18.1 21.6 22.9 23.0 25.1
Color scheme per line, with red showing the highest YoY increase in material costs and green the lowest increase or a cost decline.
Source: BLS, Goldman Sachs Global Investment Research

22 November 2021 42
Catastrophes & Reinsurance
Two topics that have been top of mind for insurance investors are elevated weather
activity and catastrophe losses of recent years, with climate change being a driving
force. Industry participants generally view climate change as both an opportunity to
distinguish themselves and support the broader economy, as well as an ever-present
risk. Companies are actively working to position themselves for a more volatile future,
which means executing on the management of property related exposures based on
geography and type, inclusive of the use of reinsurance.
Amongst our coverage group, ALL, TRV, CB, and AIG stand out as most exposed to
property and catastrophe risk (Exhibit 68). For illustrative purposes, we show a very
simplistic arrangement of our coverage names’ use of reinsurance (Exhibit 69) which
aims to show net retentions across our names. Our example focuses on
property-catastrophe national programs (as opposed to state-specific programs or
reinsurance for other lines). Furthermore, we do not differentiate between aggregate
and per-event limits, nor do we address reinstatement options and layers, all of which
would affect the exhaustion rate of reinsurance protection.
Exhibit 68: Property & Catastrophe exposure

ALL, TRV, CB and AIG have the greatest exposure to property and catastrophe risk amongst our coverage group
U.S. P&C net premiums written by type Net Catastrophe losses as a % of NPE
8.4%
8.1%
7.5%
6.1%
5.6%
41% 5.4%
53% 54% 55% 4.9%
68% 62% 4.6%
4.3% 4.2%
83%
3.0%
2.4%
2.1% 2.0%
59%
47% 46% 45%
32% 38%
17%
AIG ALL CB HIG PGR TRV WRB ALL TRV CB AIG HIG WRB PGR
Property Casualty 2021E 2022E
Premiums by type based on GS analysis of FY2020 statutory data.
Exhibit 69: Reinsurance attachment points & limits
6000 20%
18%
5000
16%
as a % of BV ex AOCI
14%
4000
12%
$ mn
3000 10%
8%
2000
6%
4%
1000
2%
0 0%
AIG ALL CB HIG PGR TRV
reinsurance cover retained by company

retained by compnay as a % of BoY BV ex AOCI reinsurance cover as a % of BoY BV ex AOCI
22 November 2021 43
Inflation adjusted average annual global catastrophe losses since 2000 have been
around $65bn, according to Swiss Re, while the average over the past 5 years has been
in excess of $90bn, including $155bn in 2017 (Exhibit 70). The increase in catastrophe
losses has coincided with an increase in loss from non-modeled risks such as wildfires
(see Exhibit 72 and Exhibit 73) and floods. Some industry participants are calling for a
new level of normal, such as catastrophe modeling firm AIR Worldwide. This firm
estimates that global catastrophe losses will be $106bn annually over the long run, a
63%/41% increase over 20/10 year averages. The company also estimates there is a
that there is a greater than 40% chance that the insurance industry will experience a
loss of greater than $200bn in one year at some point in the next decade.
As of 3Q21 YTD, we estimate global insured CAT losses to be in the range of

$87bn-$97bn, inclusive of $42bn in 1H21 and $35-$45bn in 3Q21. As such, the industry
is already at an above average CAT loss for the year. Based on our expected 2021E CAT
losses as a % of NPE as compared to an average year (our estimate for 2022E) we
observe that CB, PGR, and HIG have reported losses in the greatest excess of our
expected average.
Over the last few years, insurers have increasingly taken steps to right-size property and
CAT exposures. We outline key points below for coverage names:
n AIG: Prior to its underwriting transformation of the last several years, AIG’s share of
industry CAT losses were elevated; including 16.0pp/10.5pp of CAT losses in
2017/2018. The company has taken meaningful steps since then to reduce CAT
volatility and exposure by increasing aggregate reinsurance coverage, purchasing
additional per occurrence reinsurance, and reducing limits. Among the most
impactful changes to limits on the property side include reducing E&S property
limits from $1bn to $25mn or below (often just $10mn). Additionally, since AIG’s
acquisition of Validus Re in 2018, the company reduced its overall limit in Florida by
more than 65% or approximately $400mn of annual limit. We expect limited CAT
losses in 4Q21 (2.6pp as a % of NPE, or 65% of our average expected 4Q CAT load)
as the company is close to attaching on its North America aggregate cover and
aggregate cover for rest of the world, excluding Japan ($175mn retention
remaining).
n ALL: Despite screening as having the most property and CAT exposure amongst our
coverage group, ALL also leverages a significant amount of reinsurance, including
per occurrence and aggregate reinsurance. The company repositioned its book of
business over a decade ago to reduce coastal exposures. In Florida, it reduced its
market share from about 10% in 2003 to less than 2% today. The catastrophe
reinsurance program supports its risk tolerance framework that targets less than a
1% likelihood of annual aggregate catastrophe losses from hurricanes and
earthquakes, excluding other catastrophe losses and, net of reinsurance, exceeding
$2bn.
n CB: Over the last few years CB’s catastrophe losses have often missed Street
expectations and have been worse than implied guided levels of roughly 3.3pp
(provided as of YE2018). We note that amongst our coverage universe, we expect
CB to report FY2021 CATs in the greatest excess of our average year expectation.
22 November 2021 44
However, we note that CB’s aggregate probable maximum losses (PMLs) have
decreased ~25% since 2017, and are particularly in US hurricane risk. Management
has also emphasized its view that it cannot achieve needed rate in CA wildfire
exposed areas, and as such is materially cutting back exposure to this area.
n HIG: The company is casualty-oriented, and guided for 4pp of CATs within its 2021
outlook (we model 4.2pp normalized). The company is in the midst of rolling out a
revamped homeowners’ product, and in the Middle & Large and the Global Specialty
businesses has a variety of initiatives from re-underwriting, portfolio steering, and
changing of attachment points that it is working through. As of Sept. 30th, the
company had a little less than $50mn to go before it starts to hit the $700mn
attachment point of its aggregate Property CAT reinsurance program. We model
~$60mn of losses, or ~1.8pp (VA consensus 3.1pp).
n PGR: PGR has been impacted by its overweight share of Florida, Texas, and
Louisiana within its Property book, which has produced a CR over 100% each year
since 2017. The elevated exposure to this part of the country stems from legacy
exposures gained through PGR’s acquisition of American Strategic Insurance
(controlling stake purchased in 2015 with remaining stake purchased in 2020). We
expect the company to make headway in reducing these exposures to increase the
non-volatile portion of their property book to 60-70%. Notably, the company
increased the retention threshold to $200mn from $80mn for its per occurrence
excess of loss program within the Property business. Overall, however, PGR’s auto
oriented business mix is much less CAT prone versus homeowners’ and property
focused peers.
n TRV: TRV has effectively managed catastrophe exposure in recent years, which has
led to catastrophe losses that are below its implied market share. The company has
been tightening terms and conditions and paring back exposures in certain lines and
accounts. We think TRV’s aggregate excess of loss (XoL) reinsurance will be
exhausted in an average CAT/severe loss scenario of $225mn/$150mn in 4Q21, and
we model just 0.9pp of CATS vs. 2.0pp VA consensus.
n WRB: As a casualty-oriented commercial insurer, property exposures represent just
17% of WRB’s business mix. The company’s annual CAT load volatility has been
muted over the last decade. We model just over 2pp of CATs annually.
22 November 2021 45
Exhibit 70: Global & U.S. insured catastrophe losses and property Exhibit 71: U.S. insured catastrophe losses by peril
rate-on-line indicies
350 80%
YoY change in cat bond and ILS outstanding

12%
70%
19%
Cat losses ($bn) and rate-on-line
300 7%
60% 15% 9%
1% 34%
250 50% 12% 15% 21%
29%
200 40% 63%
30% 46%
150 80% 81% 30% 80%
20% 71% 72%
59% 59% 55%
100 10% 47%
0% 26% 27%
50 23%
-10%
- -20% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 10 year
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
average
Severe Stroms, Tornadoes Tropical Cyclone Wildfire
Global insured cat losses US insured cat losses
Global property rate-on-line index US property rate-on-line index Winter Storms Flooding Eqarthquake
Outstanding ILS YoY change Other
Source: Insurance Information Institute, SwissRe, Goldman Sachs Global Investment Research Source: Munich Re, Insurance information institute, Data compiled by Goldman Sachs Global
Investment Research
Exhibit 72: CA wildfire exposed market share and weighting ($ 000)

AIG, CB, and TRV have the highest % of US premiums at risk to wildfire exposures as of YE2020. We note that CB has pulled back from this market
meaningfully in 2021.
2020 2019 2018 2017

as a % of as a % of as a % of as a % of
Market CA Wildfire CA Wildfire CA Wildfire CA Wildfire
Market total Market total Market total Market total
Company share exposed exposed exposed exposed
share company share company share company share company
rank DPW $ DPW $ DPW $ DPW $
DPW DPW DPW DPW
P&C Industry 18,583,970 100% 2.6% 17,351,918 100% 2.5% 15,707,801 100% 2.3% 14,879,517 100% 2.3%
Farmers Insurance 1 2,253,100 12.1% 9.5% 2,184,779 12.6% 8.9% 2,054,728 13.1% 8.5% 1,969,725 13.2% 8.4%
State Farm 2 2,088,604 11.2% 3.2% 1,894,625 10.9% 2.9% 1,730,468 11.0% 2.6% 1,630,360 11.0% 2.5%
Liberty Mutual 3 1,400,502 7.5% 4.0% 1,338,128 7.7% 3.8% 1,253,315 8.0% 3.7% 1,205,786 8.1% 3.6%
Travelers 4 893,317 4.8% 3.1% 786,301 4.5% 2.8% 704,914 4.5% 2.7% 670,999 4.5% 2.7%
Nationwide 5 829,626 4.5% 4.5% 766,677 4.4% 4.2% 710,134 4.5% 3.9% 698,724 4.7% 3.6%
Chubb 6 793,791 4.3% 3.4% 719,689 4.1% 3.2% 636,623 4.1% 3.0% 633,502 4.3% 3.1%
Allstate Corp 7 777,176 4.2% 2.0% 770,767 4.4% 1.9% 775,371 4.9% 2.0% 743,398 5.0% 2.1%
CSAA Insurance Exchange 8 704,559 3.8% 17.7% 643,202 3.7% 15.7% 603,301 3.8% 14.8% 582,554 3.9% 15.1%
Mercury Insurance 9 658,053 3.5% 18.2% 574,635 3.3% 15.4% 508,185 3.2% 14.5% 459,091 3.1% 14.3%
USAA 10 628,337 3.4% 2.6% 578,074 3.3% 2.5% 499,194 3.2% 2.3% 445,954 3.0% 2.2%
Auto Club Exchange 11 556,864 3.0% 12.5% 548,189 3.2% 12.1% 536,681 3.4% 12.6% 526,129 3.5% 13.7%
CNA 12 502,276 2.7% 4.4% 494,198 2.8% 4.6% 518,383 3.3% 5.0% 516,691 3.5% 5.1%
AIG 13 494,883 2.7% 3.8% 543,659 3.1% 4.1% 518,480 3.3% 3.7% 531,935 3.6% 3.7%
The Hartford 14 347,113 1.9% 2.8% 343,593 2.0% 2.7% 316,093 2.0% 2.6% 310,810 2.1% 2.6%
Assurant 15 298,302 1.6% 3.8% 292,889 1.7% 3.8% 188,352 1.2% 2.8% 168,021 1.1% 2.7%
Zurich 16 295,023 1.6% 2.2% 220,958 1.3% 1.7% 185,932 1.2% 1.5% 171,107 1.1% 1.3%
Allianz 17 291,803 1.6% 6.7% 334,483 1.9% 7.1% 315,903 2.0% 7.7% 296,753 2.0% 8.5%
American Family Insurance 18 267,294 1.4% 2.4% 212,645 1.2% 1.8% 181,841 1.2% 1.6% 165,739 1.1% 1.6%
FM Global 19 258,874 1.4% 6.2% 390,036 2.2% 10.6% 352,541 2.2% 11.0% 335,735 2.3% 11.7%
Tokio Marine 20 253,668 1.4% 2.8% 233,366 1.3% 2.7% 207,769 1.3% 2.6% 176,650 1.2% 2.4%
Munich Re 21 219,211 1.2% 8.9% 164,251 0.9% 6.6% 106,201 0.7% 4.3% 102,270 0.7% 4.2%
QBE 22 200,277 1.1% 4.2% 161,342 0.9% 3.8% 167,796 1.1% 4.1% 152,244 1.0% 3.9%
Pacific Specialty Insurance Company 23 199,367 1.1% 82.9% 198,055 1.1% 76.2% 175,969 1.1% 73.0% 155,544 1.0% 67.4%
Berkshire Hathaway Inc. 24 197,096 1.1% 0.4% 140,681 0.8% 0.3% 78,919 0.5% 0.2% 44,993 0.3% 0.1%
AXA SA 25 185,545 1.0% 2.9% 133,816 0.8% 2.4% 79,444 0.5% 1.6% 71,404 0.5% 1.6%
Auto-Owners Insurance 26 156,408 0.8% 1.7% 156,754 0.9% 1.8% 161,831 1.0% 2.0% 155,900 1.0% 2.1%
Fairfax Financial 27 146,550 0.8% 2.3% 154,961 0.9% 2.6% 126,147 0.8% 2.4% 116,370 0.8% 2.4%
The Hanover Insurance Group 28 114,391 0.6% 2.2% 108,615 0.6% 2.1% 100,312 0.6% 2.1% 95,019 0.6% 2.1%
Great American Insurance 29 107,039 0.6% 1.6% 92,178 0.5% 1.5% 75,059 0.5% 1.3% 65,018 0.4% 1.1%
STARR Cos. 30 101,772 0.5% 2.9% 53,779 0.3% 1.8% 39,561 0.3% 1.6% 19,532 0.1% 1.0%
Progressive 36 86,736 0.5% 0.2% 68,295 0.4% 0.2% 51,377 0.3% 0.1% 33,237 0.2% 0.1%
W. R. Berkley Corp. 56 32,417 0.2% 0.5% 31,413 0.2% 0.5% 27,731 0.2% 0.5% 27,978 0.2% 0.5%
Note that % of total company DPW is US only. Displaying data for following business lines: homeowners multi-peril, commercial multi-peril (non-liability), fire, inland marine. Data is based on full-year
statutory direct premiums written.
22 November 2021 46
Exhibit 73: CA wildfire acres burned and structures damaged &

destroyed
The increasing number of CA acres burned has been alarming, though has
been offset in 2020/2021 by damaging a lower % of structures
4.5 1.4%
Structures Damaged/Destroyed as a % of acres

4.0 1.2% 1.2%
3.5
1.0%
Acres burned (mn)

3.0
2.5 0.8%
burned
0.7%
2.0 0.6%
1.5
0.4%
0.4%
1.0 0.3%
0.2%
0.2% 0.2%
.5
0.1%
0.1% 0.1%
.0 0.0%
2013 2014 2015 2016 2017 2018 2019 2020 2021
YTD
Acres Burned Structures Damaged/Destroyed as a % of acres burned
Source: CalFire, Data compiled by Goldman Sachs Global Investment Research
Exhibit 74: Company-specific thresholds for reporting catastrophic events

$ Threshold For Reporting Catastrophic Events
Threshold
$mn Detail
Type
An event that produces pre-tax losses before reinsurance in excess of $1mn and
involves multiple first party policyholders, or a winter weather event that
ALL $1 Internal produces a number of claims in excess of a preset, per-event threshold of average
claims in a specific area, occurring within a certain amount of time following the
event.
AIG $10 Internal
Property Claims Service (PCS) $25mn threshold for events in the U.S. and Canada.
CB $25 Industry
Similar definition used outside of North America.
HIG $25 Industry Property Claims Service (PCS) $25mn threshold.
PGR N/A N/A
Primarily determined at the reportable segment level. If a threshold for one
segment or a combination thereof is exceeded and the other segments have
losses from the same event, losses from the event are identified as catastrophe
TRV $20 - $30 Internal losses in the segment results and for the consolidated results of the Company.
Additionally, an aggregate threshold is applied for International business across
all reportable segments. The threshold for 2020 ranged from approximately $20
million to $30 million of losses before reinsurance and taxes.
WRB $25 Industry Property Claims Service (PCS) $25mn threshold.
22 November 2021 47
The Allstate Corporation (ALL; Sell; TP: $106)
We are initiating coverage on Allstate with a Sell rating. Our $106 12-month price target
offers a -2% total return versus the average 23% total return for the remainder of our
coverage.
Distribution positioning: While inflationary pressures are temporarily weighing on

margins, in our view, we think there is a longer-lasting impact from the acceleration of
auto sales being made directly to the consumer. For the past several years direct
business has taken share at a relatively slow pace with about 1pp of market share
shifting a year. We think that through the pandemic this likely accelerated. As part of
Allstate’s Transformative growth strategy the company has focused more on its direct
distribution, which is showing significant growth. However, the relative size of this
distribution for Allstate is smaller compared with its captive agent force which is losing
market share. We view positively the efforts being made to advance the company’s
growth, but see the company’s efforts more as an offset to its less favorable overall
distribution positioning rather than an incremental growth driver. We estimate ALL’s
book today is roughly 90%/10% distributed via agency channels and direct channels,
respectively, with agent distribution predominantly exclusive.
Exhibit 75: Personal auto distribution by channel Exhibit 76: ALL Personal Auto NPE by Brand
Today, we believe direct distribution could represent 30%+ of auto Hisotrically, Allstate brand is predominantly distributed through
premiums exclusive agents, Esurance is DTC, and Encompass/National General is
distributed through Independent agents. We estimate ALL’s book today
is roughly 75%/15%/10% distributed via EA/IA/direct channels.
5% 7% 8% 8% 8% 7% 8% 8% 12%
32% 32% 33% 32% 31% 31% 31% 30% 30% 31% 31%
95% 91% 90%
48% 46% 45% 43% 90% 89% 89% 89% 90% 90% 88%
52% 50% 50% 49% 48%
53% 49%
21% 22% 24% 25% 26%

16% 17% 18% 18% 19% 20%
2011 2012 2013 2014 2015 2016 2017 2018 2019 3Q21
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD
Direct Exclusive Agent Independent Agent Allstate Brand Esurance* Encompass/National General**
Source: Independent Insurance Agents & Brokers of America * Esurance has been collapsed into Allstate Brand. **Encompass was collapsed into the
National General brand, with the National General acquisition closing in early January 2021.
Durability of favorable experience as we get further into reopening: Allstate has

benefited in recent quarters from frequency that remains below pre-pandemic levels
associated with lower commuter miles driven. As a result, ALL’s loss ratio has benefited
relative to substandard auto insurers with the spread between ALL and PGR’s loss ratio
expanding significantly in recent quarters. As we get deeper into the normalization of
back-to-work in the United States, we would expect this spread to close and at times
inflect. More specifically, we see ALL’s frequency ticking up to a greater degree
throughout 2022 when compared to PGR which is already closer to pre-pandemic levels.
Additionally, PGR is taking more aggressive early rate action which may temporarily
22 November 2021 48
impact growth, but should also push PGR’s margins in a more favorable position as
compared with ALL.
Exhibit 77: ALL & PGR underlying loss ratios

Future periods are GSe.
80.0%
75.0%
70.0%
65.0%
60.0%
55.0%
50.0%
45.0%
1Q11
3Q11
3Q12
1Q13
1Q14
3Q14
3Q15
1Q16
1Q17
3Q17
3Q18
1Q19
1Q20
3Q20
3Q21
3Q10
1Q12
3Q13
1Q15
3Q16
1Q18
3Q19
1Q21
1Q22E
1Q23E
3Q22E
3Q23E
ALL PGR
Captive distribution faces headwinds from tighter labor market: We see the
potential for ALL’s captive distribution network to experience greater attrition and less
robust recruiting while labor markets tighten. This view is underpinned by 1) evidence
that insurance distribution faces pressure in a tight labor market more broadly, and 2)
ALL rolled out a larger compensation restructuring as part of its Dec 2019 announced
transformative growth strategy. While we are not suggesting there will be some
outsized impact, we do think it provides another subtle drag for a business that already
faces structural headwinds related to consumer demand for direct insurance.
Profitability of growth areas is still somewhat unclear in our view: Allstate has made
progress on its transformative growth strategy in its direct business with recent new
application growth rates as high as 38% in 3Q21. As the business grows and becomes a
more important component of auto underwriting results, it will be important to consider
the profitability of the business. We note that prior to the re-branding of the Esurance
direct business, underwriting results from direct distribution were weaker with a 102%
combined ratio from 2016-2019 vs the Allstate brand at 92%. Following the
consolidation of the Esurance brand into the Allstate brand, there is no longer disclosure
on results from direct business more specifically. If this business is still overall
generating weaker underwriting results, we would expect that earnings growth may not
keep up with overall top-line growth.
22 November 2021 49
Exhibit 78: Historical Allstate brand vs Esurance TTM auto Exhibit 79: Historical Allstate brand vs Esurance TTM auto
underlying loss ratios underlying combined ratios
Esurance underlying loss ratio worsened from 2016 onward, as Allstate Total underlying underwrting profitability improved for esurance over
brand improved this timeframe, driven by the expense ratio. Nonetheless, a ~6pp delta
remained between the two segments, and Esurance never produced an
underwriting profit.
80% 116%
114%
78%
112%
76% 110%
74% 108%
106%
72% 104%
70% 102%
100%
68% 98%
66% 96%
94%
64%
92%
62% 90%
3Q12
4Q12
1Q13
2Q13
1Q14
2Q14
3Q14
4Q14
3Q15
4Q15
1Q16
2Q16
1Q17
2Q17
3Q17
4Q17
4Q18
1Q19
2Q19
3Q12
4Q12
2Q13
3Q13
4Q13
2Q14
3Q14
4Q14
2Q15
3Q15
2Q16
3Q16
2Q17
3Q17
2Q18
3Q18
1Q19
2Q19
3Q19
1Q20
3Q13
4Q13
1Q15
2Q15
3Q16
4Q16
1Q18
2Q18
3Q18
3Q19
4Q19
1Q20
1Q13
1Q14
1Q15
4Q15
1Q16
4Q16
1Q17
4Q17
1Q18
4Q18
4Q19
Allstate Brand auto Esurance auto Allstate Brand auto Esurance auto
Balancing the transformative growth initiative with repricing could make for a
slower combined ratio recovery: Growth vs. margin preservation is a consistent

choice and balance faced by personal lines companies given the relatively high price
elasticity of new business. In the current environment Allstate is faced with inflationary
pressures on margins which may or may not be somewhat temporary and peers such
as PGR are taking more aggressive rate action. Given Allstate’s focus on growth and
breaking down the challenges of shifting market distribution, we think the company will
be more measured in its approach to increasing rates. While this may provide for a lift to
growth, we think it increases the risk of having margins deteriorate to a greater degree
as the auto pricing cycle takes shape.
Exhibit 80: Trailing 6 months personal auto rate filings
4%
2%
0%
-2%
-4%
Sep-15
Jun-17
Sep-17
Jun-18
Sep-18
Jun-19
Sep-19
Jun-21
Sep-21
Dec-15
Jun-16
Sep-16
Dec-16
Mar-17
Mar-18
Dec-18
Jun-20
Sep-20
Mar-19
Dec-19
Mar-21
Mar-16
Dec-17
Mar-20
Dec-20
Industry ALL PGR
What would make us more positive

Our key concern for Allstate is its competitive positioning and ability to achieve profitable
growth. We could become more positive to the extent the company successfully
executes on its transformative growth plan in a magnitude that changes the current
22 November 2021 50
direction of its market share trend while maintaining good profitability. We would also
become more optimistic to the extent that the company is able to mange through
inflationary pressures better than we expect and auto profitability recovers to a greater
degree.
Where we differ from consensus

Our 2022/2023 Property Liability underlying loss ratio estimates are 2.6pp/1.0pp worse
than Visible Alpha consensus, respectively, driven by underappreciated inflationary loss
cost pressures combined with pricing dynamics, in our view. We also model 2% NPW
growth in 2022 compared to 4% for the Street, as we believe inflationary pressures will
hurt the growth outlook. We also model greater share repurchases versus the Street,
and better growth and profitability within Protection Services.
Exhibit 81: GS comparison to VA Consensus

Summary Comparison to VA Consensus 4Q21E 1Q22E 2021E 2022E 2023E
GS GS GS GS GS
Cons. Diff Cons. Diff Cons. Diff Cons. Diff Cons. Diff
Estimate Estimate Estimate Estimate Estimate
CONSOLIDATED INCOME STATEMENT
Net Investment Income 503 547 -8% 497 498 2,949 3,149 -6% 1,953 1,997 -2% 1,894 2,110 -10%
Total operating revenues 12,123 12,157 0% 12,398 12,149 2% 49,015 50,899 -4% 50,481 49,730 2% 52,942 51,657 2%
growth % 15% -1% -1686% 3% -4% -167% 20% 10% 102% 3% -1% -367% 5% 4% 35%
Net operating income attributable to SHE 728 770 -5% 778 869 -10% 3,965 4,006 -1% 2,277 3,015 -24% 3,251 3,534 -8%
SHARES, PER-SHARE, ROE & KEY DATA

Avg. shares, diluted 286 292 -2% 281 289 -3% 301 300 0% 273 282 -3% 256 267 -4%
Buybacks ($mn) 806 712 13% 819 713 15% 3,227 2,904 11% 3,291 2,883 14% 2,427 2,389 2%
Dividends per-share $ 0.81 $ 0.81 0% $ 0.81 $ 0.85 -5% $ 2.97 $ 3.21 -7% $ 3.39 $ 3.40 0% $ 3.56 $ 3.55 0%
op EPS $ 2.55 $ 2.63 -3% $ 2.77 $ 3.01 -8% $ 13.17 $ 13.34 -1% $ 8.35 $ 10.69 -22% $ 12.68 $ 13.23 -4%
BVPS $ 86.88 $ 85.64 1% $ 87.97 $ 86.95 1% $ 86.88 $ 85.51 2% $ 88.10 $ 88.89 -1% $ 94.45 $ 94.34 0%
Op ROE 12.8% 12.6% 18bps 13.8% 15.0% -125bps 16.9% 15.6% 133bps 10.4% 12.8% -242bps 15.2% 15.1% 14bps
Debt-to-capital 23.1% 23.0% 13bps 24.0% 23.0% 96bps 23.1% 23.0% 13bps 24.8% 23.0% 185bps 24.5% 23.0% 147bps
PROPERTY-LIABILITY
Net premiums written 9,777 9,994 -2% 10,305 10,417 -1% 40,834 41,180 -1% 41,618 43,108 -3% 43,530 44,109 -1%
NPW growth 14% 13% 54bps 5% 3% 204bps 14% 13% 125bps 2% 4% -167bps 5% 3% 139bps
Net premiums earned 10,063 10,129 -1% 10,328 10,342 0% 40,127 40,286 0% 42,025 42,167 0% 43,923 43,586 1%
Reported loss ratio 71.8% 70.9% 96bps 72.4% 70.0% 238bps 70.8% 70.4% 40bps 74.5% 71.5% 303bps 72.2% 70.7% 147bps
cat loss (net of reinsurance) ratio impact 5.6% 5.8% -19bps 6.4% 6.3% 11bps 8.4% 8.4% -1bps 8.1% 8.0% 10bps 8.1% 7.9% 21bps
(favorable)/unfavorable development -0.2% 0.2% -38bps -0.1% 0.1% -12bps 0.0% 0.3% -38bps 0.2% 0.1% 9bps 0.1% 0.1% 9bps
Underlying loss ratio 66.4% 65.0% 139bps 66.1% 63.8% 230bps 62.5% 61.7% 72bps 66.2% 63.5% 277bps 63.9% 62.8% 114bps
Reported expense ratio 23.9% 24.1% -21bps 22.9% 23.5% -65bps 24.2% 24.2% 2bps 23.2% 23.6% -34bps 22.8% 23.1% -33bps
Reported combined ratio 95.7% 95.0% 73bps 95.3% 93.7% 160bps 95.1% 94.7% 39bps 97.7% 95.1% 260bps 95.0% 94.0% 104bps
Underlying combined ratio 90.2% 89.0% 124bps 88.9% 87.2% 163bps 86.4% 85.7% 70bps 89.4% 86.8% 253bps 86.7% 85.8% 86bps
PROTECTION SERVICES
Net premiums written 811 731 11% 758 710 7% 2,737 2,657 3% 3,450 3,095 11% 3,967 3,462 15%
NPW growth 45% 32% 1340bps 30% 21% 859bps 45% 42% 304bps 26% 15% 1059bps 15% 14% 107bps
Net premiums earned 573 540 6% 575 559 3% 1,875 1,842 2% 2,507 2,371 6% 2,974 2,609 14%
Adjusted Net Income 57 53 9% 70 49 41% 207 203 2% 267 231 16% 299 253 18%
HEALTH & BENEFITS
Revenues 544 531 2% 550 578 -5% 2,210 2,196 1% 2,186 2,236 -2% 2,275 2,343 -3%
Revenue growth 93% 90% 272bps -1% 4% -488bps 89% 86% 280bps -1% 3% -368bps 4% 4% 59bps
Adjusted Net Income 71 55 29% 68 73 -6% 231 210 10% 274 259 6% 287 310 -7%
Source: Visible Alpha Consensus Data, Goldman Sachs Global Investment Research
Key investment risks

We see the primary upside risks as better than expected NPW growth and underlying
loss ratios.
NPW growth: Should ALL’s transformative growth plan result in a materially positive
change in the trajectory of PIF growth, our growth estimates would be underestimated.
This would likely need to stem from greater production by ALL’s captive agent force.
Underlying loss ratio: Should supply chain pressures ease more quickly than our
expectations, or ALL reprice its book of business more quickly or to a greater magnitude
than we expect, ALL’s underlying loss ratio could beat our estimates.
Valuation
Our $106 target price is based on a 1.3x price-to-book multiple, which represents a 29%
22 November 2021 51
discount to the multiple implied by the group’s P/B-to-ROE regression for our estimated
14% ROE, and in-line with the current 1.3x market multiple. In our view, a discount is
justified by expected growth pressures and a less favorable strategic distribution
position, combined with near-term inflationary headwinds for both the auto and
homeowners’ books.
22 November 2021 52
Exhibit 82: ALL Company Profile

Summary Profile Investment Profile
Key Statistics Price Performance Fixed Income Portfolio Credit Risk Investment Portfolio Mix
Price $111.94 S/O (m) 287
NAIC 5
Market Cap ($bn) $32.1b Float 99.5% 1M 3M 12M YTD 24M 1%
Price Target $106 Volume (m) 2,084 ALL -11.5% -16.5% 11.5% 1.8% 0.8%
+/- -5.3% S&P500 -2.2% 4.2% 42.3% 32.4% 30.6% NAIC 4 Other, 3.7% Other Gov,
Dividend Yield 3.0% XLF 3.9% 6.6% 31.2% 25.1% 50.6% 5%
1.6%
Total Return -2.3% US Gov,
7.6%
LPs, 11.3%
BVPS Estimates Price Chart (Indexed)
4Q21E 2021E 2022E 2023E Real Munis &
200 Estate, Utilities,
BVPS $86.88 $86.88 $88.10 $94.45
1.3% ST Inv, 8.8% 15.9%
BVPS ex-AOCI $80.10 $80.10 $80.83 $86.82
NAIC 1
180 50% Policy
Earnings Estimates Loans,
NAIC 2 0.3%
4Q21E 2021E 2022E 2023E 44%
160
GS EPS Estimates $2.55 $13.17 $8.35 $12.68
Mortgage
Consensus EPS Estimates $3.40 $15.11 $12.81 $14.06 Loans, 1.3%
Corporate
140 Debt, 41.6%
Op. ROE 12.8% 16.9% 10.4% 15.2%
120
Structured
Equity Products,
P/E 11.0x 8.5x 13.4x 8.8x Securities, 1.8%
P/BVPS ex-AOCI 1.4x 1.4x 1.4x 1.3x 4.9%

100
Wtd Avg Diluted Shares 286 301 273 256

Repurchases ($m) 806 3,227 3,291 2,427 80
TTM Business Mix

Key Financials 60
4Q21E 2021E 2022E 2023E Revenues Net Premiums Earned
Net Premiums Written ($m) 10,682 42,181 44,719 47,088
40
Combined Ratio 95.7% 95.1% 97.7% 95.0% Health &
Nov-18
May-19
Aug-19
Nov-19
May-20
Aug-20
Nov-20
May-21
Aug-21
Feb-19
Feb-20
Feb-21
Protection
Prior Year Development -0.2% 0.0% 0.2% 0.1% Protection Benefits Services
Services 6%
CAT 5.6% 8.4% 8.1% 8.1% 4%
4%
Underlying Combined Ratio 90.2% 86.4% 89.4% 86.7% ALL SPX XLF
Historical Price / NTM Projected Earnings

Price to BVPS ex-AOCI Homeowners
Health &
Price to Earnings Homeowners
13.0x 2.0x Underwriting
Benefits
P/BV Mean +1 Std Dev -1 Std Dev Underwriting 24%
Fwd P/E Mean +1 Std Dev -1 Std Dev 4%
12.0x 23%
1.8x
Auto
11.0x Auto Underwriting
Underwriting
1.6x 67%
68%
10.0x
1.4x
9.0x
1.2x
8.0x
7.0x 1.0x
6.0x 0.8x
n…
n…
n…
p…
p…
p…
a…
a…
a…
a…
a…
a…
p…
p…
p…
r-…
r-…
r-…
v…
v…
v…
v…
v…
v…
-…
-…
-…
y…
y…
y…
Se
Se
Se
Ma
Ma
Jul-
Ma
Ma
Jul-
Ma
Ma
Jul-
No
No
No
Jan
-21
Jan
-19
Jan
-20
Se
Se
Se
No
No
No
M
Ja
Jul
Ja
Jul
Ja
Jul
19
20
21
Book Value Per Share Growth Short Interest (Days to Cover) Capital Deployment
10
$100 25% 2016 2017 2018 2019 2020 2021E 2022E 2023E
9
$90 Share Repurchases ($m) 1,343 1,424 2,198 1,800 1,700 3,227 3,291 2,427
8
$80 20%
$86.82
7 Dividends ($m) 495 542 611 651 662 867 917 908
$80.83
$80.80
$80.10
$70
Divi & Repo ($m) 1,838 1,966 2,809 2,451 2,362 4,094 4,208 3,334
BVPS ex-AOCI
6
ROE ex-AOCI
$67.12
$60 15%
5
$62.19
$50
$56.74
4 Op Earnings ($m) 1,838 2,467 3,129 3,477 4,510 3,965 2,277 3,251
$40 10% 3 Divi & Repo (% of Earn) 100% 80% 90% 70% 52% 103% 185% 103%
$30 2
$20 5% 1
$10 0
Dec-20
Jun-21
Jun-21
Nov-21
Nov-21
Feb-21
Feb-21
Apr-21
Apr-21
Jul-21
Jul-21
Jul-21
Oct-21
Oct-21
Mar-21
Mar-21
Aug-21
Aug-21
Sep-21
Sep-21
Jan-21
Jan-21
May-21
May-21
$0 0%
2017 2018 2019 2020 2021E 2022E 2023E
Source: Company data, Goldman Sachs Global Investment Research, SNL Financial, FactSet
22 November 2021 <3

$10
$11
$12
$13
$14
$6
$7
$8
$9
-40%
10%
20%
-20%
-10%
-30%
0%
1/2/2018 1/2/2018
1/17/2018 1/17/2018
2/2/2018 2/2/2018
E
2/22/2018 2/22/2018
3/14/2018 3/14/2018
22 November 2021
3/30/2018 3/30/2018
Goldman Sachs
4/19/2018
Alpha
4/19/2018
E
5/7/2018 5/7/2018
5/24/2018 5/24/2018
6/11/2018 6/11/2018
6/26/2018 6/26/2018
7/11/2018 7/11/2018
7/26/2018 7/26/2018
E
8/10/2018 8/10/2018
8/27/2018 8/27/2018
9/11/2018 9/11/2018
9/26/2018 9/26/2018
10/11/2018 10/11/2018
10/29/2018 10/29/2018
E
11/13/2018 11/13/2018
$3bn Shr Repurch. Plan
11/28/2018 11/28/2018
12/13/2018 12/13/2018
Exhibit 83: Drivers of Alpha Performance - Allstate
12/28/2018 12/28/2018
1/14/2019 1/14/2019
1/29/2019 1/29/2019
E
2/13/2019 2/13/2019
ALL announces CA Wildfire impact
2/28/2019 2/28/2019
3/15/2019 3/15/2019
4/1/2019 4/1/2019
Source: Axioma US4M, Factset, Company data, Goldman Sachs Global Investment Research
4/16/2019 4/16/2019
5/1/2019
E
5/1/2019
5/16/2019 5/16/2019
5/31/2019 5/31/2019
6/17/2019 6/17/2019
7/2/2019 7/2/2019
7/17/2019 7/17/2019
E
8/1/2019 8/1/2019
8/16/2019 8/16/2019
9/2/2019 9/2/2019
9/17/2019 9/17/2019
10/2/2019 10/2/2019
10/17/2019 10/17/2019
E
EPS Consensus Est.

ALL recommends reject Mini-Tender offer
11/1/2019 11/1/2019
11/19/2019 11/19/2019
12/4/2019 12/4/2019
12/20/2019 12/20/2019
1/6/2020 1/6/2020
1/21/2020 1/21/2020
E
2/6/2020 2/6/2020
2/21/2020 2/21/2020
3/9/2020 3/9/2020
3/24/2020 3/24/2020
4/8/2020 4/8/2020
4/23/2020 4/23/2020
E
5/8/2020 5/8/2020
5/25/2020 5/25/2020
Short Interest as a % of Float
6/9/2020 6/9/2020
6/24/2020
ALL to acquire NatGen
6/24/2020
7/9/2020 7/9/2020
7/24/2020 7/24/2020
E
8/10/2020 8/10/2020
8/25/2020 8/25/2020
9/9/2020 9/9/2020
9/24/2020 9/24/2020
10/9/2020 10/9/2020
10/26/2020 10/26/2020
E
11/10/2020 11/10/2020
11/26/2020 11/26/2020
12/11/2020 12/11/2020
12/29/2020 12/29/2020
1/14/2021 1/14/2021
2/1/2021 2/1/2021
ALL closes acq.of NatGen.
2/16/2021 2/16/2021
3/3/2021
ALL to sell ALIC
3/3/2021
3/18/2021
3/18/2021
4/2/2021
4/2/2021
4/19/2021
4/19/2021
5/4/2021
E
5/4/2021
5/19/2021
Annuity Business
ALL to exit Life and
5/19/2021
6/3/2021
6/3/2021
6/18/2021
6/18/2021
7/5/2021
7/5/2021
7/20/2021
7/20/2021
8/4/2021
E
Review
8/4/2021
8/19/2021
8/19/2021
Cat Loss Reserve
9/3/2021
9/3/2021
9/20/2021
9/20/2021
10/5/2021
10/5/2021
Sale completed
Life and Annuity
10/20/2021
NY Life and annuity sale completed
10/20/2021
11/5/2021
E
11/5/2021
3.0%
2.5%
1.5%
1.0%
0.5%
0.0%
3.5%
2.0%
<4
American International Group (AIG; Buy, on CL; TP: $74)
We initiate coverage of American International Group with a Buy rating (and add the
shares to the Americas Conviction List) and a 12-month target price of $74 indicating a
37% return including dividends. Our optimism for AIG is underpinned by our view that 1)
the General Insurance business should continue to improve margins fueled by
International pricing as well as terms and conditions improvements, 2) General
insurance growth should outpace estimates and provide material expense flexibility, 3)
We see a more robust ROE improvement initiative, and 4) We expect a material uptick in
share repurchases relative to expectations driven by the strong holding company
liquidity position. In combination, we think these drivers will allow the combined AIG
business to trade up towards book value ex AOCI as it becomes more clear what the
ROE trajectory of the company looks like. The company’s current AIG 200 program is a
start and management expects it to offset some stranded costs, but we think the
company will target double digit ROEs fueled by expense reduction, and we see the
separation of the Life & Retirement business as a potential catalyst. We think this
represents one of the most interesting ROE improvement opportunities in all of
insurance and the levers to achieve it are more easily executed in comparison to the
re-underwriting process that the management team has had success executing on in
General Insurance.
Continued benefit from commercial pricing conditions in the US and

Internationally: We see continued improvement in AIG’s General Insurance margins
driven by 1) underwriting discipline in North America, 2) a favorable rate environment in
the International business, and 3) changes to terms and conditions. While the first two
items are fairly well understood and estimated, we think the changes to terms and
conditions could be particularly powerful for AIG. We have heard from many companies
that these changes to attachment points, sub limits, deductibles, etc. should help loss
trend. Given AIG’s focus on correcting underwriting practices of the past, we think
these changes to terms and conditions will likely be most magnified in their impact for
AIG. The benefit of this element of the hard commercial market is also the hardest to
quantify in our view. And while we suspect AIG is not fully factoring these changes in to
its accident year loss picks, we would expect the company to begin to benefit from
favorable reserve development over time which we think is a crucial sign post that
investors are looking for following the re-underwriting of the business.
Growth is finally coming for AIG: AIG’s General Insurance premium CAGR from
2015-2020 was -6.5% as the company shed large amounts of risk in an effort to
re-underwrite the General Insurance business. While these cuts were necessary to get
the company’s profitability on the path it is on today, it has also been a significant
headwind for expense ratios (negative operating leverage) as well as underwriting
leverage. We now expect 2021 full year growth to reach nearly 14% and see high single
digits growth extending into 2022. We see this significant shift in the growth profile
indicating that the company is feeling more confident about the impact of the
underwriting changes and it will also afford AIG much more flexibility to work on
expense improvement across the company which we think will be a critical element of
22 November 2021 55
the ROE improvement story for RemainCo over the next few years.
EPS buyback upside: Part of our estimate upside is the substantial liquidity position
and our view that the company has significant capacity to repurchase stock following
the recapitalization of the Life & Retirement business. After considering the holding
company cash waterfall outlined below, we think that the company has capacity to do
up to an incremental $6.5bn of share repurchases in 2021. Our EPS estimates assume
around $4bn of buybacks in excess of what we would consider to be a normal run rate
for the company in 2022E. As a result, our share count reduction leaves us with diluted
shares that are around 7% lower than Visible Alpha Consensus for 2023E. We note that
our estimates do not assume either proceeds from the IPO or the lost earnings from a
greater non-controlling interest.
Exhibit 84: Holding Company Liquidity Waterfall - American International Group

$ in Millions
Parent Liquidity at 9/30/2021 5,300
Plus: Blackstone Proceeds of 9.9% L&R Sale 2,200
Plus: Affordable Housing Sale 4,000
Plus Dividends from Insurance Subsidiaries 500
Less: Common Dividends (262)
Less: Planned Debt Reduction in 4Q21 (1,000)

Less: Share repurchased planned (950)
Estimated Parent Liquidity at 12/31/2021 9,788
Plus: Repayment of the promissory note w/ L&R 8,300
Less: Debt Reduction to get to 25% RemainCo debt / cap (7,500)
Estimated Parent Liquidity at 12/31/2021 Proforma Recap 10,588
Less: Holding Company Liquidity Minimum (4,100)
Estimated Holding Company Cash Available for Buybacks 6,488
L&R Transactions to date overview: AIG has entered into several transactions in order
to generate liquidity prior to the intended L&R IPO. The L&R IPO was initially marketed
as an equity carve out of 19.9%; however, the recent Affordable Housing Sale (AHS)
reduced the benefit of the associated tax structure with a <20% initial IPO and resulted
in management stating that up to 50% of the entity may be available in the primary
offering.
22 November 2021 56
Exhibit 85: AIG’s ongoing and anticipated transaction summary details

Equity Stake in L&R IPO Affordable Housing Sale SMA Agreements
Blackstone Real Estate Income Trust
Subsidiaries of L&R will enter into a
Blackstone acquired a 9.9% equity (BREIT) will purchase from SAFG
AIG to IPO 19.9% of its L&R SMA agreement with Blackstone to
Transaction stake in L&R as the cornerstone Retirement Services, Inc. (and certain
business. Possible IPO of up to 50% perform certain investment
investor of its affiliates) it's Affordable Housing
management services
assets
$2.2B (1.1x target pro forma adjusted

target book value of $20bn)
$5.1B in cash, a portfolio of equity and Transfer of $50B of existing Life and
debt interests in operating Retirement illiquid assets, which
Consideration A GAAP loss on sale is anticipated Refer to SOTP and valuation analysis
partnerships that own affordable increases to ~$92.5B over next the 6
with a 9.9% equity purchase by
housing properties years
Blackstone & with IPO due to the
inclusion of OCI and GAAP BV.
Expected closing during 4Q21 subject

Approvals and to Blackstone’s right to close earlier
Closed 4q21 Assume 1H22 Closed 4q21
Timing upon at least one month’s prior notice
to AIG
Blackstone will manage speciality

Proceeds will likely be shifted to the holdco for de-levering, repurchases, $5.1 billion purchase price translates
asset classes (mostly private credit,
future M&A, and general corporate expenses. to an ~$3 billion after-tax gain on sale,
altenatives, and structured products).
which will benefit book value
Use of Proceeds, The fee structure is set to 30bps on
Debt to be raised at L&R entity & used to pay down AIG debt, shifting
Transaction the initial $50bn transferred increasing
leverage for both L&R and AIG to be more in line with relative peers. Provides ~$4 billion of cash to parent
structure to 45bps for the annual additional
with a minority portion held back in a
transfers and reinvestments. Fee
Estimated public company costs L&R at ~$75mn offset by ~$100 mn extra regulated L&R due to RBC
structure will gradually rise to ~43bps
savings as part of the AIG200 project. (Over the next 18 months) requirements
by the end of the 6 year contract.
The NOL portion of AIG's DTA, will still be available to offset future General
Insurance and/or AIG taxable income.
Upon tax deconsolidation, what will cease is the ability to utilize up to 35% of
Tax Implications NA NA
life insurance company income against NOLs or any remaining FTC.
As of June 30, that portion of the DTA totaled $6.3 billion and is available to
offset up to $30 billion of taxable income.
Blackstone will be required to hold its ownership interest in SAFG following

the completion of the separation of the L&R business, subject to exceptions
Blackstone to sell 25%, 67% and 75% of its shares after the first, second and
third anniversaries, respectively, of the initial public offering of SAFG (the
IPO), with the transfer restrictions terminating in full on the fifth anniversary of
the IPO. Fees will preceed benefits as they are
charged on AUM, therefore, we
The change here will impact the pro-
Other In the event that the IPO of SAFG is not completed prior to the second expect a dip in NII within L&R for the
forma BS of the L&R IPO.
anniversary of the closing of the transaction, Blackstone will have the right to NTM as investments are rolled into
require AIG to undertake the IPO, and in the event that the IPO has not been the funds higher yield assets but still
completed prior to the third anniversary of the closing, charged the incrementally higher fee.
Blackstone will have the right to exchange all or a portion of its ownership
interest in SAFG for shares of AIG’s common stock on the terms set forth in
the definitive agreement.
The three key places where we differ from consensus are on 1) share repurchases given
the strong holdco cash position, 2) more aggressive expense reduction to improve the
overall ROE, and 3) better growth and expense improvement in AIG’s General Insurance
property & casualty business. AIG has spent several years improving the underwriting
performance of the P&C operation, and we view that as the more difficult task that is
showing signs of completion. The next phase of AIG’s ROE improvement, is likely more
geared towards improving expense efficiencies which is arguably something that
management has more control over and can improve much faster than the period of
time it took to turn around the underwriting results of the P&C operation. With this
powerful combination of ROE improvement and share repurchase capacity, we see
upside to AIG of 37% to our target price of $74.
22 November 2021 57

$ mn, except per share data
GS GS GS GS GS
North America - Commercial 161 103 56% 92 153 -40% (316) (374) -15% 490 626 -22% 836 773 8%
North America - Personal (7) (17) -61% (14) (17) -16% 271 261 4% 8 (72) -111% 67 (50) -234%
North America 154 85 78 137 (45) (114) 498 554 904 723
International - Commercial 226 193 17% 279 237 18% 536 503 6% 1,032 916 13% 1,178 1,030 14%
International - Personal 102 94 9% 101 97 4% 547 539 2% 410 398 3% 425 438 -3%
International 328 287 380 334 1,083 1,042 1,442 1,314 1,603 1,468
General Insurance Underwriting 482 373 458 471 1,038 929 1,940 1,868 2,507 2,191 14%
General Insurance NII 641 642 0% 642 634 1% 2,935 2,934 0% 2,596 2,540 2% 2,662 2,579 3%
General Insurance Pretax Operating Income 1,122 1,015 1,100 1,105 3,972 3,863 4,535 4,408 5,169 4,769 8%
Individual Annuities 464 483 -4% 462 489 -6% 1,905 1,924 -1% 1,856 1,976 -6% 1,896 2,029 -7%
Group Retirement 243 259 -6% 272 259 5% 1,213 1,229 -1% 1,096 1,036 6% 1,099 1,059 4%
Life Insurance (17) 34 -148% (1) 48 -102% 97 148 -34% 171 274 -38% 256 324 -21%
Institutional Markets 95 112 -15% 94 116 -19% 511 529 -3% 355 458 -23% 363 480 -24%
L&R Corporate - NA - - NA - - NA (281) - NA (552) - NA
Life & Retirement 785 888 826 911 3,726 3,830 3,197 3,745 3,061 3,890 -21%
Corporate (517) (426) 21% (474) (411) 15% (1,757) (1,666) 5% (1,470) (1,613) -9% (1,035) (1,568) -34%
Consolidation & Eliminations (45) (92) -51% (45) (81) -44% (507) (552) -8% (180) (324) -44% (180) (321) -44%
Pretax Income 1,346 1,386 1,408 1,524 5,435 5,475 6,082 6,216 7,016 6,770
Income Tax 303 298 2% 317 328 -3% 1,105 1,100 0% 1,368 1,331 3% 1,579 1,456 8%
NCI (66) (68) -3% (70) (69) 1% (241) (243) -1% (285) (332) -14% (279) (403) -31%
Preferred Dividends 6 7 -15% 6 7 -15% 28 29 -3% 44 28 55% 50 28 78%
Aftertax Operating Income 971 1,013 1,016 1,120 4,061 4,103 4,385 4,525 -3% 5,108 4,884 5%

Avg. shares, diluted 839 846 -1% 815 835 -2% 863 865 0% 775 817 -5% 733 782 -6%
Buybacks ($ mn) 950 984 -3% 2,000 695 188% 2,601 2,645 -2% 5,500 2,959 86% 1,600 2,117 -24%
Op EPS $ 1.16 $ 1.17 -1% $ 1.25 $ 1.31 -5% $ 4.70 $ 4.72 0% $ 5.66 $ 5.37 5% $ 6.97 $ 6.08 15%
BVPS $ 78.14 $ 80.26 -3% $ 79.69 $ 81.47 -2% $ 78.14 $ 80.32 -3% $ 84.40 $ 85.62 -1% $ 90.61 $ 91.88 -1%
ROE 5.5% 6.0% -50bps 6.0% 6.9% -97bps 10.1% 6.1% 397bps 6.7% 6.8% -10bps 8.1% 7.3% 82bps
Op ROE 6.6% 7.1% -51bps 7.0% 7.8% -82bps 7.0% 7.3% -29bps 7.7% 7.7% 1bps 8.9% 8.3% 59bps
BALANCE SHEET
Total investments 354,355 364,080 -3% 351,094 369,505 -5% 354,355 364,080 -3% 350,184 387,256 -10% 352,599 415,803 -15%
Long-term debt 23,582 30,277 -22% 21,582 30,235 -29% 23,582 30,277 -22% 21,582 29,778 -28% 21,582 29,612 -27%
Total AIG shareholders' equity 64,535 65,875 -2% 63,353 65,800 -4% 64,535 65,875 -2% 62,281 65,355 -5% 64,857 66,859 -3%
GENERAL INSURANCE
Net premiums written 6,134 6,067 1% 7,316 7,202 2% 26,063 25,996 0% 28,341 27,948 1% 29,799 29,323 2%
NPW growth 10% 8% 213bps 13% 9% 394bps 14% 12% 113bps 9% 7% 220bps 5% 5% -18bps
Net premiums earned 6,646 6,457 3% 6,508 6,608 -2% 25,150 24,961 1% 27,608 27,149 2% 29,406 28,661 3%
Loss ratio 62.0% 62.9% -88bps 62.3% 61.5% 83bps 64.3% 64.5% -25bps 62.6% 62.2% 37bps 61.5% 61.9% -35bps
Cat impact 2.6% 3.6% -96bps 4.2% 3.4% 81bps 5.4% 5.7% -27bps 4.3% 4.2% 12bps 4.3% 4.2% 15bps
PYD impact (favorable)/adverse 0.2% -0.1% 30bps 0.0% -0.7% 73bps -0.5% -0.5% 5bps 0.0% -0.7% 73bps -0.4% -0.7% 37bps
Underlying loss ratio 59.2% 59.5% -22bps 58.2% 58.9% -71bps 59.4% 59.4% -2bps 58.3% 58.8% -48bps 57.6% 58.5% -86bps
Expense ratio 30.7% 31.3% -60bps 30.6% 31.3% -73bps 31.6% 31.7% -16bps 30.4% 30.9% -51bps 29.9% 30.5% -57bps
Combined ratio 92.8% 94.2% -148bps 93.0% 92.9% 10bps 95.9% 96.3% -41bps 93.0% 93.1% -14bps 91.5% 92.4% -92bps
AY combined ratio ex cats, as adjusted 90.0% 90.8% -78bps 88.8% 90.0% -124bps 91.0% 91.2% -18bps 88.7% 89.5% -79bps 87.5% 88.8% -125bps
Underwriting income (loss) 482 373 29% 458 472 -3% 1,038 929 12% 1,940 1,868 4% 2,507 2,183 15%
Net investment income (loss) 641 642 0% 642 634 1% 2,935 2,934 0% 2,596 2,540 2% 2,662 2,579 3%
Pre-tax operating income 1,122 1,015 11% 1,100 1,106 -1% 3,972 3,863 3% 4,535 4,408 3% 5,169 4,761 9%

Downside risks: The primary downside risks in our view would be the emergence of
evidence that creates questions surrounding AIG’s turnaround such as above industry
CAT losses or reserve issues, or any potential negative capital impacts.
Valuation
We assign a $74 12-month target price to AIG which assigns a 1.0x P/BVPS xAOCI
multiple to our 3Q22 estimate, implying a 37% total return. For AIG, the multiple we are
assigning is informed in large part by our sum of the parts valuation exercise.
22 November 2021 58
Exhibit 87: Sum of the parts - AIG

$ in Millions
GS After Tax Operating Earning Est. Target P/E Target / BVPS x AOCI 12m Target Price
Q5 - Q8 2021E 2022E 2023E 2024E NTM 2021E 2022E 2023E 2024E 3Q22 Multiple Aggregate Per Share
Individual Retirement 1,507 1,405 1,453 1,517 1,526 6.0x 6.4x 6.2x 6.0x 5.9x 9,045 $11.91
Group Retirement 879 894 859 879 894 9.5x 9.3x 9.7x 9.5x 9.3x 8,351 $11.00
Life Insurance 200 71 137 204 218 7.0x 19.6x 10.2x 6.8x 6.4x 1,400 $1.84
Institutional Markets 290 377 277 290 332 7.5x 5.8x 7.8x 7.5x 6.5x 2,174 $2.86
Life and Retirement 2,876 2,747 2,726 2,891 2,970 7.3x 7.6x 7.7x 7.3x 7.1x 20,969 $ 27.62
Corporate and other - Life (445) - (225) (442) (437) 7.3x 7.6x 7.7x 7.3x 7.1x (3,241) ($4.27)
Life & Retirement - Including Corporate Expense Load 2,432 2,747 2,501 2,449 2,533 7.3x 6.5x 7.1x 7.2x 7.0x 19,306 0.92x 17,728 $23.35
Preferred Dividends - Life 34 8 27.5 34 34 7.3x 6.5x 7.1x 7.2x 7.0x (248) ($0.33)
Non-controlling Interest (237) (56) (245) (239) (247) 7.3x 6.5x 7.1x 7.2x 7.0x (1,731) ($2.28)
Life & Retirement - Excluding BX Interest 2,160 2,683 2,228 2,176 2,252 7.3x 5.9x 7.1x 7.2x 7.0x 15,749 $20.74
General Insurance 3,894 3,158 3,528 4,011 4,230 13.4x 16.5x 14.8x 13.0x 12.3x 52,144 $68.67
Corporate and Other- RemainCo (1,048) (1,574) (1,316) (1,023) (903) 12.7x 8.4x 10.1x 13.0x 14.7x (13,293) ($17.51)
Preferred Dividends - RemainCo 16 20 16 16 16 13.4x 16.5x 14.8x 13.0x 12.3x (208) ($0.27)
Non-controlling Interest - ReaminCo - RemainCo (40) (185) (40) (40) (40) 12.7x 8.4x 10.1x 13.0x 14.7x (520) ($0.68)
RemainCo - General Insurance 2,789 1,379 2,157 2,932 3,270 13.4x 16.5x 14.8x 13.0x 36,477 1.05x 38,122 $50.21
DTA 2,048 $2.70
Total 4,950 4,062 4,385 5,108 5,522 11.3x 13.8x 12.8x 10.9x 55,783 1.00x 55,919 $74.00
Upside / Downside 29.9%

22 November 2021 59
$-
$1
$2
$3
$4
$5
$6
10%
-50%
-40%
-30%
-20%
-10%
0%
1/2/2018 1/2/2018
1/17/2018 1/17/2018
2/2/2018 2/2/2018
E
2/22/2018 2/22/2018
Validus
3/14/2018 3/14/2018
22 November 2021
AIG to acquire
3/30/2018 3/30/2018
Goldman Sachs
4/19/2018 4/19/2018
Alpha
E
5/7/2018 5/7/2018
5/24/2018 5/24/2018
AIG to acquire UK Ellipse

Close of Validus
Chart data begins January 1, 2018.

6/11/2018 6/11/2018
6/26/2018 6/26/2018
7/11/2018 7/11/2018
7/26/2018 7/26/2018
E
DSA Re partnership
8/10/2018 8/10/2018
8/27/2018 8/27/2018
9/11/2018 9/11/2018 Cat Loss preannounced
Glatfelter acq. announced
9/26/2018 9/26/2018
10/11/2018 10/11/2018
Brexit restructure approved
E
10/29/2018 10/29/2018
11/13/2018 11/13/2018
11/28/2018 11/28/2018
12/13/2018 12/13/2018
Close of Glatfelter acq.
12/28/2018 12/28/2018
1/14/2019 1/14/2019
1/29/2019 1/29/2019
E
2/13/2019 2/13/2019
2/28/2019 2/28/2019
3/15/2019 3/15/2019
Carlyle Group 19.9% in…
4/1/2019 4/1/2019
4/16/2019 4/16/2019
Acq. of UK Ellipse
Mark Lyons CFO
5/1/2019 5/1/2019
E
5/16/2019 5/16/2019
Source: Axioma US4M Model, Factset, Company data, Goldman Sachs Global Investment Research
5/31/2019 5/31/2019
6/17/2019 6/17/2019
Exhibit 88: Drivers of Alpha Performance - American International Group
7/2/2019 7/2/2019
7/17/2019 7/17/2019
8/1/2019 8/1/2019
E
8/16/2019 8/16/2019
PRT $750mn to AIG L&R
9/2/2019 9/2/2019
9/17/2019 9/17/2019
10/2/2019 10/2/2019
10/17/2019 10/17/2019
EPS Consensus Est.

E
11/1/2019 11/1/2019
11/19/2019 11/19/2019
12/4/2019 12/4/2019
12/19/2019
holdings acquisition
12/19/2019
1/3/2020 1/3/2020
1/20/2020 1/20/2020
Carlyle and T&D to acquire Fortitude Group majority
2/5/2020 2/5/2020
E
2/20/2020 2/20/2020
3/6/2020 3/6/2020
Carlyle and T&D complete Fortitude Group majority
3/23/2020 3/23/2020
4/7/2020 4/7/2020
4/22/2020 4/22/2020
E
5/7/2020 5/7/2020
5/22/2020 5/22/2020
6/8/2020 6/8/2020
6/23/2020 6/23/2020
7/8/2020 7/8/2020
7/23/2020 7/23/2020
E
8/7/2020 8/7/2020
AIG to relocate to NYC
8/25/2020 8/25/2020
9/9/2020 9/9/2020
9/24/2020 9/24/2020
10/9/2020 10/9/2020
10/26/2020 10/26/2020
E
11/10/2020 11/10/2020
11/26/2020 11/26/2020
12/11/2020 12/11/2020
Redeem 3.3% notes
12/28/2020 12/28/2020
1/13/2021 1/13/2021
1/29/2021 1/29/2021
E
2/15/2021
trans.
2/15/2021
3/2/2021
Touchstone
3/2/2021
3/17/2021
Zaffino to be CEO
3/17/2021
L&R to separate &
4/1/2021 4/1/2021
4/16/2021 4/16/2021
5/3/2021
E
5/3/2021
5/18/2021 5/18/2021
6/2/2021 6/2/2021
6/17/2021 6/17/2021
7/2/2021 7/2/2021
7/19/2021 7/19/2021
Tender offer
E
8/3/2021 8/3/2021
8/18/2021 8/18/2021
9/2/2021 9/2/2021
9/17/2021 9/17/2021
10/4/2021 10/4/2021
BX L&R partnership & AHS announced
10/22/2021 10/22/2021
E
11/8/2021 11/8/2021
BX 9.9% Trans. Closes
3.0%
2.5%
2.0%
1.0%
0.5%
0.0%
1.5%
<0
Exhibit 89: Company Profile - American International Group

Price $54.95 S/O (m) 830
NAIC 6
Market Cap ($bn) $45.6b Float 99.9% 1M 3M 12M YTD 24M 1% Other Other Gov
Price Target $74 Volume (m) 4,865 AIG -6.3% 3.8% 42.6% 45.1% 2.9% 1% US Gov 4%
NAIC 5 Real Estate ST Inv
+/- 34.7% XLF -2.2% 4.2% 42.3% 32.4% 30.6% 1% 2%
2% 4%
NR
Dividend Yield 2.5% S&P500 3.9% 6.6% 31.2% 25.1% 50.6% NAIC 4 12% Policy Loans LPs
Total Return 37.2% 3% 1% 3%
NAIC 3 Munis &
BVPS Estimates Price Chart (Indexed) Utilities
3%
4Q21E 2021E 2022E 2023E Mortgage 11%
200
BVPS $78.14 $78.14 $84.40 $90.61 Loans
BVPS ex-AOCI $71.26 $71.26 $76.70 $82.67 12%
180
NAIC 1
Earnings Estimates
51%
4Q21E 2021E 2022E 2023E Structured
160
GS EPS Estimates $1.16 $4.70 $5.66 $6.97 NAIC 2 Products
Consensus EPS Estimates $1.20 $4.67 $5.37 $6.02 29% 18% Corporate
140 Debt
Op. ROCE 6.6% 7.0% 7.7% 8.9% 42%
120
P/E 11.9x 11.7x 9.7x 7.9x
P/BVPS ex-AOCI 0.8x 0.8x 0.7x 0.7x

100

Repurchases ($m) 950 2,601 5,500 1,600 80
TTM Business Mix
Key Financials
60
4Q21E 2021E 2022E 2023E Revenues Pre-Tax Earnings
Core P&C Net Premiums Written ($m) 6,134 26,063 28,341 29,799
Combined Ratio 92.8% 95.9% 93.0% 91.5% 40 Institutional North America - North
Nov-18
Apr-19
Jun-19
Nov-19
Apr-20
Jun-20
Nov-20
Apr-21
Jun-21
Nov-21
Feb-19
Sep-19
Jan-20
Sep-20
Jan-21
Sep-21
markets Commerical America -
Prior Year Development 0.2% -0.5% 0.0% -0.4% 8% -9% Personal
CAT 2.6% 5.4% 4.3% 4.3% -8%
Underlying Combined Ratio 93.2% 94.3% 88.7% 87.5% AIG SPX XLF
Institutional
markets
Life Insurance North America 9%
Historical Price / NTM Projected Earnings Group 10% - General
Retirement Insurance Group
Price to Earnings Price to BVPS ex-AOCI 6% 27% Retirement
International -
13.5x 1.0x Commerical
Fwd P/E Mean +1 Std Dev -1 Std Dev 21%
12.5x 0.9x P/BV Mean +1 Std Dev -1 Std Dev 9%
11.5x Individual
0.8x Retirement
10.5x
0.7x 12%
9.5x
8.5x 0.6x International -
General
7.5x 0.5x Individual
Insurance
6.5x 0.4x 37% Retirement
5.5x 37% International -
0.3x
4.5x Personal
3.5x 0.2x 7%
Nov-18
Nov-19
Jun-19
Nov-20
Feb-19
Jun-20
Nov-21
Apr-19
Sep-19
Jun-21
Apr-20
Sep-20
Apr-21
Sep-21
Jan-20
Jan-21
Nov-18
Nov-19
Jun-19
Nov-20
Jun-20
Nov-21
Jun-21
Feb-19
Apr-19
Sep-19
Apr-20
Sep-20
Apr-21
Sep-21
Jan-20
Jan-21
$90 10.0%
10
9.0%
2016 2017 2018 2019 2020 2021E 2022E 2023E
$80 9
$82.67
8.0%
Share Repurchases ($m) 11,460 6,275 1,739 - 500 2,601 5,500 1,600
8
$76.70
$70
Dividends ($m) 1,361 1,166 1,133 1,113 1,103 1,080 1,056 1,093
$71.26
7
$69.20
7.0%
$66.67
$66.41
$66.18
$60
BVPS ex-AOCI
6 Divi & Repo ($m) 12,821 7,441 2,872 1,113 1,603 3,681 6,556 2,693
Op. ROCE
6.0%
$50 5
5.0%
$40 4 Core Earnings ($m) 404 2,229 194 4,078 2,201 4,062 4,385 5,108
4.0%
3 Divi & Repo (% of Earn) 3173% 334% 1480% 27% 73% 91% 150% 53%
$30
3.0% 2
$20 2.0% 1
$10 1.0% 0
Dec-20
Jun-21
Jun-21
Nov-21
Nov-21
Feb-21
Feb-21
Apr-21
Apr-21
Jul-21
Jul-21
Jul-21
Oct-21
Oct-21
Mar-21
Mar-21
Aug-21
Aug-21
Sep-21
Sep-21
Jan-21
Jan-21
May-21
May-21
$0 0.0%
2017 2018 2019 2020 2021E 2022E 2023E
22 November 2021 <<

Chubb Limited (CB; Buy; TP: $230)
We are initiating on Chubb with a Buy rating and 12-month target price of $230 implying
a 24% total return. Our Buy rating is underpinned by our view that CB has a unique
combination of 1) redundant existing reserves paired with 2) core loss ratios that are
strong, improving, and being booked conservatively with future reserve releases
embedded within loss picks. We view CB as a quality underwriter with among the
highest quality level of margin and stability of margin with above-average exposure to
the desirable parts of the hard commercial pricing cycle. In our view, the company’s
stronger-than-peer pricing power which stems from its large account focus on the
commercial side, and high-net worth focus on the personal lines side, position it well to
drive premium growth during what we view as favorable underwriting vintages to
deploy capital into. Within our coverage group we expect CB to be a major beneficiary of
rate in excess of loss trend, operating leverage, and favorable prior year reserve
development.
Premium growth to continue to benefit from large account focus and the return of
exposure growth: YTD P&C net premium written growth of 14% is roughly 3x the
growth achieved in 2020, benefiting primarily from double digit pricing increases due to
the company’s large account orientation with exposure to E&S and a weighting towards
casualty lines. However, despite evidence of an economic recovery and above-average
GDP growth in 2021, exposure growth has yet to fuel premium levels in commercial
lines. As such, over the coming quarters while we expect pricing increases to moderate,
we think there will be a partial offset in growth of exposures. We estimate that
commercial exposure is growth is lagging the economic recovery because 1) premium
audits (exposure true-ups) are often lagged 2) the Global A&H business (~10% of total
NPW) is still down -12% versus 2019 levels due to exposure to Asia-Pacific travel, and 3)
in light of price increases, some insureds have increased deductibles. In regard to the
Global A&H business, many geographies in Asia are just reopening for travel, and a
recovery to 2019 premiums levels (an increase of ~$500mn+ versus 2021) would serve
to increase consolidated P&C premiums by +1.4% alone in 2022E.
Per Exhibit 92, rate increases are sticking better than some investors may have
expected, which is a trend we expect to continue. In our view, the company’s
international and E&S exposure (nearly 1/3 and 10% of P&C premiums, respectively)
should allow for an extended pricing cycle beyond that of a US standard lines oriented
insurer.
We also expect improved growth in 2022 from the company’s personal lines business,
which has grown only 3% YTD compared to 18% for commercial lines, despite
double-digit price increase within its high net worth homeowners segment. CB has
been re-underwriting its homeowners’ exposure in light of climate change-related risks,
particularly in California where it has cut exposure as it feels price increases in that
market are not adequate for the risk.
22 November 2021 62
Exhibit 90: North America Commercial NPW growth based on rate Exhibit 91: TTM NPW growth by product
versus exposure and other Growth has been led by commercial products most exposured to the
Growth has only recently begun to be bouted by exposure growth hardening cycle, partially offset by Global A&H and personal lines
20% 30%
3Q21 includes just
0.5pp of pure 25%
15% exposure growth
20%
15%
10%
10%
5% 5%
0%
0% -5%
-10%
-5% -15%
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
1Q21
2Q21
3Q21
1Q22E
2Q22E
3Q22E
4Q22E
1Q23E
2Q23E
3Q23E
4Q21E
-10%
1Q22E
3Q22E
3Q18
1Q19
3Q19
2Q20
4Q20
1Q18
2Q18
4Q18
2Q19
4Q19
1Q20
3Q20
1Q21
2Q21
3Q21
4Q21E
2Q22E
4Q22E
Commercial casualty Professional liability Property and other short-tail
Total Commercial Homeowners' Total Personal
Rate Exposure & other NPW growth Global A&H Consolidated
Source: Company data, Goldman Sachs Global Investment Research we do not model premium growth by individual product line.
Exhibit 92: CB management pricing commentary

Pricing increases have decelerated since 1Q21, yet they remains in double-digit territory and exceed loss cost by at least a mid-single digit margin
3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21

North America commercial +6.4% +9% +10.5% +14% +15% +16.5% +14.5% +13.5% +12%
Property
General & specialty casualty
Financial / professional lines
Risk management
U.S. middle market business ex WC +6.5% ex WC +7% ex WC over +7% +9.5% +9.5%
Workers' comp -4.5% -1% -0.5%
Property +7.3% +10.5% +18% +16% +15% +16% +10.5% +11%
Casualty +7.7% +6% ex WC +12% ex WC +11% ex WC +12% ex WC +12% ex WC +11% ex WC +11% ex WC
+32% (public D&O) +8% (financial lines) +14.5% +17% +20% +18.5% +17.5% +18%
Package +6% +6%

Excess umbrella +7% +20%
Commercial Auto +11%
U.S. major accounts +8% +10.5% +13% +16% +16% +13%
Property +29% +20% +21% +22% +30% +20% +12% +12%
Casualty ~+17.5% (excess +25.5% (+48% excess
~+27% (excess casualty) +31% +36% +34.5% +27% +21%
casualty) casualty)
Risk management casualty +4.5% +5.5% +8% +6.5% +7% +8% +9% +6%
General & specialty casualty +13% (Westchester +18% (Westchester
specialty) specialty)
'+42% (Bermuda) '+20% (Bermuda)
Financial / professional lines +17.5% (public D&O) +18.5% +23% +26% +21% +20% +17%
E&S wholesale +7.5% +15% +18% +16%
Property +17% +19% +18% +21% +23% +15.5% +16.5% +13%
Casualty +15% +31% +32% +29% +25% +21% +20%
Financial / professional lines +8.5% +12% +17% +25.5% +26% +25% +21% +21%
North America personal lines +4.5%
Homeowners +10.7% +13%
International retail commercial +10% +8% +16% +15% +17% +14% +16% +15%
Property +11% +11%
General & specialty casualty +3% (casualty)
+17% (financial lines) +33%
Marine
Aviation
London wholesale +17% +20% +18% +20% +32% +26% +20% +13% +11%
Property +21% +13%
Financial lines +16% +14%
Marine +8%
Aviation +27%
red/green shading indicates a decrease/increase in QoQ pricing levels.
Source: Company data, Data compiled by Goldman Sachs Global Investment Research
Improving and conservative loss ratios + operating leverage = robust margin

improvement story: With mid-double-digit rate increases on average and a ~5%
commercial loss trend, we estimate that CB is underwriting business with some of the
greatest inherent margin improvement within our coverage universe. Additionally, our
comfort with CB’s reserves combined with the sheer magnitude of rate versus loss
trend leads us to believe that the company will be able to continue to show margin
improvement, while still booking in a conservative manner. Furthermore, we think CB’s
exposure to international and E&S business (together nearly 40% of total P&C
Premiums) should serve to extend the hard pricing cycle beyond that of standard and
US-oriented insurers. International commercial lines business is currently exhibiting
22 November 2021 63
almost double the inherent margin improvement relative to US business (Exhibit 93) and
the international commercial hardening cycle is at an earlier stage, in our view.
On the expense ratio side of the margin equation, we expect CB to benefit from
stronger growth in earned premiums versus its primary commercial peers. While much
of the impact of mid-double-digit growth in earned premiums is still to come, 3Q21
results gave investors a glimpse of the meaningful expense ratio improvement that we
think is to be expected from CB. Improvement will be partially offset by increased travel
and entertainment (T&E) amounting to 30bps or less, business investment, and a
potential increase in acquisition costs over time as business mix reverts post outsized
growth of the next several years. Ultimately, we expect operating leverage to outweigh
any offsetting factors for what is already a lean expense ratio in absolute terms.
Exhibit 93: Commercial Lines Rate vs. Loss trend by Geography Exhibit 94: Expense Ratio improvement
Implied margin improvement is nearly double for international lines We expect expense ratio improvement in 2022E while VA consensus
calls for deterioration
15.0% Improvement Actual/Gse Consensus

13.7%
13.3% 2.5% 29%
28%
2.0%
27%
1.5% 26%
25%
1.0%
24%
5.5%
4.9% 0.5% 23%
3.0% 22%
0.0%
21%
-0.5% 20%
AIG CB HIG TRV WRB AIG CB HIG TRV WRB 2020 2021E2022E2023E
North America Commercial International Commercial Total commercial 3Q21 expense ratio 3Q21 YTD expense ratio CB Commercial
improvement improvement expense ratio: GSe vs
Rate loss trend Consensus
Source: Company data, Goldman Sachs Global Investment Research Source: Visible Alpha Consensus Data, Company data, Goldman Sachs Global Investment
Research
Exhibit 95: Marsh commercial pricing index
Global pricing, and more specifically the UK, are seeing greater pricing
increases versus the US
50%
40%
30%
20%
10%
0%
Q3 2018
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
Q4 2018
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
-10%
Global U.S. U.K.
We see modestly redundant reserves, with AY2020 favorability offsetting

deficiencies in AY2018/AY2019: The main conclusions from our analysis of both GAAP
and STAT reserves implies that CB has been quick to address liability related
deficiencies which have developed over the last several years (though we think some
22 November 2021 64
still remain) and that AY2020 favorability outweighs modest prior AY deficiencies.
Ultimately, we see AY2020 being redundant by $1.4bn, more than offsetting $410mn of
reserve deficiencies for AY2019 and prior, equating to a $960mn (5.4% of STAT surplus)
redundancy for US reserves. In a similar method to other commercial lines players, we
assume a -1% loss trend adjustment for AY2020 from the 3-year average LDF to
account for reduced claim frequency during the pandemic.
YTD CB has continued to true-up reserves for the deficiencies we identified in our
schedule P analysis. This includes $74mn of net adverse development in commercial
auto, $74mn net adverse in excess and umbrella portfolios, and $26mn for high
deductible general liability coverages; all for AY’s 2016 and beyond. Since 2017, CB has
taken $380mn+ of net adverse development in General/Auto liability and commercial
multi-peril combined.
Exhibit 96: NA Commercial Reserve Development (GAAP)
$800
$700
$600
$500
$400
$300
$200
$100
$0
-$100
-$200
2016 2017 2018 2019 2020 3Q21 YTD
Professional Liability Excess and Umbrella Workers Compensation
General/Auto Liability & CMP Foreign Casualty Structured Deals
Other Long-tail Short-Tail
Exhibit 97: Estimated Redundancy / (Deficiency) by Accident Year and Product

$mn, based on 2020 Schedule P analysis
Total
Comm. Other Liab. Other Liab. Private Pass. Workers'
Chubb Comm. Multi Peril Reserves in All others All Lines
Auto Liab (Claims) (Occurrence) Auto Liability Comp
Analysis
Redundancy / (Deficiency)
Prior - - - - - - - - -
AY2011 0 (7) (4) (6) 0 (35) (52) (30) (82)
AY2012 (1) (1) 88 13 (0) (52) 47 (41) 5
AY2013 0 38 (39) (32) (0) (25) (57) (34) (91)
AY2014 (1) 21 (46) (25) (0) 9 (42) (41) (83)
AY2015 (32) (25) 28 (58) (3) 0 (89) (52) (141)
AY2016 (31) (16) 26 (87) (2) 91 (20) (39) (59)
AY2017 (41) (54) 77 (35) (1) 177 123 (40) 82
AY2018 (58) (137) 79 (312) 9 215 (203) (58) (261)
AY2019 21 25 (5) (242) 19 66 (116) (199) (315)
AY2020 173 31 602 67 83 413 1,369 418 1,787
Total 31 (125) 807 (716) 103 859 959 (116) 843
22 November 2021 65
Exhibit 98: CB Statutory total commercial lines initial vs. most recent
loss pick
CB has already begun to take reserve hits for AY2018/AY2019, but we
expect more to come, but with overall net PYD remaining favorable
75%
70%
65%
60%
55%
50%
AY2011 AY2012 AY2013 AY2014 AY2015 AY2016 AY2017 AY2018 AY2019 AY2020
Initial loss pick Most recent loss pick
Business mix shift shows growth in hard market lines of business: CB has
cycle-managed by growing in property lines (+4.6pp) and professional liability (+0.6pp)
over the trailing 3-year period as rates picked up, while decreasing exposure to WC
(-2.9pp) as rate adequacy has become less attractive (albeit overall underwriting
conditions remained strong). We note that property growth occurred despite a reduction
in probable maximum loss (PMLs), which have decreased 20%+ since 2017, indicating
conservative catastrophe management.
Exhibit 99: CB NPW distribution

Growth has stemmed from hard market lines of business
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
1Q21
2Q21
3Q21
International other casualty Property and other short-tail lines

Surety Professional liability
Workers' compensation Commercial casualty
Commercial multiple peril
22 November 2021 66
Exhibit 100: Net Probable Maximum Loss (PML) as a % of shareholder’s equity

PMl’s have decreased 20%+ since 2017 despite increased exposure to property and other short-tail lines.
8,000 15%
7,000 13%
PML as % of total shareholders' equity

6,000 11%
5,000 9%
Net PML ($mn) 4,000 7%
3,000 5%
2,000 3%
1,000 1%
- -1%
2017 2018 2019 2020 3Q21 2017 2018 2019 2020 3Q21 2017 2018 2019 2020 3Q21
Worldwide U.S. Hurricane California EQ
(annual aggregate) (annual aggregate) (single occurrence)
1-in-10 ($) 1-in-100 ($) 1-in-250 ($) 1-in-10 (% of ShE) 1-in-100 (% of ShE) 1-in-250 (% of ShE)
Exhibit 101: CB catastrophe losses as a% of NPE

We model a CAT load that is modestly above consensus levels
10.6%
Catastrophe losses as a % of NPE
4.4%
10.2% consensus 4.4%
7.5%
5.8% 6.2%
4.0% 4.1% 4.6% 4.5% 4.5%
2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E
CATs ex COVID COVID losses Total CATs
Source: Visible Alpha Consensus Data, Company data, Goldman Sachs Global Investment Research

Our estimates are 5%+ above VA consensus in both 2022/2023, driven by our
underlying combined ratios of 86.8%/86.6% which are both 1pp+ better than the Street.
We believe the differential stems from our expectation for commercial underlying loss
ratios to benefit from pricing in excess of loss cost to a greater degree, and for more
operating leverage to be generated.
22 November 2021 67

GS GS GS GS
Cons. Diff Cons. Diff Cons. Diff GS Estimate Cons. Diff Cons. Diff
Estimate Estimate Estimate Estimate
NPW growth 10% 8% 11% 6% 12% 10% 9% 10% 5% 10%
Net premiums earned 9,256 9,209 1% 9,128 9,061 1% 36,290 36,243 0% 39,696 39,389 1% 42,368 42,136 1%
Net investment income 923 912 1% 921 911 1% 3,738 3,727 0% 3,702 3,658 1% 3,760 3,716 1%
Operating income before income taxes 1,789 1,761 2% 1,890 1,795 5% 6,417 6,359 1% 7,771 7,267 7% 8,249 7,809 6%
Effective tax rate 16.0% 15.9% 5bps 16.1% 15.7% 42bps 15.5% 15.5% -1bps 16.1% 15.9% 18bps 16.1% 16.0% 10bps
Operating income to common shares 1,504 1,481 2% 1,585 1,514 5% 5,424 5,374 1% 6,520 6,110 7% 6,921 6,559 6%

Weighted average shares outstanding, diluted 432 433 0% 427 428 0% 442 442 0% 419 423 -1% 409 411 -1%
buybacks ($ mm) 1,000 1,024 -2% 1,300 1,022 27% 4,956 4,980 0% 3,550 3,137 13% 2,200 2,503 -12%
Dividends per-share $ 0.80 $ 0.80 0% $ 0.80 $ 0.80 0% $ 3.18 $ 3.17 0% $ 3.32 $ 3.31 0% $ 3.48 $ 3.39 3%
op EPS $ 3.48 $ 3.42 2% $ 3.72 $ 3.54 5% $ 12.26 $ 12.15 1% $ 15.56 $ 14.46 8% $ 16.93 $ 15.95 6%
BVPS $ 139.8 $ 139.7 0% $ 142.2 $ 142.1 0% $ 139.8 $ 140.0 0% $ 150.2 $ 149.5 0% $ 162.6 $ 160.4 1%
tangible BVPS, net of tax, ex. AOCI $ 91.37 $ 93.27 $ 91.37 $ 100.38 $ 112.3
ROE 10.0% 10.5% 13.3% 10.7% 10.8%
Op ROE 10.3% 9.9% 38bps 10.8% 9.8% 105bps 9.4% 9.8% -40bps 11.0% 9.8% 124bps 11.1% 9.8% 133bps
tangible operating ROE 15.5% 16.2% 14.2% 16.4% 16.0%
Debt-to-capital, ex. AOCI 20.5% 20.4% 20.5% 20.0% 19.1%
TOTAL P&C INSURANCE

NPW growth 11% 9% 29% 11% 6% 74% 13% 11% 26% 9% 6% 46% 5% 5% 10%
Segment income (loss) 1,397 1,678 -17% 1,497 1,712 -13% 5,007 6,000 -17% 6,128 6,849 -11% 6,526 7,373 -11%
Reported loss ratio 60.9% 60.3% 59bps 58.4% 58.9% -44bps 63.1% 63.0% 15bps 60.7% 61.1% -42bps 60.5% 60.8% -27bps
Cat loss ratio impact 4.9% 3.9% 100bps 3.8% 3.8% -1bps 7.5% 7.3% 25bps 4.6% 4.4% 13bps 4.5% 4.5% 6bps
PPD loss ratio impact -1.6% -1.8% 19bps -2.1% -1.9% -20bps -2.7% -2.8% 3bps -1.7% -1.7% -6bps -1.8% -1.7% -9bps
Combined ratio 87.6% 87.7% -4bps 86.1% 86.9% -88bps 89.7% 89.7% -1bps 86.8% 88.0% -124bps 86.6% 87.7% -111bps
Combined ratio ex. cats and PPD 84.3% 85.6% -123bps 84.3% 85.0% -66bps 84.9% 85.2% -26bps 84.0% 85.3% -132bps 83.8% 84.9% -108bps

The primary downside risks, in our view, are slower than expected premium growth,
lack of margin improvement, or net unfavorable reserve development.
Premium growth: Should the hard market decelerate quicker than expected or if CB
finds it more difficult to achieve exposure growth, premium growth would likely miss
our estimates. The upside we see for the company is particularly levered to CB’s
success is E&S and international markets.
Margin improvement: Should actual loss trends exceed CB’s long-term trend view of
5.5%, margins would likely miss our estimates. Given CB’s large account focus, social
inflation is a particular concern for the company.
Reserve development: We model more net favorable reserve development for CB

versus many peers, and the company has a history of reserve releases. Should reserve
development begin to be less favorable or net adverse, investors would question CB’s
reserve adequacy which supports its valuation and credibility as conservative
underwriter.
Valuation
We assign a 1.6x P/B ex AOCI multiple for CB shares, translating to a $230 12-month
price target based on our 3Q23E book value, reflecting a 24% total return, inclusive of a
1.7% dividend yield. Our assigned multiple represents a modest premium to regression
implied levels for an 11.5% ROE, reflective of the company’s high quality reserves,
above-average growth and leverage to the hard commercial pricing cycle. We adjust our
11% Q5-Q8 ROE upward by 0.5% to 11.5% in order to adjust for CB’s accounting for
certain alternative investments that peers primarily include within operating income.
22 November 2021 68
Exhibit 103: CB Company Profile

Price $188.25 S/O (m) 431
Market Cap ($bn) $81.5b Float 99.4% 1M 3M 12M YTD 24M
Price Target $230 Volume (m) 2,076 CB 3.3% 1.5% 27.7% 22.3% 23.2%
US Gov
+/- 22.2% S&P500 -2.2% 4.2% 42.3% 32.4% 30.6% Other
3%
Dividend Yield 1.7% XLF 3.9% 6.6% 31.2% 25.1% 50.6% B 1%
9004 AAA ST Inv
Total Return 23.9% 16274 Equity
BB 4% LPs
9495 Securities 9% Other Gov Munis &
BVPS Estimates Price Chart (Indexed) 4%
10% Utilities
4Q21E 2021E 2022E 2023E 200 8%
BVPS $140.02 $140.02 $151.23 $164.59
BBB
BVPS ex-AOCI $137.72 $137.72 $148.85 $162.15 17479 Structured
180
AA Products
Earnings Estimates 35412 17%
4Q21E 2021E 2022E 2023E 160
GS EPS Estimates $3.48 $12.26 $15.56 $16.93 A Corporate
19720 Debt
Consensus EPS Estimates $3.40 $12.02 $14.14 $15.80
140 44%
Op. ROE 10.3% 9.4% 10.9% 11.0%

120
P/E 13.5x 15.4x 12.1x 11.1x

100
Wtd Avg Diluted Shares (m) 432 442 419 409

Repurchases ($m) 1,000 4,956 3,550 2,200 80
TTM Business Mix
Key Financials 60
40 Life
Combined Ratio 87.6% 89.7% 86.8% 86.6% Insurance
Nov-18
May-19
Aug-19
Nov-19
May-20
Aug-20
Nov-20
May-21
Aug-21
Feb-19
Feb-20
Feb-21
Prior Year Development -1.6% -2.7% -1.7% -1.8% Global
-2%
Reinsurance
CAT 4.9% 7.5% 4.6% 4.5% 3% Life
Underlying Combined Ratio 84.3% 84.9% 84.0% 83.8% CB SPX XLF Insurance
7%
Overseas
General
Historical Price / NTM Projected Earnings North America Insurance
Price to Earnings Price to BVPS ex-AOCI Overseas
Commercial 30%
20.0x Fwd P/E Mean +1 Std Dev -1 Std Dev 1.6x North
P&C Insurance
19.0x General
P/BV Mean +1 Std Dev -1 Std Dev 44% America
18.0x Insurance
Commercial
17.0x 1.4x 27%
P&C
16.0x
Insurance
15.0x
1.2x 54%
14.0x
13.0x North America North
12.0x Personal P&C America
1.0x
11.0x Agricultural
Insurance
10.0x North America 14% Insurance North
9.0x 0.8x Agricultural 4% America
8.0x Insurance Personal P&C
7.0x 5% Insurance
Nov-18
Nov-19
Nov-20
Jul-19
Sep-19
Jul-20
Sep-20
Jul-21
Jan-19
Mar-19
May-19
Mar-20
Sep-21
Jan-20
May-20
Jan-21
Mar-21
May-21
0.6x 10%
n…
n…
n…
a…
a…
a…
a…
a…
a…
p…
p…
p…
v…
v…
v…
-…
-…
-…
Se
Se
Se
M
M
No
No
No
Ja
Jul
Ja
Jul
Ja
Jul
$180 12.0% 10 2016 2017 2018 2019 2020 2021E 2022E 2023E
9
$160 Share Repurchases ($m) - 830 1,021 1,531 516 4,956 3,550 2,200
10.0% 8
$162.15
$140 7 Dividends ($m) 1,274 1,312 1,341 1,356 1,394 1,391 1,374 1,408
$148.85
$137.72
Divi & Repo ($m) 1,274 2,142 2,362 2,887 1,910 6,347 4,924 3,608
BVPS ex-AOCI
$120 8.0% 6
$125.51
$121.05
Op. ROE
5
$114.89
$100
$109.15
6.0% 4
$80 Op Earnings ($m) 4,716 3,785 4,407 4,641 3,313 5,424 6,520 6,921
3
$60 4.0% 2 Divi & Repo (% of Earn) 27% 57% 54% 62% 58% 117% 76% 52%
$40 1
2.0% 0
$20
Dec-20
Nov-21
Nov-21
Jun-21
Jun-21
Jul-21
Jul-21
Jul-21
Oct-21
Oct-21
Feb-21
Feb-21
Apr-21
Apr-21
Aug-21
Aug-21
Sep-21
Sep-21
Jan-21
Jan-21
Mar-21
Mar-21
May-21
May-21
$0 0.0%
2017 2018 2019 2020 2021E 2022E 2023E
Source: Company data, Goldman Sachs Global Investment Research, FactSet, SNL Financial
22 November 2021 <9

$10
$11
$12
$13
$14
$15
$5
$6
$7
$8
$9
-5%
-25%
-20%
-15%
-10%
10%
15%
20%
0%
5%
1/2/2018
1/16/2018 1/2/2018
2/1/2018 1/16/2018
E
2/16/2018 2/1/2018
3/8/2018 2/16/2018
3/8/2018
22 November 2021
3/23/2018
Goldman Sachs
4/10/2018 3/23/2018
4/26/2018 4/10/2018
E
Note offering
4/26/2018
Alpha
5/11/2018
5/30/2018 5/11/2018
6/13/2018 5/30/2018
6/27/2018 6/13/2018
7/11/2018 6/27/2018
7/25/2018 7/11/2018
E
8/8/2018 7/25/2018
8/22/2018 8/8/2018
9/5/2018 8/22/2018
9/19/2018 9/5/2018
10/3/2018 9/19/2018
10/17/2018 10/3/2018
10/17/2018
E
10/31/2018
11/14/2018 10/31/2018
11/28/2018 11/14/2018
12/12/2018 11/28/2018
12/12/2018
Exhibit 104: Drivers of Alpha Performance - Chubb
12/26/2018
Share Repurch. Program
1/9/2019 12/26/2018
1/23/2019 1/9/2019
2/6/2019 1/23/2019
E
2/20/2019 2/6/2019
3/6/2019 2/20/2019
3/20/2019 3/6/2019
4/3/2019 3/20/2019
Partner with Banco de Chile
Source: Axioma US4M, FactSet, Company data, Goldman Sachs Global Investment Research
4/17/2019 4/3/2019
5/1/2019 4/17/2019
E
5/1/2019
Increase ownership in Huatai Ins.
5/15/2019
5/29/2019 5/15/2019
6/12/2019 5/29/2019
Notes Offering
6/26/2019 6/12/2019
7/10/2019 6/26/2019
7/24/2019 7/10/2019
Coal Policy
E
8/7/2019 7/24/2019
8/21/2019 8/7/2019
9/4/2019 8/21/2019
9/18/2019 9/4/2019
10/2/2019 9/18/2019
10/16/2019 10/2/2019
10/30/2019 10/16/2019
EPS Consensus Est.

E
11/13/2019 10/30/2019
11/28/2019 11/13/2019
12/12/2019 11/28/2019
12/26/2019 12/12/2019
Share Repurch. Author.
1/9/2020 12/26/2019
1/23/2020 1/9/2020
2/7/2020 1/23/2020
E
2/21/2020 2/7/2020
Increase in Huatai to 46.2%
2/21/2020
Notes Offering
3/6/2020
3/20/2020 3/6/2020
4/3/2020 3/20/2020
4/17/2020 4/3/2020
E
5/1/2020 4/17/2020
5/15/2020 5/1/2020
5/29/2020 5/15/2020
6/12/2020 5/29/2020
6/26/2020 6/12/2020
7/10/2020 6/26/2020
7/24/2020 7/10/2020
E
8/12/2020 7/24/2020
8/27/2020 8/12/2020
8/27/2020
Peter Enns to CFO effective July 1
9/14/2020
9/28/2020 9/14/2020
John Keogh President
10/12/2020 9/28/2020
Shr. Repur. Autho
10/12/2020
Notes Offering
10/26/2020
E
11/9/2020 10/26/2020
11/24/2020 11/9/2020
12/8/2020 11/24/2020
Incr. to Shr. Repurch Auth.
12/22/2020 12/8/2020
1/5/2021 12/22/2020
1/20/2021 1/5/2021
2/5/2021 1/20/2021
E
2/19/2021 2/5/2021
3/5/2021 2/19/2021
Shr. Repurch. Auth.
3/19/2021 3/5/2021
4/2/2021 3/19/2021
4/16/2021 4/2/2021
4/30/2021 4/16/2021
HIG declines offer
5/14/2021 4/30/2021
Proposes Strategic Business with HIG
5/28/2021 5/14/2021
Chubb responds to HIG
6/11/2021 5/28/2021
6/25/2021 6/11/2021
7/9/2021 6/25/2021
business
7/23/2021 7/9/2021
E
8/6/2021 7/23/2021
Mark Hammond Deputy CFO
8/20/2021 8/6/2021
9/3/2021 8/20/2021
9/17/2021 9/3/2021
E $5bn Shr. Repurch. Auth.
10/1/2021 9/17/2021
10/15/2021 10/1/2021
10/15/2021
Chubb to acquire Cigna's Asia Pacific Life & Health
10/29/2021
E
11/15/2021 10/29/2021
11/15/2021
2.5%
2.0%
1.5%
0.5%
0.0%
1.0%
<0
The Hartford Financial Services Group (HIG; Buy; TP: $84)
We are initiating on HIG with a Buy rating and a 23% total return potential based on our
12-month target price of $84. HIG stands out to us for its impressive YTD underwriting
improvement, buoyed by the economic rebound for its small account and workers’
compensation oriented business, in addition to its expense initiative, Hartford Next. The
company’s purchase of Navigators in 2019 was a timely acquisition, boosting HIG’s
exposure to hard market at an opportune moment. In our view, CB’s takeover attempt
earlier in the year has likely pushed investors to take another look at HIG, which has
outlined ambitious targets. The company’s latest guidance calls for a 13-14% operating
ROE in 2022, which is atop our coverage universe and justifies a higher valuation
multiple based on a P/B vs ROE regression.
Rebounding exposures to drive premium growth: In contrast to many peers, HIG’s

commercial NPW growth has far exceeded renewal price increases, and we expect this
dynamic to continue, albeit at a slowing pace. The company’s workers’ compensation
and small business-oriented business mix continues to see an outsized benefit from an
improved economy, with increases in payroll and wages contributing to the exposure
growth in addition to higher new business levels and continued strong retention. As
such, while HIG is not the company to buy for outsized exposure to the hardening
commercial market, we see aspects of its business that will lead to stronger premium
growth than its book of business might suggest at first glance, and we expect stronger
growth than at close peer TRV. HIG’s book is also more diversified than it has been
historically following the acquisition of Navigators in 2019, giving the company greater
exposure the specialty market at a solid spot in the insurance cycle, which should
continue to support pricing levels near-term. We expect NPW growth peaked in 3Q21,
with two future quarters remaining with outsized rebounds in growth from periods with
pandemic-related compressed economic activity. We note that should core inflation
remain elevated compared to levels seen over that past 5+ years (as is the GS house
view), HIG sees a direct benefit to premiums from wage growth within its workers’
comp book. Ultimately we expect +6%/+4% commercial lines growth in 2022E/2023E,
following estimated growth of +12% in 2021E.
On the personal lines side, we expect more muted growth near-term as the company
seeks to right-size its book and roll out contemporary products in partnership with AARP,
which are now available in seven states. Last year, HIG extended its long-standing auto
and home insurance program with AARP through 2033 and announced investment in a
new technology platform to simplify and streamline the customer experience. While we
expect relatively flat growth in 2022E, we are more bullish on the growth of this
segment over the longer term as the mature market demographic (50+ years of age)
that AARP comprises is expected to grow 3x as fast as the rest of the US population
over the next decade.
22 November 2021 71
Exhibit 105: P&C NPW growth and renewal price increases by line of business
Management expects the current pricing environment to remain healthy well into 2022
22%
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
-12%
-14%
-16%
-18%
1Q21
1Q19
3Q19
3Q20
1Q20
1Q21
3Q20
3Q21
1Q19
3Q19
1Q20
3Q20
3Q21
3Q19
1Q20
3Q20
1Q21
3Q21
1Q19
1Q20
1Q21
3Q21
1Q19
3Q19
3Q20
3Q21
1Q19
3Q19
1Q20
1Q21
Small Commercial Middle & Large Commercial Global Specialty Personal Auto Homeowners'
NPW growth % average renewal written rate YoY %

Pricing for Middle & Large is representative of Middle Market only, and pricing for Global Specialty is representative of U.S. Global Specialty only. Global
specialty NPW growth only shown for 2021 as prior periods are skewed by the Navigators acqusition. Note that Middle market rate excludes loss
sensitive and programs businesses, and Global Specialty excludes Global Re and Continental Europe Operations and is before ceded reinsurance.
More commercial margin improvement to come, offset by personal lines pressure:

While we expect there is still commercial underlying loss ratio improvement to come
given rate and loss trend dynamics, we expect it will be less than the 2.6pp of
underlying loss ratio improvement (ex COVID losses) reported 3Q21 YTD. Based on
disclosures provided, we estimate a TTM written pricing for the entire commercial book
of nearly 7pp (6% in 3Q21), which we believe is in excess of loss trend. HIG does not
disclose a long-term loss trend assumption, but its business mix leads us to believe it
should be lower than CB’s 5.5% or TRV’s 5%, implying at least 1.5pp+ of pure rate over
trend at 3Q21 rate levels. Consistent with peers, we expect some compression in
pricing over the coming year, but expect rates to hover above loss trend on average for
the NTM. We estimate a 55.7% commercial underlying loss ratio in 2022E (a 0.8pp YoY
improvement from our 56.5% 2021E est.) which is a factor of earned rate over trend
and exposure increases in certain lines like workers’ comp that performs like rate,
partially offset by near-term replacement cost inflationary pressures in property lines.
We note that 3Q21 in particular also benefited from lower than expect non-cat weather,
which has the effect of decreasing the YoY improvement as well.
HIG’s personal lines segment faces replacement cost inflation over the next several
quarters and perhaps longer. The company’s auto business reported accident frequency
that remained below 2019 levels in 3Q21, in contrast to some peers reporting that
frequency was back to normal. We think this may stem from its mature customer base
electing to be more careful versus other age groups in the midst of an ongoing
pandemic, but think this modest relative benefit will be overshadowed by the punitive
near-term pressure that all auto businesses face in absolute terms. We expect a 65.3%
underlying loss ratio in 2022E, which represents a 3.2pp deterioration from 2021E levels
22 November 2021 72
and would be in line with 2019.
Exhibit 106: HIG commercial lines combined ratios

We expect the most margin improvement from Global Specialty and
MIddle & Large commercial, with HIG”s peer-leading small commercial
business already reporting signif
110%
105%
100%
95%
90%
85%
4Q21E
4Q22E
4Q22E
4Q11
2Q12
4Q12
2Q13
4Q13
2Q14
4Q14
2Q15
4Q15
2Q16
4Q16
2Q17
4Q17
2Q18
4Q18
2Q19
4Q19
2Q20
4Q20
2Q21
2Q22E
4Q22E
Total Comm'l Total Comm'l ex COVID Small Commercial
Middle & Large Global Specialty
Hartford Next to drive expense efficiencies: We expect Hartford Next - the company’s
operational transformation and cost reduction plan - to drive the majority of expense
ratio improvement over the coming years. Additionally, recent P&C growth levels justify
additional benefits to be achieved via operating leverage for the commercial P&C
business. Recall, the company is targeting a 2.0-2.5% reduction in the P&C expense
ratio and a 1.5-2.0% reduction for Group Benefits by 2022E as compared to 2019, which
believes it is on track to deliver. We estimate a 2.8% improvement in the P&C ratio in
2022E as compared to 2019, which is stronger than Hartford next alone, buoyed by
premium growth. For Group benefits, we remain just below the bottom end of the
guided improvement range, as progress to date has been less inspiring, and there has
been flat premium growth as compared to 2019.
22 November 2021 73
Exhibit 107: Summary of GSe expense improvement

2019 2020 2021E 2022E ∆ from 2019
Underwriting expenses ($mn) 2,261 2,228 2,268 2,221 40
P&C
Total expense ratio 32.6% 31.9% 31.0% 29.8% 2.8%
Group Insurance operating costs ($mn) 1,311 1,308 1,331 1,259 52
Benefits Total expense ratio 24.5% 25.2% 25.0% 23.1% 1.4%
22 November 2021 74
Exhibit 108: Summary of Hartford Next

Latest Guide 2H20 2021 2022 2023 Total
Core Expenses (49) (59) (46) (40) (194)
Savings 106 400 540 625 625
as % of total program 17% 64% 86% 100%
Core Earnings Improvement (p/t) 57 341 494 585 431
Core ROIC 216% 678% 1174% 1563% 322%
Total ROIC (GSe) 69% 426% 794% 781% 158%
Orignal Guide 2H20 2021 2022 2023 Total

Core Expenses (30) (80) (80) (190)
Savings 40 300 500 500
as % of total program 8% 60% 100%
Core Earnings Improvement (p/t) 10 220 420 310
Core ROIC 133% 375% 625% 263%
Total ROIC 33% 273% 556% 156%
Reserves bolstered by workers’ comp redundancy: The standout conclusion from our
Schedule P reserve analysis is that HIG has yet to release a significant amount of
workers’ compensation redundancies, and that it continues to book this line very
conservatively. This conclusion can be drawn regardless of the period chosen for
selecting loss development factors (LDFs), if using historical averages (we used 5 Yr, 3
Yr, and 1 YR; all with similar conclusions). We estimate that every accident year from
AY2011 onward is redundant, driven by WC. This is even more compelling when
contemplating that HIG improved its underlying WC loss ratio in 3Q21, while still
booking a 5%+ severity assumption and with pricing just barely positive. This implies
that claim frequency trends in this line of business have been far lower, for far longer,
than the industry and HIG has expected.
We balance this optimism with apparent deficiencies in commercial auto and other
liability (though far less meaningful than WC redundancies), and note that HIG has not
historically reported net favorable prior year reserve development. Deficiencies have
stemmed primarily from liabilities prior to the past 10 accident years such as asbestos &
environmental and sexual molestation claims, which we note falls out of our below
analysis.
HIG did purchase an adverse development cover (ADC) for $650mn reinsure loss
development after 2016 on substantially all of the company’s asbestos and
environmental reserves. As of September 30, 2021, the company has incurred $860mn
in cumulative adverse development on A&E reserves that have been ceded under the
A&E ADC treaty with $640mn of available limit remaining, limiting worries on further
A&E reserve issues.
HIG also has an ADC covering Navigators reserves from 2018 and prior, with just $18mn
in limit remaining. In 3Q21 HIG ceded an additional $28mn to the ADC for tail factors in
wholesale construction. In our view, its quite likely HIG leverages the remaining limit,
and based and could see further development based on the usage of the cover thus far.
However, we don’t expect such development would be material.
22 November 2021 75

$ mn
Comm. Comm. Multi Other Liab. Other Liab. Private Pass. Total Reserves
HIG Workers' Comp All others All Lines
Auto Liab Peril (Claims) (Occurrence) Auto Liab. in Analysis
Prior - - - - - - - - -
AY2011 4 (8) 0 13 0 44 54 (0) 54
AY2012 1 9 8 23 1 92 135 (0) 135
AY2013 4 24 17 9 2 172 229 0 229
AY2014 2 34 17 15 5 229 302 0 302
AY2015 (37) 13 22 (19) 9 297 285 (0) 285
AY2016 (38) 26 19 26 16 347 396 0 396
AY2017 (45) 33 12 6 21 451 478 0 478
AY2018 (66) 43 9 (40) 41 434 420 - 420
AY2019 29 122 47 (52) 89 430 665 0 665
AY2020 62 55 (83) (120) 165 776 854 - 854
Total (84) 353 69 (139) 348 3,272 3,819 (0) 3,819
Exhibit 110: HIG statutory commercial lines prior year reserve

development
reserve development has been net adverse, driven by business written
more than 10 years prior to a given calendar year
500
AY2020
400 AY2019
AY2018
300
AY2017
200 AY2016
AY2015
100
AY2014
- AY2013
AY2012
(100)
AY2011
(200) Prior
CY2014
CY2012
CY2013
CY2015
CY2016
CY2017
CY2018
CY2019
CY2020
Total PYD
Strong underlying Group Benefits business masked by COVID near-term: HIG has
steadily improved its group benefits business, and we estimate that 2021 will be its
strongest core earnings margin in over a decade, ex COVID. The company offered
guidance at the beginning of the year for a 3.7% - 4.7% core earnings margin inclusive
of 2.3pp of COVID-19 related losses. As of 3Q21 YTD the core earnings margin stands
just below the bottom end of the range at 3.5%; however, it includes 7.6pp of COVID-19
(~3x as much as anticipated). The variance stems from persistent COVID deaths beyond
CDC expected levels, and higher claim severity stemming from increased mortality
amongst the younger population (under 65 year of age, see Exhibit 111).
Nonetheless, the core earnings margin ex-COVID of 11.1% YTD is an encouraging sign
of a healthy underlying business, and we expect such strong underlying performance to
continue, albeit at a moderating pace. In 4Q21, we model a 9.9% core earnings margin
ex COVID-19 with a 7.3pp COVID-19 impact leading to a 2.6% margin all-in. This estimate
assumes ~90k deaths in the quarter (119k in 3Q21) and a slight moderation in severity
versus 3Q21. At this time we do expect COVID-19 losses to be apparent in 2022 results,
though to a lesser degree (see Exhibit 112). Per management comments on the 3Q21
22 November 2021 76
earnings call, we will be looking for the company to provide an update in December
regarding its reserves for 3Q21 losses, which were 53% incurred but not reported
(IBNR) losses as of the end of the quarter, with only July losses fairly developed. As of
HIG’s recent investor day (11/16), the company stated that its 3Q21 IBNR is holding, and
that COVID deaths for October are projected to be down 25% - 30%+ MoM.
Exhibit 111: U.S. COVID-19 deaths and % of deaths by age group Exhibit 112: HIG core earnings margin and COVID-19 impact
The percentage of deaths by the under 65 cohort increased to all-time we expect a 7.3pp core earnings margin impact from COVID-19 in 4Q21E,
highs in 3Q21, increasing HIG’s claim severity based on ~90k deaths and a slight moderation in severity versus 3Q21
90% 120
80%
100
70%
COVID-19 deaths (000's)

10.8%
% of COVID-19 deaths
60% 80 9.5%
8.9%
50% 8.1%
60 3.1% 7.1%
40% 7.0%
7.5% 1.7%
5.6% 5.7% 5.8%
30% 40 5.2%
4.2%
20% 3.3%
20
10% 2.4% 6.4%
1.9%
0% - 3.3%
May-20
Jun-20
Nov-20
Jul-20
May-21
Jun-21
Nov-21
Aug-20
Jul-21
Aug-21
Apr-20
Sep-20
Feb-21
Apr-21
Sep-21
Mar-20
Dec-20
Jan-21
Mar-21
Oct-20
Oct-21
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E
Total COVID-19 Deaths Under 65 years of age 65+ years of age core earnings margin COVID-19 impact core earnings margin ex COVID-19
All reported data as of 11/16/2021. Source: Company data, Goldman Sachs Global Investment Research
Source: CDC, Data compiled by Goldman Sachs Global Investment Research

Our estimates are ~4% greater than the Street on average in 2022/2023, stemming
from our 87.9%/87.4% P&C underlying combined ratios, reflective of better-than-Street
commercial underlying loss ratios and expense ratios. Our personal lines profitability
estimates are worse than the Street as we believe the company will face a longer
repricing cycle versus peers.
22 November 2021 77

GS Estimate Cons. Diff GS Estimate Cons. Diff GS Estimate Cons. Diff GS Estimate Cons. Diff GS Estimate Cons. Diff
Earned premiums 4,545 4,437 2% 4,659 4,812 -3% 17,913 18,331 -2% 18,853 19,126 -1% 19,525 19,865 -2%
Net investment income 456 469 -3% 450 455 -1% 2,197 2,205 0% 1,821 1,830 -1% 1,861 1,859 0%
Total operating revenues 5,381 5,410 -1% 5,491 5,529 -1% 21,674 21,957 -1% 22,222 22,309 0% 22,990 23,128 -1%
Operating income before income taxes 703 622 13% 732 661 11% 2,485 2,625 -5% 3,092 2,749 12% 3,320 8,149 -59%
Effective tax rate 19.8% 18.1% 167bps 19.7% 18.1% 152bps 18.9% 18.1% 79bps 19.6% 17.8% 181bps 19.5% 19.4% 17bps
Core earnings 566 509 11% 587 541 8% 2,047 2,149 -5% 2,473 2,259 9% 2,651 6,570 -60%
Net income 559 529 6% 583 550 6% 2,191 2,126 3% 2,465 2,325 6% 2,651 2,551 4%

Avg. shares, diluted 345 345 0% 341 341 0% 353 354 0% 334 335 0% 317 323 -2%
buybacks ($ mn) 300 390 -23% 375 345 9% 1,502 1,596 -6% 1,500 1,340 12% 1,400 1,005 39%
op EPS $ 1.64 $ 1.59 3% $ 1.72 $ 1.67 3% $ 5.79 $ 5.72 1% $ 7.41 $ 7.12 4% $ 8.35 $ 8.00 4%
BVPS $ 51.63 $ 52.06 -1% $ 52.75 $ 53.00 0% $ 51.63 $ 51.55 0% $ 56.58 $ 55.69 2% $ 62.46 $ 60.61 3%
tangible BVPS ex. AOCI $ 45.16 $ 46.21 $ 45.16 $ 49.76 $ 55.29
ROE 12.7% 13.1% 12.3% 13.7% 14.1%

Op ROE 13.1% 12.8% 26bps 13.4% 13.6% -16bps 11.9% 11.4% 52bps 13.9% 13.4% 53bps 14.3% 13.8% 52bps
BALANCE SHEET
Total investments 58,027 58,061 0% 58,496 58,497 0% 58,027 58,061 0% 60,005 59,995 0% 62,126 62,652 -1%
Total assets 76,813 76,422 1% 77,367 76,644 1% 76,813 76,422 1% 79,088 77,963 1% 81,424 80,665 1%
Debt 4,943 4,943 0% 4,943 4,843 2% 4,943 4,943 0% 4,943 4,626 7% 4,943 4,668 6%
Total Shareholders Equity 18,053 17,958 1% 18,217 18,012 1% 18,053 18,034 0% 18,727 18,423 2% 19,663 19,380 1%
TOTAL P&C INSURANCE

Written premiums 3,138 3,077 2% 3,438 3,401 1% 12,907 12,847 0% 13,539 13,483 0% 14,073 14,044 0%
NPW growth 9% 6% 367bps 7% 5% 221bps 8% 6% 210bps 5% 4% 58bps 4% 4% 25bps
Earned premiums 3,193 3,077 4% 3,254 3,401 -4% 12,437 12,847 -3% 13,265 13,483 -2% 13,810 14,044 -2%
Fee income 18 17 3% 19 18 8% 67 66 1% 76 71 8% 80 71 12%
Underwriting gain 301 244 23% 303 257 18% 512 455 12% 1,148 992 16% 1,243 1,084 15%
58.8% 58.6% 58.3%
Current AY before cats loss ratio 58.5% 60.7% -216bps 57.7% 55.2% 248bps 57.8% 56.0% 184bps 57.8% 56.8% 107bps 57.7% 56.5% 112bps
Current AY cats impact on loss ratio 1.8% 3.1% -129bps 3.1% 3.4% -35bps 5.6% 5.7% -11bps 4.2% 4.3% -10bps 4.1% 4.2% -10bps
PYD, (favorable)/adverse impact on loss ratio -0.5% -0.4% -13bps -0.8% -0.3% -52bps 1.2% 1.2% 2bps -0.7% -0.4% -27bps -0.6% -0.3% -23bps
Expense ratio 30.6% 32.1% -156bps 30.5% 29.6% 93bps 31.0% 30.4% 54bps 29.8% 30.1% -28bps 29.6% 30.0% -44bps
Underlying combined ratio 89.3% 90.0% -71bps 88.4% 89.1% -67bps 89.0% 89.3% -27bps 87.9% 88.8% -91bps 87.4% 88.3% -88bps
Net investment income 337 364 -7% 333 354 -6% 1,644 1,671 -2% 1,351 1,426 -5% 1,390 1,458 -5%
Operating income before income taxes 644 619 4% 642 613 5% 2,248 2,313 -3% 2,525 2,446 3% 2,658 2,569 3%
Effective tax rate 19.5% 18.8% 68bps 19.5% 18.6% 88bps 18.9% 21.2% -226bps 19.5% 18.6% 94bps 19.5% 18.3% 120bps
Core earnings 522 502 4% 517 499 4% 1,843 1,824 1% 2,033 1,992 2% 2,140 2,099 2%

In our view, the primary downside risks surround a quicker than expected deceleration
in both premium growth and margin improvement in commercial lines, a material
slowdown in workers’ comp reserve releases, or a longer term COVID impact on the
group benefits business.
Commercial lines premium growth and margins: HIG has seen boost from exposure
growth over the trailing 6 months that is in excess of many peers. We embed a
continuation of exposure growth in addition to a relatively stable hard pricing cycle over
the next several quarters. Should either of these assumptions be incorrect, commercial
lines growth and margins would likely miss our estimates.
Reserve releases: HIG’s reserve position has been buoyed by favorable workers’ comp
releases and our model embeds a continuation of this trend. Should loss trends inflect
upwards or reserve redundancy in this line of business be less than expected, results
would be negatively impacted versus our estimates.
Group benefits: Given the longer term nature of a repricing cycle in group benefits, we
think that persistently and long-lasting COVID claims would result in pressured margins
for several years. While we model continued COVID losses through 2022E, we do not
model them thereafter.
Valuation
We assign a 1.6x P/B ex AOCI multiple for HIG shares, translating to an $84 12-month
22 November 2021 78
price target based on our 3Q22E book value, reflecting an 23% total return, inclusive of
a 2.2% dividend yield. Our assigned multiple represents a discount to regression
implied levels for a 14.4% ROE, reflective of our view that the company is booking loss
ratios with a lower degree of implied favorable reserve development versus some
peers, and lower market valuations for group benefits businesses, partially offset by our
favorable view for the company’s high-quality small commercial business.
22 November 2021 79
Exhibit 114: HIG Company Profile

Price $69.68 S/O 340
Market Cap ($bn) $24.0b Float 99.7% 1M 3M 12M YTD 24M 24M NAIC 4
Price Target $84 Volume 2,087 HIG -3.7% 5.7% 50.7% 42.3% 12.1% 0.0% 1% US Gov
5% Other Gov
+/- 20.6% XLF -2.2% 4.2% 42.3% 32.4% 30.6% 0.0%
NAIC 3 2%
Dividend Yield 2.2% S&P500 3.9% 6.6% 31.2% 25.1% 50.6% 0.0% 4%
LPs
Total Return 22.7% Mortgage
ST Inv 4%
Loans
9% 6%
BVPS Estimates Price Chart (Indexed) NAIC 2
4Q21E 2021E 2022E 2023E 23% Munis &
200
BVPS $51.63 $51.63 $56.58 $62.46 Equity Utilities
Securities 20%
BVPS ex-AOCI $50.73 $50.73 $55.64 $61.47
180 3%
Earnings Estimates
4Q21E 2021E 2022E 2023E 160
GS EPS Estimates $1.64 $5.79 $7.41 $8.35 Structured
Consensus EPS Estimates $1.60 $5.65 $7.04 $7.90 Products
NAIC 1 21%
140 Corporate
72%
Debt
Op. ROE 13.1% 11.9% 13.9% 14.3%
30%
120
P/E 10.6x 12.0x 9.4x 8.3x

100

Repurchases ($m) $300.00 $1,502.00 $1,500.00 $1,400.00 80
TTM Business Mix
Key Financials 60
Combined Ratio 90.6% 95.9% 91.3% 91.0% 40
May-19
May-20
May-21
Nov-18
Feb-19
Aug-19
Nov-19
Feb-20
Aug-20
Nov-20
Feb-21
Aug-21
Prior Year Development -0.5% 1.2% -0.7% -0.6%
CAT 1.8% 5.6% 4.2% 4.1% Hartford Hartford
Underlying Combined Ratio 89.3% 89.0% 87.9% 87.4% HIG SPX XLF Funds Funds
6% 8%
Historical Price / NTM Projected Earnings Group

Group Benefits
Price to Earnings Price to BVPS ex-AOCI Benefits 13%
1.7x
16.0x 32%
15.0x P/BV Mean +1 Std Dev -1 Std Dev
Fwd P/E Mean +1 Std Dev -1 Std Dev 1.5x
14.0x
13.0x
12.0x 1.3x P&C
11.0x 62%
10.0x 1.1x
9.0x P&C
8.0x 79%
0.9x
7.0x
6.0x
5.0x 0.7x
4.0x
Nov-18
Nov-19
Nov-20
Jul-19
Jul-20
Sep-19
Jul-21
Mar-19
Sep-20
Sep-21
Jan-19
May-19
Jan-20
Mar-20
May-20
Jan-21
Mar-21
May-21
0.5x
n…
n…
n…
a…
a…
a…
a…
a…
a…
p…
p…
p…
v…
v…
v…
-…
-…
-…
Se
Se
Se
No
No
No
M
Ja
Jul
Ja
Jul
Ja
Jul
$70 16%
10 2016 2017 2018 2019 2020 2021E 2022E 2023E
$60 14% 9 Share Repurchases ($m) 1,331 1,028 - 201 150 1,502 1,500 1,400
$61.47
12% 8
Dividends ($m) 344 340 395 437 474 492 518 543
$55.64
$50
7
BVPS ex-AOCI
$50.73
10% Divi & Repo ($m) 1,675 1,368 395 639 624 1,994 2,018 1,943
$47.16
6
Op. ROE
$40
$43.71
8% 5
$39.40
Core Earnings ($m) 912 1,014 1,575 2,062 2,086 2,047 2,473 2,651
$35.29
$30 4
6%
3 Divi & Repo (% of Earn) 184% 135% 25% 31% 30% 97% 82% 73%
$20
4% 2
$10 2% 1
0
Dec-20
Feb-21
Feb-21
Apr-21
Apr-21
Jun-21
Jun-21
Nov-21
Nov-21
Jul-21
Jul-21
Jul-21
Oct-21
Oct-21
Aug-21
Aug-21
Sep-21
Sep-21
Jan-21
Jan-21
Mar-21
Mar-21
May-21
May-21
$0 0%
2017 2018 2019 2020 2021E 2022E 2023E
22 November 2021 <0

$1
$2
$3
$4
$5
$6
$7
$8
$-
-50%
-40%
-30%
-20%
-10%
10%
0%
1/2/2018
1/17/2018 1/2/2018
2/1/2018 1/18/2018
2/16/2018
E
2/7/2018
3/3/2018
3/1/2018
3/18/2018
22 November 2021
3/21/2018
Goldman Sachs
4/2/2018
4/17/2018 4/9/2018
Exchanges
E
Notes
5/2/2018 4/27/2018
5/17/2018 5/17/2018
HIG acquires renewal

rights for select Farmers
Close of $500mn
6/1/2018 6/6/2018
6/16/2018
Est. of US Tax law and Cats
6/22/2018
7/1/2018
7/10/2018
7/16/2018
Close sale of
E
7/31/2018 7/26/2018
Talcott Resolution
8/15/2018 8/13/2018
8/30/2018 8/29/2018
9/14/2018 9/14/2018
9/29/2018 10/2/2018
Navigators
10/14/2018
HIG to acquire
10/18/2018
E
Alpha
10/29/2018 11/5/2018
11/13/2018
11/21/2018
11/28/2018
12/13/2018 12/7/2018
12/28/2018 12/25/2018
Exhibit 115: Drivers of Alpha Performance - Hartford
1/12/2019 1/10/2019
$300mn Pref Stk Offer
1/27/2019 1/28/2019
E
2/11/2019 2/13/2019
2/26/2019 3/1/2019
Acquires Y-Risk
3/13/2019
3/19/2019
3/28/2019
4/4/2019
Source: Axioma US4M, FactSet, Company data, Goldman Sachs Global Investment Research
4/12/2019
4/27/2019 4/22/2019
E
5/12/2019 5/8/2019
5/27/2019 5/24/2019
6/11/2019 6/11/2019
6/26/2019
for
6/27/2019
Acq.
7/11/2019 7/15/2019
Navigators
7/26/2019
Reg. Approval
E
7/31/2019
8/10/2019
8/25/2019 8/16/2019
9/9/2019 9/3/2019
9/24/2019 9/19/2019
Cash Tender Offer
10/9/2019 10/7/2019
10/24/2019 10/23/2019
EPS Consensus Est.

E
11/8/2019 11/8/2019
11/23/2019
Close of Navigators Acq.
11/27/2019
12/8/2019
12/23/2019 12/13/2019
1/7/2020 12/31/2019
1/22/2020 1/16/2020
Concern HIG is too WC focus
E
2/6/2020 2/4/2020
2/21/2020 2/20/2020
3/7/2020 3/9/2020
3/22/2020
3/25/2020
4/6/2020
4/10/2020
4/21/2020
E
5/6/2020 4/28/2020
5/21/2020 5/14/2020
6/5/2020 6/1/2020
6/20/2020 6/17/2020
7/5/2020 7/3/2020
7/20/2020 7/21/2020
E
8/4/2020
8/6/2020
8/19/2020
9/3/2020 8/24/2020
9/18/2020 9/11/2020
10/3/2020 9/29/2020
10/18/2020 10/15/2020
E
11/2/2020 11/2/2020
11/17/2020 11/19/2020
12/2/2020
12/7/2020
12/17/2020
1/1/2021 12/23/2020
1/16/2021 1/8/2021
1/31/2021 1/28/2021
E
2/15/2021 2/15/2021
$1.5bn Shr Repurch. Auth.
3/2/2021 3/3/2021
3/17/2021 3/19/2021
4/1/2021 4/6/2021
4/16/2021
E
4/22/2021
5/1/2021
5/16/2021 5/10/2021
5/31/2021 5/26/2021
Settlement
6/11/2021
Boy Scounts
6/15/2021
6/30/2021 6/29/2021
Chubb offer
7/15/2021 7/15/2021
E
7/30/2021 8/2/2021
8/14/2021
8/18/2021
8/29/2021
9/13/2021 9/3/2021
9/28/2021 9/21/2021
new
10/13/2021 10/7/2021
Boy Scouts
Agreement
10/28/2021 10/25/2021
E
11/12/2021 11/11/2021
1.8%
1.6%
1.4%
1.2%
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%
<<
Progressive Corp (PGR; Buy; TP: $104)
Overview: We are initiating with a Buy rating on PGR and 12-month target price of $104
implying a 17% total return. We think investors will be fairly forward-looking and now
willing to look past near-term compressed margins from unexpected and likely
temporary (at least in magnitude) inflation-driven severity trends, which have arrived at
the unfortunate time when the industry has just reduced pricing following lower
pandemic-related driving activity in 2020. Instead, we think stock performance will hinge
on indications of the balance between growth and profits in 2H22 and 2023, with the
assumption that elevated inflationary trends (meaning beyond even the new normal, if
there is one) persists through at least 1H22. Given the short-term nature of PGR’s
policies (most are 6 months), the company should have the opportunity to reprice
quickly, with observable evidence that the company is already ahead of peers in doing
so.
We view PGR as an innovative company that is poised for success over the long term.
The key components of this favorable position stem from best-in-class pricing
segmentation and data analytics (fueled by early telematics adoption), direct distribution,
marketing and advertising capabilities, and scale. While we still expect PGR’s personal
auto business to produce mid-to-high-single-digit growth over the next several years, we
see even greater growth for its commercial and homeowners’ businesses.
PGR has several offsets to battle supply-chain related pressures, and has
historically rebounded strongly from pricing cycles:
n Price increases: During the third quarter 2021, rate increases became effective in
20 states, which had an average increase of about 6%. In the aggregate, rate
changes for personal auto for the quarter were about 3% and about 5% for the year
(2% increases in 2Q21, and less than 1% increases in 1Q21). We expect rate
increases to continue, and at even higher levels to catch up with inflationary trends,
which were in the double-digits YoY in 3Q21.
n Nimble advertising: PGR has a top quality marketing & advertising operation, with
great brand recognition stemming from one of the largest advertising budgets in the
country. This operation is in-house and has been part of the company’s formula for
success over the past decade. The in-house capabilities make PGR’s advertising
operation nimble and responsive to changes that develop in the marketplace. This
dynamic can be observed in the most recent quarter, where PGR chose to advertise
less YoY amidst margin deterioration - benefiting the expense ratio by 1.5pp -
whereas peer Allstate increased its advertising by 0.1pp QoQ and 0.9pp YoY.
n Re-underwrite quicker than peers: The company’s 6-month policies, combined
with driving data from its snapshot usage-based insurance program, a smaller
filing-to-approval lag, and historical evidence of reacting to changing market
dynamics more quickly, should result in PGR turning the corner on margins more
quickly than peers. Our analysis indicates that PGR had stronger underlying loss
ratio improvement across 1 year, 2 year, and 3 year periods following the loss ratio
trough, on average for the 2012 and 2016 repricing cycles (Exhibit 117).
22 November 2021 82
n Lower growth means lower new business penalty: PGR has produced more auto
growth than any mature publicly traded competitor in the market. This growth has
come with a new business penalty, or put simply, the tendency of a higher loss ratio
for newer customers. Over the coming quarters we expect growth to be hindered
modestly by lower growth appetite and higher prices, but offsetting this impact will
be a favorable loss ratio impact from a higher percentage of renewal customers
(Exhibit 119).
Exhibit 116: Personal auto statutory rate filings

We see evidence that PGR has began to reprice policies quicker than peers
Trailing 6 month rate increases filings based on submitted date Individual rate filings (by state) based on submitted date
10% 15% PGR's filings turned
definitively positve in
8% April, ahead of peer ALL
10%
6%
5%
4%
2% 0%
0%
-5%
-2%
-4% -10%
Jan-21
Jan-21
Mar-21
Jun-21
Jul-21
Jul-21
Oct-21
Oct-21
Oct-21
Mar-21
May-21
May-21
Jun-21
Apr-21
Apr-21
Apr-21
Feb-21
Feb-21
Aug-21
Aug-21
Sep-21
Sep-21
Nov-15
May-16
Nov-16
May-17
Nov-17
May-18
Nov-18
May-19
Nov-19
May-20
Nov-20
May-21
Nov-21
Feb-16
Aug-16
Feb-17
Aug-17
Feb-18
Aug-18
Feb-19
Aug-19
Feb-20
Aug-20
Feb-21
Aug-21
Industry ALL PGR GEICO TRV ALL PGR
Note that the left chart represents a weighted average nationwide trailing 6-month figure that incorporates the applicable premium size of given rate actions, while the chart on the right represents
individual rate filings (for a given state) and does not indicate the applicable premium size of a given action.
Exhibit 117: Revisiting prior personal auto repricing cycles

On average across 2012 and 2016, PGR had
Underlying loss ratio improvement for 2012/2016 repricing cycles* 2012 repricing cycle - trailing 6m pricing % 2016 repricing cycle - trailing 6m pricing %
8% 6% 7%
YoY underlying loss ratio change pts
5% 6%
6%
5%
4% 4%
4%
3%
fav/(unfav)
2% 3%
2%
0% 2%
1% 1%
-2%
0% 0%
April-12
September-12
April-16
September-16
July-12
November-12
December-12
July-16
November-16
December-16
May-12
May-12
June-12
August-12
May-16
May-16
June-16
August-16
October-12
October-16
-4%
-6%
+1 Year +2 Years +3 Years +1 Year +2 Years +3 Years
2012 Period 2016 Period
ALL PGR TRV HIG Industry ALL PGR TRV HIG Industry ALL PGR TRV HIG
*For HIG we show underlying combined ratio improvement as underlying loss ratio not available.
22 November 2021 83
Exhibit 118: Filing-to-approval times for personal auto rate changes Exhibit 119: PGR Personal auto growth metrics
PGR gets rate changes approved 24 days earlier than the industry on we expect new apps to be pressured in coming months with continued
average strong renewal apps and an increase in premiums per policy; leading to
modesty lower NPW and a lower new business penalty
100 25%
96 93 95
91 89 20%
85 86
15%
75 73 74 75 74
71 71 10%
5%
0%
-5%
-10%
-15%
-20%
-25%
3Q18
2Q19
3Q19
2Q20
2Q21
1Q18
2Q18
1Q19
1Q20
3Q20
1Q20
3Q21
ALL
HIG
ALL
HIG
ALL
HIG
PGR
PGR
PGR
TRV
TRV
TRV
Industry
Industry
Industry
Premiums Per Policy New applications
10 year average 5 year average 3 year average Renewal Applications TTM Policy Life Expectancy
Average numbers of days between submitted and effective date. Source: Company data, Goldman Sachs Global Investment Research
We expect the consolidated underlying combined ratio to improve by ~0.9pp in

2022E, and for 2023/2024E underlying CR to remain ~1.5pp above 2019 levels
coinciding with an all-in CR ~3.5pp below the companies 96% target: As mentioned
previously, we expect PGR to continue to push rate, resulting in personal auto earned
pricing approaching 5% in 2022E. However, pricing should fail to meet loss trend for the
next two quarters, as we expect severity to remain at or near double-digit levels and
with a tough frequency comp in 1Q22E. Our estimates assume earn rate exceeds loss
trend by 3Q22E, with accident severity increasing at mid-single-digit levels and flat
frequency, as the effect of safer cars is offset by the return of additional commuters.
The company has the stated objective of growing as fast as possible below a 96%
combined ratio, with margins becoming the priority anytime underwriting profitability
becomes pressured around this threshold. We think margins are squarely in focus as we
expect the company will report a 96%+ combined ratio for 3 consecutive quarters
(2Q21-4Q21E) for the first time in at least 2 decades. And while 96% is the stated limit,
we note that the company has generally far outperformed this level, having produced a
92.5% average combined ratio from 2015-2019. We model a ~92.3% combined ratio in
2023E/2024E driven by operating leverage, and loss ratio improvement in commercial
and property lines versus the 2015-2019 period.
22 November 2021 84
Exhibit 120: Personal lines pricing, loss trend, and underlying loss
ratio
we dont expect earned pricng to exceed loss trend until 2Q22E
10% 78%
8% 76%
6% 74%
4%
72%
2%
70%
0%
68%
-2%
-34% at peak 66%
-4%
pandemic- 64%
-6% related impact
-8% on frequency 62%
-10% 60%
2Q20
3Q20
4Q20
1Q21
2Q21
3Q21
1Q18
2Q18
3Q18
4Q18
2018
1Q19
2Q19
3Q19
4Q19
1Q20
4Q21E
1Q22E
2Q22E
3Q22E
4Q22E
1Q23E
2Q23E
3Q23E
4Q23E
Loss Trend Pricing Earned TTM underlying loss ratio
2Q21-4Q21 loss trend is as compared to 2019 levels, annualized. Future estimates are GSe.
Commercial lines has tailwinds from economic reopening and entrance into new
markets: PGR is the leading commercial auto player by market share, which it has
achieved primarily by dominating the less than 10 vehicle space, with the commercial
lines segment growing at a 19% NPW CAGR since 2014. We expect the company to
continue to drive double-digit growth in its commercial auto business, with recent
expansion into larger fleet trucking space supported by the acquisition of Protective
Insurance (closed 6/1/21), which added roughly 1% to consolidated NPW, by our
estimate. Increased penetration of usage-based insurance/telematics via the company’s
Smart Haul program should provide support for margins, in addition to preferred
customer growth and compounding rate increases for several years. YTD the
Commercial lines segment has grown 56%, reflecting price increases and the economic
rebound. Growth has primarily stemmed from the for-hire transportation business
market target, due to greater demand for shipping services, which we expect to
continue as a tailwind over the NTM.
PGR also recently expanded into small commercial via general liability and property
insurance offerings through its business owners policy (BOP), plus workers’
compensation; and the company also acts as an agent to place other commercial lines
products. We are bullish on the company’s ability to materially increase small
commercial market share and become dominant market participant over time, given its
combination of direct distribution expertise, strong marketing capabilities, an established
personal lines brand, and the related potential to bundle policies.
Property business has been troubled, though we model modest improvements

while the Street does not: The company has been vocal that the Property business has
not performed to their expectations (103%% CR over the last 5 years, 118% 2021E). To
fix this, the company is pushing rate (8pp YTD, 12pp in 2020), improving segmentation,
and plans to move its book of business to less catastrophe prone states, where it
outperforms peers from a profitability standpoint (goal is to make non-volatile states
60-70% of portfolio over the next few years vs 50% today). We model a ~99.8%
combined ratio (102.5% VA consensus) with a 17.6% embedded CAT load (17.0pp VA
22 November 2021 85
consensus) in 2022E, as we think the Street is under-appreciating pricing and

segmentation actions.
We expect a continuation of modest unfavorable reserve development in FL: PGR’s

reserve development has been hindered by higher than expected frequency of
reopened personal injury protection (PIP) claims, primarily in Florida, for several years
now. Given the litigation environment, when a case is lost by a competitor or by PGR, it
affects the majority of market participants. We see no evidence for a change to this
environment, and given PGR’s policy of trying to estimate reserves in the most accurate
way, and management commentary that they are starting to plan for FL PIP as a type of
CAT load, we continue to model adverse development. We model 0.3pp adverse
development for personal lines in 22E/23E, compared to 0.1pp/0.2pp VA consensus.
Exhibit 121: PGR Key top-line metrics

Personal lines 1Q18 2Q18 3Q18 FY18 1Q19 2Q19 3Q19 FY19 1Q20 2Q20 3Q20 FY20 1Q20 2Q21 3Q21 FY21E FY22E FY23E
NPW growth 20% 19% 18% 18% 14% 13% 12% 15% 8% 13% 12% 7% 14% 6% 7% 9% 9% 8%
PIF growth 14% 16% 15% 14% 13% 0% 11% 11% 10% 11% 12% 11% 13% 11% 8% 8% 7% 6%
NPW-PIF spread 6% 3% 3% 4% 1% 13% 0% 3% -2% 2% 0% -4% 1% -5% -1% 0% 2% 2%
Premiums per policy 5% 5% 4% 4% 3% 2% 2% 2% 1% 0% -2% -1% -3% -2%
New apps 21% 21% 17% 17% 8% 5% 5% 8% 2% 2% 11% 3% 14% 7%
Renewal apps 11% 9% 11% 11% 12% 11% 11% 13% 10% 12% 12% 8% 14% 9%
PLE - TTM 10% 10% 7% 3% -1% -2% -1% 0% 0% 7% 9% 10% 13% 3%
Agency 1Q18 2Q18 3Q18 FY18 1Q19 2Q19 3Q19 FY19 1Q20 2Q20 3Q20 FY20 1Q20 2Q21 3Q21 FY21E FY22E FY23E
NPW growth 18% 16% 16% 16% 13% 12% 11% 13% 7% 9% 10% 5% 11% 5% 5% 7% 9% 8%
PIF growth 13% 14% 13% 12% 12% 11% 10% 10% 8% 9% 9% 9% 10% 9% 6% 7% 7% 5%
NPW-PIF spread 5% 2% 2% 4% 1% 0% 0% 3% -1% 0% 1% -4% 1% -3% -1% 1% 2% 2%
Premiums per policy 5% 5% 5% 5% 3% 3% 2% 3% 1% 1% -1% 0% -2% -1%
New apps 19% 21% 12% 14% 9% 6% 4% 7% -3% -13% 4% -5% 5% 9%
Conversion rate 13% 14% 11% 12% 12% 10% 4% 7% -3% -9% 5% -3% -3% -9%
Renewal apps 12% 10% 12% 12% 11% 11% 10% 12% 9% 11% 12% 7% 12% 6%
PLE - TTM 11% 11% 8% 4% 1% 0% 2% 3% 4% 9% 10% 10% 13% 3%
Direct 1Q18 2Q18 3Q18 FY18 1Q19 2Q19 3Q19 FY19 1Q20 2Q20 3Q20 FY20 1Q20 2Q21 3Q21 FY21E FY22E FY23E
NPW growth 22% 22% 21% 21% 16% 14% 13% 16% 9% 17% 14% 9% 16% 6% 8% 10% 10% 8%
PIF growth 15% 17% 17% 16% 15% 13% 12% 12% 11% 13% 14% 13% 15% 13% 10% 10% 8% 6%
NPW-PIF spread 7% 5% 4% 5% 1% 0% 1% 4% -2% 4% 0% -4% 1% -7% -2% 0% 2% 2%
Premiums per policy 4% 5% 4% 4% 3% 2% 1% 2% 0% 0% -2% -1% -4% 3%
New apps 31% 32% 26% 25% 8% 6% 6% 9% 5% 4% 13% 5% 17% 7%
Conversion rate 20% 16% 13% 14% 8% 5% 5% 6% 0% -2% 5% 2% 0% -2%
Renewal apps 13% 13% 15% 15% 16% 15% 14% 17% 11% 15% 15% 11% 18% 9%
PLE - TTM 8% 9% 5% 1% -3% -4% -3% -3% -3% 5% 7% 10% 14% 3%
Commercial 1Q18 2Q18 3Q18 FY18 1Q19 2Q19 3Q19 FY19 1Q20 2Q20 3Q20 FY20 1Q20 2Q21 3Q21 FY21E FY22E FY23E
NPW growth 40% 22% 31% 28% 26% 13% 11% 20% -2% 1% 34% 11% 57% 66% 47% 50% 18% 12%
PIF growth 8% 9% 8% 8% 8% 8% 8% 8% 7% 6% 7% 9% 13% 18% 19% 17% 8% 6%
NPW-PIF spread 32% 13% 23% 21% 18% 5% 3% 12% -9% -5% 26% 2% 44% 48% 29% 32% 10% 6%
Premiums per policy 14% 12% 15% 14% 15% 10% 4% 8% 4% -1% 4% 4% 12% 20%
New apps 27% 9% 10% 12% 11% 11% 8% 11% 5% -10% 18% 5% 28% 52%
Renewal apps 3% 5% 6% 6% 9% 7% 7% 9% 8% 7% 9% 6% 13% 8%
PLE - TTM -1% 2% 2% 1% -3% -7% -5% -2% 1% 6% 4% 5% 7% 5%
Property 1Q18 2Q18 3Q18 FY18 1Q19 2Q19 3Q19 FY19 1Q20 2Q20 3Q20 FY20 1Q20 2Q21 3Q21 FY21E FY22E FY23E
NPW growth 37% 37% 32% 33% 19% 15% 16% 16% 15% 12% 13% 13% 17% 15% 16% 16% 13% 11%
PIF growth 30% 35% 36% 32% 21% 17% 15% 14% 13% 13% 13% 13% 13% 14% 13% 12% 7% 7%
NPW-PIF spread 7% 2% -3% 1% -3% -2% 1% 2% 1% -1% 0% 1% 4% 1% 3% 4% 6% 4%
Premiums per policy -5% -5% -3% -3% 0% 3% 2% 2% 1% 0% -1% 0% 1% -1%
New apps 85% 81% 51% 53% 3% -6% -1% -1% 7% 4% 17% 12% 26% 29%
Renewal apps 19% 21% 26% 25% 25% 23% 22% 22% 17% 15% 14% 14% 12% 8%

While our EPS estimates are 9% below VA consensus for 2022, our estimates are 17%
higher than the Street for 2023. We anticipate a worse-than-consensus personal auto
underlying combined ratio in 2022, stemming from inflationary pressures. However, we
think PGR’s re-underwriting speed will translate into a better-than-Street combined ratio
in 2023, stemming from personal lines in addition to commercial and Property lines. We
also think operating leverage will result in lower than expected expense ratios.
22 November 2021 86

GS GS GS GS GS
Net investment income 195 208 -6% 197 212 -7% 817 830 -2% 848 897 -5% 1,072 993 8%
Yield (net) 1.6% 1.6% 1.8% 1.6% 1.8%
Pre-tax income 855 825 4% 869 962 -10% 3,861 4,146 -7% 3,491 3,772 -7% 5,035 4,250 18%
adjusted effective tax rate 20.9% 20.6% 20.5% 20.7% 20.8% 20.6% 20.5% 20.8% 20.5% 20.9%
Net income attributable to Progressive 669 640 5% 684 752 -9% 3,038 3,250 -7% 2,748 3,016 -9% 3,976 3,393 17%
Operating income 430 632 -32% 684 744 -8% 1,935 2,246 -14% 2,748 3,006 -9% 3,976 3,398 17%

Weighted Average shares outstanding - diluted 586.8 586.9 0% 587.7 587.1 0% 586.9 586.8 0% 587.8 587.4 0% 588.7 588.0 0%
buybacks ($ mn) 55 35 61% 66 32 105% 212 171 24% 134 132 1% 143 125 15%
op EPS $0.73 $1.08 -32% $1.16 $1.27 -8% $3.30 $3.83 -14% $4.68 $5.12 -9% $6.75 $5.78 17%
BVPS $32.52 $31.95 2% $32.61 $32.27 1% $32.52 $31.95 2% $35.86 $35.23 2% $40.34 $38.75 4%
Op ROE 9.3% 13.6% -430bps 14.5% 15.8% -123bps 11.0% 12.9% -192bps 14.0% 15.3% -129bps 18.3% 16.3% 200bps
Debt-to-capital 20.5% 21.4% 20.4% 21.2% 20.5% 21.4% 22.5% 19.9% 20.5% 18.6%
COMPANYWIDE TOTAL UNDERWRITING RESULTS

NPW growth 11.6% 9.9% 172bps 11.4% 10.6% 73bps 14.1% 13.4% 70bps 11.1% 10.7% 34bps 8.9% 9.2% -29bps
Reported loss ratio 77.8% 74.4% 343bps 73.4% 73.0% 35bps 76.2% 75.0% 114bps 74.4% 73.6% 86bps 72.5% 73.2% -76bps
cat loss ratio impact 0.6% 0.9% -32bps 1.0% 1.3% -30bps 3.0% 2.9% 9bps 2.0% 2.0% 7bps 2.0% 2.0% -5bps
PYD loss ratio impact -0.2% 0.1% -31bps 0.3% 0.6% -24bps 0.3% 0.4% -11bps 0.3% 0.1% 21bps 0.3% 0.2% 11bps
Underlyting loss ratio 77.4% 73.5% 390bps 72.1% 71.2% 86bps 72.8% 71.7% 115bps 72.1% 71.6% 43bps 70.2% 71.2% -101bps
Expense ratio 18.6% 19.7% -103bps 20.4% 20.2% 18bps 19.6% 19.9% -31bps 19.9% 20.1% -24bps 19.8% 20.2% -33bps
Combined ratio 96.5% 94.1% 240bps 93.8% 93.3% 53bps 95.8% 95.0% 83bps 94.3% 93.7% 62bps 92.3% 93.4% -109bps
Combined ratio ex. cats and PPD 96.1% 93.2% 287bps 92.4% 91.5% 92bps 92.7% 91.6% 111bps 91.8% 91.7% 7bps 89.9% 91.4% -145bps

We see the primary downside risks as a prolonged repricing cycle, slower than
expected premium growth, and greater than expected adverse development.
A prolonged repricing cycle could stem from persistently higher loss trends. One
could argue that both accident frequency and severity trends are more uncertain now
than in recent history given pandemic changes to driving patterns and supply chain
constraints. Inflation could persist longer than expected amidst prolonged supply chain
disruptions, and accident frequency could reach or surpass pre-pandemic levels quicker
than expected due to a booming economy and return to in-office work. A prolonged
pricing cycle would also hurt PIF growth.
Slower than expected premium growth could stem from a potential and
aforementioned prolonged repricing cycle, a decrease in the effectiveness of marketing
spend (note PGR recently hired a new CMO), increased competition (including from
insurtech firms), or an overall economic downturn.
Net adverse prior year loss development has hindered PGR’s results for several years
now, with a large portion stemming from the recently problematic state of Florida. In our
view, many of the difficulties PGR and other insurers face in this state surrounding the
litigation environment in the state have yet to be resolved. We model a continuation of
net adverse prior year loss development going forward, though actual reserve
strengthening could prove to be greater.
Valuation
We assign a 3.0x P/B ex AOCI multiple for PGR shares, translating to an $104 12-month
a 1.5% dividend yield. Our assigned multiple represents a slight premium to regression
implied levels for a 18.5% ROE, reflective of our view that the company is one of the
22 November 2021 87
most well-positioned auto insurers based on competitive advantages in pricing

segmentation, distribution, and telematics, combined with further growth avenues in
property and commercial lines. This is partially offset by near-term inflationary
headwinds for its personal lines focused businesses.
22 November 2021 88
Exhibit 123: PGR Company Profile

Price $90.30 S/O (m) 585
Price Target $104 Volume (m) 2,581 PGR -2.5% -6.1% -4.2% -8.7% 26.2% ST Inv
NAIC 4
+/- 15.2% XLF -2.2% 4.2% 42.3% 32.4% 30.6% 1% 4%
Dividend Yield 1.5% S&P500 3.9% 6.6% 31.2% 25.1% 50.6%
Total Return 16.7% NAIC 3
4% Equity
Securities
BVPS Estimates Price Chart (Indexed) 12%
4Q21E 2021E 2022E 2023E NAIC 2
200 22% US Gov
BVPS $32.52 $32.52 $35.86 $40.34
38%
BVPS ex-AOCI $32.14 $32.14 $35.48 $39.96
180 Structured
Earnings Estimates Products
20%
4Q21E 2021E 2022E 2023E 160
GS EPS Estimates $0.73 $3.30 $4.68 $6.75
Consensus EPS Estimates $1.11 $3.96 $5.12 $5.79 NAIC 1
140 73% Corporate
Op. ROE ex-AOCI 9.3% 11.0% 14.0% 18.3% Debt
21% Munis &
120
P/E 30.8x 27.4x 19.3x 13.4x Utilities

P/BVPS ex-AOCI 2.8x 2.8x 2.5x 2.3x 5%
100

Repurchases ($m) 55 212 134 143 80
TTM Business Mix
Key Financials
60
Net Premiums Written 10,652 46,308 51,435 56,011
Combined Ratio 96.5% 95.8% 94.3% 92.3% 40
Nov-18
Apr-19
Jun-19
Nov-19
Apr-20
Jun-20
Jun-21
Nov-21
Feb-19
Sep-19
Jan-20
Nov-20
Apr-21
Sep-20
Jan-21
Sep-21
Prior Year Development -0.2% 0.3% 0.3% 0.3%
CAT 0.6% 3.0% 2.0% 2.0%
Underlying Combined Ratio 96.1% 92.7% 91.8% 89.9% PGR SPX XLF
Personal
Lines -
Agency Personal Lines
Historical Price / NTM Projected Earnings 20% - Agency
Price to BVPS ex-AOCI 22%
Price to Earnings 4.3x
Auto Auto
24.0x 4.0x P/BV Mean +1 Std Dev -1 Std Dev
Fwd P/E Mean +1 Std Dev -1 Std Dev 49% 49%
21.0x 3.8x Personal
Personal Lines
Lines - Direct
18.0x 3.5x - Direct
22%
18%
3.3x
15.0x
3.0x
12.0x
2.8x
9.0x
2.5x Commercial
Commercial
6.0x Property Property
2.3x 7% 9%
Business Business
Nov-18
Nov-19
Nov-20
Nov-21
Jun-19
Jun-20
Jun-21
Feb-19
Apr-19
Sep-19
Apr-20
Sep-20
Apr-21
Sep-21
Jan-20
Jan-21
Nov-18
Nov-19
Nov-20
Nov-21
Feb-19
Apr-19
Jun-19
Jun-20
Sep-19
Apr-20
Sep-20
Apr-21
Jun-21
Sep-21
Jan-20
Jan-21
2% -2%
$45 35.0%
10
2016 2017 2018 2019 2020 2021E 2022E 2023E
$40 9
30.0% Share Repurchases ($m) 191 63 76 34 76 212 134 143
$39.96
$35 8
Dividends ($m) 518 395 655 1,643 1,551 2,811 849 1,407
$35.48
25.0% 7
$30
BVPS ex-AOCI
$32.14
6 Divi & Repo ($m) 709 458 731 1,678 1,627 3,023 983 1,550
Op. ROE
$25 20.0%
$27.05
5
$20 4 Core Earnings ($m) 942 1,391 2,813 3,252 4,347 1,935 2,748 3,976
$22.60
15.0%
3
$18.79
$15 Divi & Repo (% of Earn) 75% 33% 26% 52% 37% 156% 36% 39%
10.0% 2
$10
$12.53
1
5.0%
$5 0
Dec-20
Nov-21
Nov-21
Jun-21
Jun-21
Oct-21
Feb-21
Feb-21
Apr-21
Apr-21
Jul-21
Jul-21
Jul-21
Oct-21
Mar-21
Mar-21
Aug-21
Aug-21
Sep-21
Sep-21
Jan-21
Jan-21
May-21
May-21
$0 0.0%
2017 2018 2019 2020 2021E 2022E 2023E
22 November 2021 <9

$-
$1
$2
$3
$4
$5
$6
$7
20%
40%
60%
80%
-40%
-20%
0%
1/2/2018
1/17/2018 1/2/2018
2/5/2018 1/17/2018
2/26/2018 2/5/2018
E
3/15/2018 2/26/2018
22 November 2021
4/2/2018 3/15/2018
Goldman Sachs
Alpha
4/20/2018 4/2/2018
Notes Offering
5/8/2018 4/20/2018
5/28/2018 5/8/2018
5/28/2018
Chart data begins January 1, 2018.

6/12/2018
6/27/2018 6/12/2018
7/12/2018 6/27/2018
7/12/2018
E
7/27/2018
8/13/2018 7/27/2018
8/28/2018 8/13/2018
9/12/2018 8/28/2018
9/27/2018 9/12/2018
10/12/2018 9/27/2018
10/12/2018
E
10/29/2018
11/13/2018 10/29/2018
11/28/2018 11/13/2018
11/28/2018
Notes Offering
12/13/2018
12/28/2018 12/13/2018
1/14/2019 12/28/2018
1/29/2019 1/14/2019
E
Exhibit 124: Drivers of Alpha Performance - Progressive
2/13/2019 1/29/2019
2/28/2019 2/13/2019
3/15/2019 2/28/2019
4/1/2019 3/15/2019
4/16/2019 4/1/2019
E
5/1/2019 4/16/2019
5/16/2019 5/1/2019
Source: Axioma US4M Model, FactSet, Company data, Goldman Sachs Global Investment Research
5/31/2019 5/16/2019
6/17/2019 5/31/2019
7/2/2019 6/17/2019
7/17/2019 7/2/2019
E
8/1/2019 7/17/2019
8/16/2019 8/1/2019
9/2/2019 8/16/2019
9/17/2019 9/2/2019
10/2/2019 9/17/2019
10/17/2019 10/2/2019
E
EPS Consensus Est.

11/1/2019 10/17/2019
11/19/2019 11/1/2019
12/4/2019 11/19/2019
12/19/2019 12/4/2019
1/3/2020 12/19/2019
1/20/2020 1/3/2020
2/5/2020 1/20/2020
2/21/2020 2/5/2020
3/10/2020 2/21/2020
3/25/2020 3/10/2020
3/25/2020
4/9/2020
4/9/2020
E
4/24/2020
4/24/2020
5/11/2020
$1bn of Senior Notes
5/11/2020
5/26/2020
5/26/2020
6/10/2020
6/10/2020
6/25/2020
6/25/2020
7/10/2020
7/10/2020
E
7/27/2020
7/27/2020
8/12/2020
8/12/2020
8/28/2020
8/28/2020
9/14/2020
9/14/2020
9/29/2020
9/29/2020
10/14/2020
10/14/2020
10/29/2020
10/29/2020
E
11/13/2020
11/13/2020
12/1/2020
12/1/2020
12/16/2020
12/16/2020
12/31/2020
12/31/2020
1/18/2021
1/18/2021
E
2/3/2021
2/3/2021
2/18/2021
2/18/2021
3/5/2021
3/5/2021
3/22/2021
Protective Insurance Acq. Announced
3/22/2021
4/6/2021
4/6/2021
4/21/2021
4/21/2021
5/6/2021
5/6/2021
5/21/2021 5/21/2021
6/7/2021 6/7/2021
6/22/2021 6/22/2021
7/7/2021 7/7/2021
E
7/22/2021 7/22/2021
8/6/2021 8/6/2021
8/23/2021 8/23/2021
9/7/2021 9/7/2021
Protective Insurance Acq. Completed
9/22/2021 9/22/2021
10/7/2021 10/7/2021
10/22/2021 10/22/2021
E
11/9/2021 11/9/2021
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
90
The Travelers Companies, Inc. (TRV; Neutral; TP: $165)
Overview: We are initiating with a Neutral rating on TRV and 12-month target price of
$165, implying an 11% total return. As one of the most diversified P&C books of
business within our coverage universe, we find TRV’s product mix and history of capital
deployment attractive, defensible and stable over the long term. However, in light of the
tailwinds we see for the commercial lines insurers with strong underwriting leverage,
and greater exposure to the hard market, we think that there is more attractive upside
elsewhere within our coverage over the next twelve months. That said, we see
continued margin improvement in the years to come, and similar levels versus the
Street. Our views for mid-single-digit growth over the coming years are largely
consensus, and we think TRV’s market share and product mix imply a low probability for
material upside to our growth numbers, making this stock more of a margin and capital
deployment story, in our view. For the near term we expect a continuation of inflationary
pressures in personal lines (39% of TTM premiums earned; highest weighting among
our coverage group after ALL and PGR), with TRV’s stated strategy of growing through it
perhaps being a beneficial long-term decision, but with near-term consequences.
Exhibit 125: TRV capital deployment as a % of operating earnings

At this point in the insurance cycle, we prefer companies that are
leveraging capital to grow organically more agressively.
16%
120% 116%
111% 109% 109% 14%
21% 95%
100% 20% 12%
25% 88% 87% 87%
38% 84%
80% 10%
33%
33% 27% 29% 26%
57% 8%
60%
94% 6%
91% 84%
40% 32%
71% 4%
55% 61% 60% 59% 58%
20%
2%
25%
0% 0%
2014 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E
Buybacks Dividends Operating ROE
How to assess the pace of deceleration in commercial pricing and premium

growth: TRV’s domestic Business Insurance pricing (ex. National Accounts) has
decelerated to 6.3% after peaking at 8.2% in 4Q20. As pricing reaches levels that are
approaching its long-term loss cost assumption of 5%, we believe that the pace of
pricing deceleration should slow down, and we wouldn’t be surprised to see pricing
hover in the mid-single-digit range next year. We see this scenario as most likely given
TRV’s stated goal of achieving mid-teens operating ROE over time (though we estimate
this target is lower today given the interest rate environment). We estimate that TRV will
earn a low-teens ROE over the coming years (11-12%), indicating the importance of
pricing to be maintained at least near loss trend. In our view pricing is being supported
not only by loss cost worries around climate and social inflation, but the low interest rate
environment that is making it difficult for TRV and others to reach desired profitability,
even in a hard underwriting market. Over time as interest rates and fixed income yields
22 November 2021 91
increase, we would expect the company to be more inclined to alleviate some pricing
increases as net investment income contributes more to the ROE.
More loss ratio improvement to come, and beneficiary of lagged exposure growth
that acts like rate; yet booking loss ratios less conservatively versus peers: As
earned rates for 2022 will be a function of business written in 21/22, we still expect
margin improvement in 2022E, though there were discrete benefits to the tune of 70bps
YTD in commercial lines that we expect to largely reverse next year (lower than normal
non-cat weather and favorable commercial auto frequency). TRV has been noticeably
vocal about leveraging terms and conditions - namely the management of deductibles,
attachment points, limits, sub-limits, and exclusions, which can also contribute to an
increase in the price per unit of risk. Additionally, there are elements of exposure
increases inherent within some of TRV’s businesses that act like rate, such as workers’
comp (22% of TTM NPW) and commercial property (16% of TTM NPW). We think these
factors will contribute to margin increases within TRV’s book and are reflected in our
underlying loss ratio estimates. We note that workers’ comp premium audits (which can
help drive exposure increases) are often done on a lagged basis, meaning that premium
growth and margin benefits from the economic reopening may not have fully shown
through to results yet.
Despite these positives, however, our rate vs. loss trend work implies that the company
may be booking loss ratios less conservatively versus peers. As such, we think recent
vintages will produce relatively less PYD down the line, and should social inflation spike,
the company would have less of a margin buffer.
Exhibit 126: TRV business insurance rate vs. loss trend
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
1Q16
1Q17
4Q17
1Q18
4Q18
1Q19
4Q19
4Q20
2021E
2022E
2023E
3Q15
4Q15
2Q16
3Q16
4Q16
2Q17
3Q17
2Q18
3Q18
2Q19
3Q19
1Q20
2Q20
3Q20
1Q21
2Q21
3Q21
-1%
BI renewal rate change (written) TRV Business Insurance loss trend

GSe BI renewal rate change (earned)
rate reflects Domestic Business Insurance ex. National Accounts.
22 November 2021 92
Exhibit 127: Segment margins and NPW growth

Business Insurance Personal Insurance Bond & Specialty Insurance
96.2% 95.5%
100% 93.2% 93.8% 94.9% 95.7% 92.4% 91.9% 91.1% 8% 100% 16% 100%
90.9% 91.5% 91.0% 91.5% 91.4% 91.3% 90.1%
20%
90% 90% 87.0% 90% 86.8% 85.0% 18%
83.2% 83.4% 82.2% 81.6% 14%
6% 80.1% 81.0% 79.4% 81.8%
80% 80% 12% 80% 16%
70% 4% 70% 70% 14%
10%
Combined ratio
Combined ratio
Combined ratio
60.7% 61.4% 62.9% 64.4% 65.5% 64.6%
NPW growth
NPW growth
NPW growth
61.5% 61.2% 60.7% 51.1%
60%
2%
60% 42.6% 42.7% 44.4% 41.9% 44.6% 48.2% 47.1% 46.5% 60%
58.3% 62.6% 64.7% 64.5% 65.3% 58.0% 65.1% 65.2% 63.5% 12%
8%
50% 50% 50% 10%
0% 6%
40% 40% 40% 8%
4%
30% -2% 30% 30% 6%
20% 20% 2% 20% 4%
32.5% 32.4% 32.0% 31.3% 30.7% 30.9% 37.5% 38.3% 38.8% 37.5% 37.3% 35.9% 35.2% 35.1% 35.1%
30.9% 30.7% 30.4% -4% 28.5% 28.3% 26.8% 26.5% 26.2% 27.0% 26.3% 26.1% 26.6%
10% 10% 0% 10% 2%
0% -6% 0% -2% 0% 0%
2015 2016 2017 2018 2019 2020 2021E 2022E 2023E 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E 2015 2016 2017 2018 2019 2020 2021E 2022E 2023E
expense ratio underlying loss ratio expense ratio underlying loss ratio expense ratio underlying loss ratio
underlying combined ratio NPW growth underlying combined ratio NPW growth underlying combined ratio NPW growth
On the expense ratio side of the margin equation, we expect less operating
leverage versus peers: Our expectation for more limited expense ratio improvement
versus peers over the coming years is a function of 1) slower premium growth leading
to less operating leverage, and/or 2) the lack of an expense savings initiative. While we
would view less operating leverage as a relative disadvantage over the coming years,
we don’t necessarily view the lack of an expense initiative as a negative, given that TRV
has improved its expense ratio by -2.5pp from 2009 to 2019, which is stronger than CB
(-1.0pp, 2009 expense ratio reference is ACE), WRB (-1.3pp) and HIG (expense ratio
increased). We recognize HIG and CB went through transformative M&A, with HIG’s
transformation certainly increasing its expense ratio profile.
Exhibit 128: Coverage P&C expense ratios

we expect less expense ratio improvement versus peers
Gse Improvement through..
2019 2020 2021E 2022E 2023E 2021E 2022E 2023E
AIG 34.4% 33.3% 31.6% 30.4% 29.9% -2.9% -4.1% -4.5%
ALL 24.0% 26.8% 24.2% 23.2% 22.8% 0.2% -0.8% -1.2%
CB 28.4% 27.5% 26.5% 26.1% 26.1% -2.0% -2.3% -2.4%
HIG 32.6% 31.9% 31.0% 29.8% 29.6% -1.6% -2.8% -3.0%
PGR 20.5% 23.7% 19.9% 19.8% 19.7% -0.7% -0.7% -0.8%
TRV 29.6% 29.9% 29.5% 29.4% 29.4% -0.1% -0.2% -0.2%
WRB 31.5% 30.5% 28.6% 28.3% 28.3% -3.0% -3.2% -3.2%
Our analysis of TRV’s reserves don’t imply the need for caution today: Our
multi-pronged approach to assessing TRV’s reserve adequacy started with our
roll-froward of rate vs. trend indexed to 2012 (see Exhibit 130 and Exhibit 46 in the
commercial lines section). The conclusion from this analysis is that TRV’s commercial
reserves from 2012 through 2020 are accurate (without accounting for adjustments in
terms and conditions) at a ~3.5% or lower loss trend. We think this is quite possible
given TRV’s product weighting; notably workers’ comp is ~25% of the book on average
over this period and experienced very low claim inflation.
In our second approach we leveraged a typical Schedule P analysis in which we

modeled LDFs by accident year for each long-tail product line (see Exhibit 129). For most
lines of business we used the most recent 3 year average LDFs, though for workers’
comp and used the most recent year experience. We added a punitive inflation
adjustment for inflation heavy years of 2015-2018, and a smaller favorable adjustment for
AY2020. The conclusion from this analysis is that aggregate reserves are redundant by
$2.8bn, which equates to 13% of statutory surplus (Exhibit 129). The estimated
22 November 2021 93
redundancy largely stems from workers’ compensation for all accident years since 2012
(with the AY redundancy growing over time), partially offset by deficient reserves in
commercial auto liability and other liability occurrence.
Ultimately, when considering the combination of the two analyses we feel good about
TRV’s reserves, and we expect to continue to see modestly favorable (50bps) of PYD in
2022/2023.

$mn
Comm. Comm. Multi Other Liab. Other Liab. Private Pass. Total Reserves
WRB Workers' Comp All others All Lines
Auto Liab Peril (Claims) (Occurrence) Auto Liab. in Analysis
Prior - - - - - - - - -
AY2011 (2) (18) (27) 8 (1) (32) (72) 0 (72)
AY2012 6 (8) 92 (7) (0) 10 94 (0) 94
AY2013 2 17 78 12 (1) 11 118 (0) 118
AY2014 13 17 (18) 16 (1) 90 116 0 116
AY2015 (136) 6 (11) (72) 2 184 (28) - (28)
AY2016 (156) 30 24 (67) 4 372 207 (0) 207
AY2017 (201) 28 (17) 45 11 425 290 0 290
AY2018 (275) (23) (3) (89) 28 524 162 (0) 162
AY2019 48 205 76 (11) 63 584 965 (0) 965
AY2020 131 28 (97) (363) 265 965 929 - 929
Total (571) 282 98 (528) 368 3,132 2,782 - 2,782
Exhibit 130: TRV Business Insurance underlying loss ratio build Exhibit 131: Progression of TRV liability loss picks in 2019
using company pricing and various loss trend scenarios TRV deliberately reset go-forward loss picks upon recogition of loss
were comfortable with TRV’s loss picks, assuming a cumulative loss creeep in prior years
trend of 3-4%
Cumulative 6.9%
74% increase
72% 8%
70% 1.5%
7%
68%
66% 6% 1.0%
Cumulative 4.5%
increase
64% 5% Cumulative 1.8% 1.7%
1.4%
62% increase
4%
60% 3.1%
3% 1.1%
58%
56% 2% 0.5% 1.7%
2012 2013 2014 2015 2016 2017 2018 2019 2020 0.3%
1% 0.5%
0.5%
Underlying loss ratio (actual) LR @ 3% loss trend LR @ 4% loss trend 0%

4Q18
3Q19
3Q19
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
3Q18
1Q19
2Q19
4Q19
3Q18
4Q18
1Q19
2Q19
4Q19
LR @ 5% loss trend LR @ GSe loss trend
Total Business Insurance Commercial auto General liability
This chart corresponds to the analysis in exhibit XX in the commercial lines section which GSe commercial auto and general liability loss pick reset estimates assume that adverse loss
outlines the process for, and potential drawbacks of, this analysis. ratio impact was equally attributable to both in 2Q19-4Q19, and are based on GAAP net
premiums written (not earned) for each line.
We expect an EPS beat in 4Q21, with TRV exhausting its CAT XoL treaty based on
an average CAT quarter: Our $3.90 EPS estimate in 4Q21 is 5% better than the Street,
stemming largely from our CAT ratio of 90bps (260bps VA consensus), and our 61% BI
underlying loss ratio (61% VA consensus). The reason for this is that we think TRV’s
aggregate XoL reinsurance will be exhausted in an average CAT/severe loss scenario of
$225mn/$150mn (Exhibit 132). We note that TRV has effectively managed catastrophe
exposure in recent years, which has led to catastrophe losses that are below its implied
market share. Additionally, we don’t see Visible Alpha consensus correctly accounting
for the roughly 2pp of rate over trend and favorable commercial auto accident frequency
22 November 2021 94
benefit.
Exhibit 132: 4Q21 catastrophe and severe loss scenario analysis

Net Catastrophe losses (pretax) Net Catastrophe losses (pretax) benefit
Catastrophe losses (pretax) before reinsurance treaty Catastrophe losses (pretax) before reinsurance treaty
$ mn $75 $150 $225 $300 $375 $ mn $75 $150 $225 $300 $375
$50 $23 $45 $68 $90 $150 $50 $53 $105 $158 $210 $225
Severe losses
Severe losses
$100 $23 $45 $68 $109 $174 $100 $53 $105 $158 $191 $201
$150 $23 $45 $72 $130 $193 $150 $53 $105 $153 $170 $182
$200 $23 $45 $90 $147 $209 $200 $53 $105 $135 $153 $166
$250 $23 $54 $104 $161 $222 $250 $53 $96 $121 $139 $153
Net Severe losses over $5mn (pretax) Net Severe losses over $5mn (pretax) benefit
Catastrophe losses (pretax) before reinsurance treaty Catastrophe losses (pretax) before reinsurance treaty
$ mn $75 $150 $225 $300 $375 $ mn $75 $150 $225 $300 $375
$50 $15 $15 $15 $15 $20 $50 $35 $35 $35 $35 $30
Severe losses
Severe losses
$100 $30 $30 $30 $36 $46 $100 $70 $70 $70 $64 $54
$150 $45 $45 $48 $65 $77 $150 $105 $105 $102 $85 $73
$200 $60 $60 $80 $98 $111 $200 $140 $140 $120 $102 $89
$250 $75 $91 $116 $134 $148 $250 $175 $159 $134 $116 $102
$ mn
Total qualifying losses to date $2,036
GS estimate in model
XoL Treaty Attachment $1,900
Agg Max $2,400
The treaty provides for up to $350mn part of $500mn of coverage, subject to a $1.9bn retention (i.e., for every dollar of loss between $1.9 billion and $2.4 billion, this treaty provides for 70 cents of
coverage), of aggregate qualifying losses. Qualifying losses are subject to a $5 million event deductible per occurrence.
Exhibit 133: Summary of TRV reinsurance program

2019 Treaty 2020 Treaty 2021 Treaty
Attachment point ($mn) $1,300 $1,550 $1,900
Treaty coverage ($mn) $430 $280 $350
Treaty coverage (% of $500mn) 86% 56% 70%
Qualifying events ($mn) ≥$5 ≥$5 ≥$5
Per event limit ($mn) $250 $250 $250
Treaty cost to TRV ($mn; GSe) $145 $100 $150
Adverse impact to underlying CR (GSe) 50bps 35bps 50bps
22 November 2021 95
Exhibit 134: TRV Share of U.S. P&C Industry CAT Losses vs. CAT Exposed Market Share
$mn
U.S. P&C TRV CAT Exposed
TRV share of TRV CAT
lndustry TRV CAT U.S. P&C Market
Industry CAT Exposed
Insured CAT Losses $ Share (based on
losses DPW $
Losses $ DPW $)
2011 48,400 2,562 5.3% 4.2% 8,681
2012 63,500 1,862 2.9% 4.0% 8,675
2013 24,100 591 2.5% 3.7% 8,573
2014 23,200 709 3.1% 3.5% 8,353
2015 22,900 514 2.2% 3.4% 8,473
2016 31,600 877 2.8% 3.4% 8,811
2017 130,900 1,949 1.5% 3.4% 9,209
2018 60,400 1,716 2.8% 3.4% 9,766
2019 38,700 886 2.3% 3.5% 10,663
2020 74,400 1,613 2.2% 3.7% 11,528
2011-2015 avg. 36,420 1,248 3.2% 3.7% 8,551

2016-2020 avg. 67,200 1,408 2.3% 3.5% 9,995
CAT exposed business lines used include allied lines (sub), commercial auto physical damage, commercial multiple peril (non-liability), farmowners
multiple peril, federal flood, homeowners multiple peril, inland marine, multiple peril crop, private passengers auto physical damage, private crop.
Source: Insurance Information Institute, SNL Financial, Company data, Goldman Sachs Global Investment Research

Our Business Insurance underlying loss ratios are in-line with the Street at 61.2%/60.7%
in 2022/2023, while our Bond & Specialty Insurance underlying loss ratios are much
better than the Street. In Personal Insurance, we model combined ratios that are
150bps/50bps worse than the Street. In total, our estimates are fairly aligned with
consensus from an EPS perspective.

GS GS GS GS GS
NPW growth 6.8% 6.1% 71bps 6.4% 5.6% 75bps 6.7% 6.3% 39bps 6.1% 5.3% 73bps 5.0% 4.8% 20bps
Net investment income 619 602 3% 615 601 2% 2,909 2,892 1% 2,457 2,412 2% 2,490 2,463 1%
Interest expense 87 87 0% 87 87 0% 339 339 0% 348 348 0% 348 349 0%
Reported loss ratio 62.6% 62.9% -36bps 65.1% 64.2% 87bps 66.0% 66.1% -16bps 65.6% 65.4% 24bps 64.6% 64.9% -28bps
cat loss (net of reinsurance) ratio impact -0.9% -2.6% 167bps -4.6% -4.3% -31bps -6.1% -6.6% 44bps -4.9% -4.8% -6bps -4.9% -4.8% -10bps
net favorable PYD loss ratio impact 0.9% 1.0% -13bps 1.1% 1.0% 1bps 1.7% 1.7% -1bps 0.5% 0.5% -7bps 0.5% 0.5% -4bps
Underlying loss ratio 62.6% 61.4% 118bps 61.5% 61.0% 57bps 61.5% 61.3% 27bps 61.2% 61.1% 11bps 60.2% 60.6% -41bps
Combined ratio 91.7% 92.6% -85bps 94.4% 94.1% 38bps 95.5% 96.1% -60bps 95.0% 95.2% -15bps 94.0% 94.6% -56bps
Combined ratio ex. cats and PPD 91.7% 91.0% 66bps 90.9% 90.8% 10bps 91.0% 91.3% -22bps 90.6% 91.0% -36bps 89.6% 90.5% -90bps
Effective tax rate 17.4% 17.3% 7bps 17.5% 17.3% 21bps 17.2% 17.2% 2bps 16.5% 17.1% -58bps 16.5% 17.2% -66bps
Core income available to common shareholders 963 916 5% 789 824 -4% 3,179 3,148 1% 3,066 3,053 0% 3,445 3,297 4%

Weighted average shares outstanding, diluted 247 247 0% 249 246 1% 251 251 0% 245 243 1% 240 236 2%
Buybacks ($ mn) 500 476 5% 450 445 1% 1,899 1,867 2% 1,800 1,722 5% 2,000 1,773 13%
Dividends per-share $0.88 $0.88 0% $0.88 $0.89 -1% $3.55 $3.50 2% $3.76 $3.67 2% $3.98 $3.86 3%
Op EPS $ 3.90 $ 3.72 5% $ 3.17 $ 3.32 -5% $ 12.67 $ 12.53 1% $ 12.49 $ 12.57 -1% $ 14.35 $ 14.02 2%
BVPS $ 118.3 $ 117.9 0% $ 120.6 $ 119.7 1% $ 118.3 $ 119.0 -1% $ 126.1 $ 125.6 0% $ 135.6 $ 132.9 2%
Op ROE 14.0% 13.2% 81bps 11.3% 11.8% -47bps 11.7% 11.3% 42bps 10.9% 10.8% 18bps 11.9% 11.3% 57bps
BUSINESS INSURANCE
Net premiums written 3,797 3,851 -1% 4,363 4,353 0% 15,923 15,977 0% 16,811 16,794 0% 17,683 17,526 1%
NPW growth 4.6% 5.1% -54bps 5.8% 5.4% 32bps 3.2% 3.4% -18bps 5.6% 5.1% 49bps 5.2% 4.7% 47bps
Segment income (loss) before taxes 749 720 4% 682 638 7% 2,565 2,492 3% 2,563 2,476 4% 2,778 2,641 5%
Reported loss ratio 61.6% 62.4% -74bps 63.1% 64.3% -118bps 66.2% 66.6% -35bps 64.4% 65.1% -62bps 63.9% 64.5% -52bps
cat loss (net of reinsurance) ratio impact -0.7% -1.8% 108bps -3.5% -4.0% 53bps -5.5% -5.8% 29bps -3.6% -4.1% 51bps -3.6% -4.1% 49bps
net favorable PYD loss ratio impact 0.8% 1.2% -41bps 1.7% 1.2% 53bps 0.8% 0.9% -6bps 0.4% 0.3% 8bps 0.4% 0.4% 3bps
Underlyting loss ratio 61.7% 61.8% -8bps 61.3% 61.4% -12bps 61.5% 61.6% -13bps 61.2% 61.2% -3bps 60.7% 60.7% 1bps
Combined ratio ex. cats and PPD 92.4% 92.4% 1bps 92.3% 92.4% -8bps 92.4% 92.6% -25bps 91.9% 92.0% -7bps 91.1% 91.5% -34bps
22 November 2021 96

Upside risks primarily center around stronger than expected premium growth,
materially favorable reserve development, or greater than expected margin
improvement. While the company has not grown recently as much as certain
commercial lines peers that are particularly levered to the hard cycle, we have yet see
material growth in exposures from TRV either. Should TRV be able materially grow
exposures (could stem from WC or other lines levered to payroll growth) or see a
prolonged repricing cycle for standard lines, growth would exceed our estimates. In
terms of reserve development, should a lower degree of social inflation come through
reserving data, or continued lower frequency of workers’ comp claims beyond our
expectations, we would expect more favorable development than modeled. Additionally,
should TRV improve its underwriting profile significantly beyond rate vs. loss trend
dynamics, the company could beat our loss ratio estimates. That said, we have
attempted to capture such improvements in our model.
Downside Risks: We see the primary downside risks as a worsened social inflation
environment that would weigh on both reserve development and underlying margin
improvement. Additionally, a material deceleration in rate increases beyond our
estimates would lead to lower profitability versus our estimates.
Valuation
We assign a 1.4x P/B ex AOCI multiple for TRV shares, translating to an $165 12-month
a 2.4% dividend yield. Our assigned multiple represents a discount to regression
implied levels for a 12% ROE, reflective of our view that the company is booking loss
ratios in a less conservative manner versus coverage peers, translating to a lower
degree of favorable development overtime. We also expect less growth for TRV as
compared to peers that are levered to the hard market to a greater degree.
22 November 2021 97
Exhibit 136: TRV Company Profile

Price $152.53 S/O 246
NAIC 3
Market Cap ($bn) $38.1b Float 99.7% 1M 3M 12M YTD 24M Real Estate US Gov
1% Equity
Price Target $165 Volume 1,620 TRV -1.8% -4.4% 13.9% 8.7% 12.6% 1% Other 4% Other Gov
Securities
+/- 8.2% XLF -2.2% 4.2% 42.3% 32.4% 30.6% 1% 1%
1%
Dividend Yield 2.4% S&P500 3.9% 6.6% 31.2% 25.1% 50.6% NAIC 2
14% Structured LPs
Total Return 10.6%
Products ST Inv 3%
2% 7%
BVPS Estimates Price Chart (Indexed)
4Q21E 2021E 2022E 2023E 200
BVPS $118.35 $118.35 $126.09 $135.56
BVPS ex-AOCI $113.55 $113.55 $121.13 $130.40
180
Munis &
Earnings Estimates
Utilities
4Q21E 2021E 2022E 2023E 160 41%
GS EPS Estimates $3.90 $12.67 $12.49 $14.35 Corporate
Consensus EPS Estimates $3.75 $12.23 $12.48 $13.97 Debt
140 39%
Op. ROE 14.0% 11.7% 10.9% 11.9% NAIC 1
120
85%
P/E 9.8x 12.0x 12.2x 10.6x

100

Repurchases ($m) 500 1,899 1,800 2,000 80
TTM Business Mix
Key Financials
60
Combined Ratio 91.7% 95.5% 95.0% 94.0% 40
Nov-18
Apr-19
Jun-19
Nov-19
Apr-20
Jun-20
Nov-20
Apr-21
Jun-21
Nov-21
Feb-19
Sep-19
Jan-20
Sep-20
Jan-21
Sep-21
Prior Year Development 0.9% 1.7% 0.5% 0.5%
CAT -0.9% -6.1% -4.9% -4.9%
Underlying Combined Ratio 91.7% 91.0% 90.6% 89.6% TRV SPX XLF
Personal
Personal Insurance
Insurance 33%
Historical Price / NTM Projected Earnings 37%
Price to Earnings Price to BVPS ex-AOCI
16.0x 1.8x Business
Fwd P/E Mean +1 Std Dev -1 Std Dev Business Insurance
15.0x P/BV Mean +1 Std Dev -1 Std Dev
Insurance 52%
1.6x
14.0x 53%
13.0x
1.4x
12.0x
Bond & Bond &
11.0x 1.2x Specialty Specialty
10.0x Insurance Insurance
9.0x 1.0x 10% 15%
8.0x
0.8x
7.0x
Nov-18
Nov-19
Jun-19
Nov-20
Jun-20
Nov-21
Jun-21
Feb-19
Apr-19
Sep-19
Apr-20
Sep-20
Apr-21
Sep-21
Jan-20
Jan-21
Nov-18
Nov-19
Nov-20
Nov-21
Jun-19
Jun-20
Jun-21
Feb-19
Apr-19
Sep-19
Apr-20
Sep-20
Apr-21
Sep-21
Jan-20
Jan-21
$140 14.0% 10
9
2016 2017 2018 2019 2020 2021E 2022E 2023E
$130.40
$120 12.0% Share Repurchases ($m) 2,472 1,440 1,321 1,548 672 1,899 1,800 2,000
$121.13
8
$113.55
$100 10.0% 7 Dividends ($m) 749 778 808 836 852 864 882 899
$105.78
BVPS ex-AOCI
$99.03
6 Divi & Repo ($m) 3,221 2,218 2,129 2,384 1,524 2,763 2,682 2,899
$93.90
Op. ROE
$80 8.0%
$88.70
5
$60 6.0% 4 Core Earnings ($m) 2,944 2,028 2,411 2,518 2,664 3,179 3,066 3,445
3 Divi & Repo (% of Earn) 109% 109% 88% 95% 57% 87% 87% 84%
$40 4.0% 2
1
$20 2.0%
0
Dec-20
Jun-21
Jun-21
Nov-21
Nov-21
Feb-21
Feb-21
Apr-21
Apr-21
Jul-21
Jul-21
Jul-21
Oct-21
Oct-21
May-21
May-21
Aug-21
Aug-21
Sep-21
Sep-21
Jan-21
Jan-21
Mar-21
Mar-21
$0 0.0%
2017 2018 2019 2020 2021E 2022E 2023E
22 November 2021 9<

$10
$10
$11
$11
$12
$12
$13
$13
$8
$9
$9
-5%
-30%
-25%
-20%
-15%
10%
15%
20%
-10%
0%
5%
1/2/2018
1/2/2018
1/17/2018
1/18/2018
E
2/5/2018
2/26/2018 2/7/2018
3/15/2018 3/1/2018
22 November 2021
4/2/2018 3/21/2018
Goldman Sachs
4/20/2018 4/10/2018
E
5/8/2018 4/30/2018
Alpha
5/29/2018 5/21/2018
6/13/2018 6/8/2018
6/28/2018 6/26/2018
7/13/2018
7/12/2018
E
7/30/2018
7/30/2018
8/14/2018
Dan Frey to CFO
8/29/2018 8/15/2018
9/13/2018 8/31/2018
9/28/2018 9/18/2018
10/15/2018 10/4/2018
E
10/30/2018 10/22/2018
11/14/2018 11/7/2018
Subs.
11/29/2018 11/23/2018
12/14/2018
TRV Europe
12/11/2018
12/31/2018 12/27/2018
approved for Dublin
1/15/2019
Exhibit 137: Drivers of Alpha Performance - Travelers
1/14/2019
E
1/30/2019
1/30/2019
2/14/2019
2/15/2019
3/1/2019
3/18/2019 3/5/2019
4/2/2019 3/21/2019
4/17/2019 4/8/2019
E
5/2/2019 4/24/2019
5/17/2019 5/10/2019
TRV provides auto
6/3/2019 5/28/2019
ins. For Lexus lease
6/18/2019 6/13/2019
7/3/2019 7/1/2019
7/18/2019 7/17/2019
E
8/2/2019
8/2/2019
To Dublin
8/20/2019
Approval to
8/21/2019
Trans. Euro Bus.
9/4/2019
9/6/2019
9/19/2019
10/4/2019 9/24/2019
10/21/2019 10/10/2019
E
EPS Consensus Est.

11/6/2019 10/29/2019
11/22/2019 11/14/2019
12/9/2019 12/3/2019
12/24/2019 12/19/2019
1/8/2020 1/6/2020
1/23/2020
E
1/22/2020
2/10/2020 2/10/2020
2/25/2020
2/26/2020
3/11/2020
3/13/2020
3/26/2020
4/10/2020 3/31/2020
4/16/2020
E
4/27/2020
5/12/2020 5/4/2020
5/27/2020 5/20/2020
6/11/2020 6/5/2020
6/26/2020 6/23/2020
7/14/2020 7/9/2020
E
7/29/2020 7/28/2020
8/13/2020 8/13/2020
8/28/2020
8/31/2020
9/14/2020
9/16/2020
9/29/2020
10/2/2020
10/14/2020
E
10/29/2020 10/20/2020
11/13/2020 11/5/2020
12/1/2020 11/24/2020
12/16/2020 12/10/2020
1/1/2021 12/29/2020
1/19/2021 1/15/2021
E
Insuramatch
2/4/2021 2/3/2021
TRV to acquire
2/19/2021 2/19/2021
3/8/2021 3/9/2021
3/23/2021
3/25/2021
4/7/2021
4/12/2021
E
4/22/2021
5/10/2021 4/28/2021
5/25/2021 5/17/2021
6/9/2021 6/2/2021
6/24/2021 6/18/2021
7/9/2021 7/6/2021
E
7/26/2021 7/22/2021
In Fidelis
8/10/2021 8/9/2021
Minority inv.
8/25/2021 8/25/2021
9/9/2021 9/10/2021
9/24/2021 9/28/2021
10/12/2021
E
10/15/2021
10/27/2021
11/2/2021
11/12/2021
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
99
W.R. Berkley Corporation (WRB; Buy; TP: $99)
We are initiating with a Buy rating on WRB and 12-month target price of $99 implying a
25% total return.
Where does growth go from here: The logical question following the very strong
premium growth year to date at WRB is how long it can be sustained. Certainly price
increases should be expected to moderate while reeling in the outsized growth from
that factor. However, we think it may be underappreciated that the recent premium
growth has occurred without much help from exposure unit growth and actually took
place despite it being a drag for the past 12 months. Looking forward, we think absolute
premium growth should exceed expectations as pricing remains pretty hard with an
added tailwind from unit exposure. Part of this is the result of the mechanics of workers’
compensation premium audits which are lagged. However, we also think commercial
auto is a meaningful contributor as economic activity increases and WRB deploys more
capital behind growth in this line which has seen more significant gains in pricing
adequacy over the past 2 years.
We note that around 1/3 of WRB’s premiums are from excess and surplus lines
businesses, for which we have a particularly favorable view of unit exposure. More
specifically, we expect pricing to remain in excess of loss cost over the near term with
the added benefit of unit exposures continuing to grow. As a result, we expect premium
growth to remain elevated over the next several quarters despite some moderation in
earned pricing.
Exhibit 138: E&S Stamping Office activity suggets continued growth for E&S premiums
Will the strides in improving rate adequacy lead to favorable PYD over time or
mask deficiencies of the past? We think there are signs that suggest 2020 and 2021
YTD loss estimations have been accounted for at the more conservative end of the
actuarial spectrum. Said another way, we think the improved margins are understated
and will likely show even more improvement to the ultimate loss over time. The signs
worth considering are 1) the Schedule P data on paid claims suggesting much higher
than normal IBNR booked last year, and 2) paid claims YTD continuing to run lower than
expected. While we appreciate that paid losses have some uncertainty in 2020 related
to lagged reporting and Covid-19, we think if there was going to be a catch up it would
have started becoming evident in the 1st half of 2021. The GAAP reported paid claims
do not suggest there was a rebound in paids for the 2020 accident year, and so we
conclude that 2020 appears to be quite redundant on the back of significant rate
22 November 2021 100

increases and conservative assumptions. We anticipate that 2020 and likely 2021 have
been estimated quite conservatively relative to prior accident years, giving us some
confidence in overall reserve adequacy and the potential for more material favorable
reserve development over the next few years.
Exhibit 139: Paid to Ultimate Loss Ratio Exhibit 140: GAAP Paid to Incurred Ratio
Paid claims divided by incurred claims in the loss reserve rollforward
100% 110.0%
90%
AY2011 100.0%
80%
AY2012
90.0%
70% AY2013
60% AY2014 80.0%
50% AY2015
70.0%
AY2016
40%
AY2017 60.0%
30%
AY2018
20% 50.0%
AY2019
10% AY2020
40.0%
0%
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
1Q21
2Q21
12 24 36 48 60 72 84 96 108 120
Source: SNL Financial Source: Company data

In terms of reserve adequacy on the back book, we have used a couple of different
approaches to dial in our view of reserves. Our loss development factor based squaring
of the reserve triangles suggested to us that the company is roughly adequate, with a
deficiency in Liability - Occurrence being offset by redundancies estimated in the other
product lines. This approach utilizes loss development factors based on the past 3 years
of company experience with adjustments for 1) a partial catch up for AY2020 paid
losses, 2) modestly unfavorable development of 2015-2018 accident years relative to the
recent loss development factors, and 3) modestly favorable long term development of
AY 2020 after the initial catch up.
Exhibit 141: Reserve Adequacey Analysis - WRB
$ in Millions
Stated Estimated Redundancy / (Deficiency)
Paid Incurred Reserves Paid Incurred Reserves Reserves % Reserves %Surplus
Prior 3,360 4,430 1,070 3,360 4,430 1,070 0 0.0% 0.0%
AY2011 1,567 1,690 123 1,567 1,735 168 (45) (36.5%) (0.7%)
AY2012 1,624 1,768 144 1,624 1,821 197 (53) (36.8%) (0.9%)
AY2013 1,677 1,846 169 1,677 1,906 229 (60) (35.6%) (1.0%)
AY2014 1,753 2,008 255 1,753 2,033 280 (25) (10.0%) (0.4%)
AY2015 1,737 2,103 366 1,737 2,153 416 (50) (13.6%) (0.8%)
AY2016 1,762 2,404 642 1,762 2,353 591 51 7.9% 0.8%
AY2017 1,680 2,488 808 1,680 2,575 895 (87) (10.8%) (1.4%)
AY2018 1,366 2,511 1,145 1,366 2,588 1,222 (77) (6.7%) (1.2%)
AY2019 980 2,608 1,628 980 2,588 1,608 20 1.2% 0.3%
AY2020 409 2,877 2,468 409 2,345 1,936 532 21.6% 8.6%
Total 17,916 26,733 8,817 17,916 26,527 8,611 206 2.3% 3.3%


$ in Millions
Prior - - - - - - -
AY2011 (1) (1) 7 (5) 0 (46) (45)
AY2012 1 (1) 4 (17) 0 (40) (53)
AY2013 (1) (0) (1) (7) 0 (51) (60)
AY2014 (1) 5 6 2 0 (38) (25)
AY2015 (16) 2 (7) (16) 0 (13) (50)
AY2016 (18) 0 25 18 0 25 51
AY2017 (17) (3) (12) (83) 0 28 (87)
AY2018 (18) (0) 6 (102) 1 36 (77)
AY2019 14 30 20 (101) 1 56 20
AY2020 146 2 103 190 0 90 532
Total 90 33 151 (120) 4 48 206
The impact of duration on the investment portfolio: WRB has commented that they
are maintaining a shorter asset duration as a tactical strategy for dealing with lower
rates and the potential for a quicker increase related to inflation. The company recently
noted that the duration of around 2.25 years is about a full year lower than the liabilities.
Based on the difference between the 2yr and 3yr treasury yields, we estimate the
company is sacrificing around 30 bps to maintain this posture for potential increases in
interest rates. Our assessment of Visible Alpha consensus suggests that it is not
anticipated by consensus that the duration could be lengthened back out to match the
liabilities. Adjusting the core portfolio yield up by 30bps would have a roughly 5% impact
on EPS. We would not expect the company to do this quickly, but we note that it could
be a mitigating factor to assumed yield compression over the next couple of years.
We think WRB will likely be at the low end of the near term expense ratio guide
despite travel and entertainment reversion: WRB’s management recently noted that
it expects the near term expense ratio to run in the 28-20% range. While we appreciate
that there is a roughly 50bps benefit in recent quarters from lower T&E expense, we
think the operating leverage to the significant top-line growth can not be ignored. More
specifically, we think from 2021 to 2022 the company can grow expenses at a slower
pace than the 15% earned premium growth we are forecasting despite a headwind
from T&E returning. The magnitude of growth in premiums driven in part by pricing
increases should give the company significant flexibility to be at the lower end of their
expense ratio guidance in our view.

We are above VA consensus by 7%/10% in 2022/2023 driven by better underwriting
results stemming from the underlying loss ratio, the expense ratio, and prior year
reserve development. We think the company is booking loss ratios that will both
surpass Street estimates on a core basis and will provide further PYD over time.
Furthermore, we are not as concerned by reserves as consensus, as we model 40bps
of favorable development in 2022/2023, respectively, compared to 20bps for the Street.


GS GS GS GS GS
Net Investment Income 136 139 -2% 136 137 -1% 643 646 -1% 549 556 -1% 591 588 1%
Cat loss ratio impact 1.7% 1.5% 18bps 1.5% 1.4% 5bps 2.4% 2.3% 3bps 2.1% 2.2% -8bps 2.1% 2.2% -8bps
PPD loss ratio impact -0.2% -0.1% -4bps -0.4% -0.2% -19bps -0.1% -0.1% -2bps -0.4% -0.2% -18bps -0.4% -0.2% -20bps
Reported combined ratio 88.0% 88.7% -69bps 87.4% 88.2% -81bps 89.5% 89.8% -25bps 87.9% 89.2% -122bps 87.7% 89.3% -159bps
Total net investment income 136 139 -2% 136 137 -1% 643 646 -1% 549 556 -1% 591 588 1%
Operating income, after tax 233 228 2% 251 242 4% 901 896 1% 1,009 945 7% 1,118 1,015 10%
Effective tax rate 21.0% 21.3% -26bps 21.0% 21.2% -15bps 20.7% 20.6% 14bps 21.0% 21.1% -10bps 21.0% 21.1% -10bps

Weighted average shares outstanding, diluted 186 186 0% 186 186 0% 187 187 0% 186 186 0% 185.7 185.0 0%
buybacks ($ mn) 30 48 -37% 30 48 -38% 182 158 15% 65 196 -67% 71 195 -64%
Dividends per-share $ 0.63 $ 0.51 25% $ 0.15 $ 0.13 15% $ 1.51 $ 1.38 9% $ 1.60 $ 0.91 76% $ 1.76 $ 0.93 89%
op EPS $ 1.25 $ 1.22 2% $ 1.35 $ 1.30 4% $ 4.83 $ 4.80 1% $ 5.43 5.08 7% $ 6.02 5.49 10%
$ 4.65 4% $ 5.07 7% $ 5.75 5%
BVPS $ 38.39 $ 38.49 0% $ 39.72 $ 39.67 0% $ 38.39 NA NA $ 42.92 NA NA $ 47.91 NA NA
ROE 15.1% 14.9% 19bps 15.7% 14.9% 85bps 15.0% 14.8% 23bps 15.2% 13.8% 137bps 14.9% 14.0% 91bps
Op ROE 13.5% 13.4% 9bps 14.2% 13.8% 32bps 13.5% 13.4% 3bps 13.7% 13.0% 75bps 13.6% 13.2% 45bps
INSURANCE
Underwriting income (loss) 225 211 7% 241 223 8% 745 731 2% 988 875 13% 1,092 937 16%
Cat loss ratio impact 1.5% 1.3% 18bps 1.5% 1.3% 18bps 1.9% 1.9% 3bps 1.9% 2.0% -7bps 1.9% 2.0% -7bps
PPD loss ratio impact -0.5% -0.3% -25bps -0.6% -0.1% -50bps -0.2% -0.2% -3bps -0.6% 0.0% -56bps -0.6% 0.1% -65bps
REINSURANCE
Net premiums written 228 234 -2% 337 341 -1% 1,075 1,080 -1% 1,142 1,176 -3% 1,199 1,247 -4%
NPW growth 11.3% 7.5% 382bps 8.6% 8.3% 34bps 17.4% 12.6% 476bps 6.3% 7.4% -115bps 5.0% 5.4% -35bps
Net premiums earned 266 265 0% 272 274 -1% 1,017 1,015 0% 1,113 1,130 -1% 1,172 1,211 -3%
Underwriting income (loss) 32 29 9% 37 35 8% 95 92 3% 126 120 5% 127 121 5%
Reported loss ratio 59.0% 58.8% 21bps 56.8% 57.2% -38bps 60.9% 60.9% -4bps 59.1% 59.2% -1bps 59.6% 59.6% 2bps
Cat loss ratio impact 3.0% 2.8% 20bps 1.3% 2.2% -88bps 5.2% 5.1% 4bps 3.4% 3.5% -14bps 3.4% 3.5% -14bps
PPD loss ratio impact 2.0% 1.3% 71bps 1.0% 1.1% -6bps 0.8% 0.8% 7bps 1.0% 1.0% 1bps 1.0% 1.3% -27bps
Underlying loss ratio 54.0% 55.2% -122bps 54.5% 54.4% 13bps 54.8% 55.1% -31bps 54.8% 55.0% -28bps 55.3% 55.6% -34bps
Key risks
The primary downside risks for WRB surround the magnitude and duration of the hard
pricing cycle, reserve development, and ability to continue executing successfully on its
total return strategy.
Hard pricing cycle: Our estimates embed a continuation of the hard pricing cycle, for
which WRB is particularly levered, given its exposure to the E&S markets. Should price
decelerate quicker or more meaningfully than we expect growth and margin estimates
would be too high.
Reserve development: As a casualty-oriented insurer, WRB’s book of business screens

as susceptible to the impacts of social inflation. While our analysis shows WRB’s
reserves are in a solid position, should net adverse development come through, we
believe the company would face pressure on both valuation and earnings.
Total return strategy: Over the last decade WRB has consistently supported its ROE
through the realizing of investment gains (outside of operating income) as part of its
total return investment strategy. We model a continuation of a ~1.5% ROE boost going
forward, and while we see no evidence that performance shouldn’t continue, if it does
not, we think valuation and returns would both be at risk.

Valuation
At roughly 2x book value ex AOCI, WRB’s market valuation is above that implied by a
book value to operating ROE regression. In our view, this higher market valuation is
justified by 1) peer-low underwriting volatility and 2) a total return strategy that has
consistently boosted its net income ROE by 1.6pp above its operating ROE over the last
decade. WRB’s peer low underwriting volatility stems from is underwriting expertise,
and casualty orientation leading to a relatively minimal catastrophe exposure.
We assign a 2.3x P/B multiple for WRB which is slightly above the current market
multiple and regression implied multiple of 2.1x, each. The premium was assign stems
from its favorable position within the current P&C hardening cycle and exposure to E&S
markets, combined with our expectations for peer high premium growth. Embedded
within our valuation and model is 1.5pp of ROE generated from realized gains annually,
which brings our Q5-Q8 ROE to ~15%. We apply our 2.3x P/B ex AOCI multiple to our
3Q22E book value ex AOCI to arrive at a $99 target price, translating to an 25% total
return from current levels, inclusive of a 2.0% dividend yield.
Exhibit 144: Net vs. Operating ROE spread for WRB and selected Exhibit 145: Combined ratio coefficient of variation
peers Measured over several different timeframes, WRB posts peer-low
WRB has produced a positive spread each year over the past decade, underwriting volatility, which supports its valuation.
and with a greater consistency versus peers with similar strategies.
5.0% 8.0%
4.0% 7.0%
3.0%
6.0%
2.0%
5.0%
1.0%
0.0% 4.0%
-1.0% 3.0%
-2.0%
2.0%
WRB Total GS P&C WRB Total GS P&C WRB Total GS P&C
Return Coverage Return Coverage Return Coverage
1.0%
Reinsurer ex WRB Reinsurer ex WRB Reinsurer ex WRB
group group group
0.0%
10 Years 5 Years 3 Years AIG ALL CB HIG PGR TRV WRB
average St. dev 10 Yr 5 Yr 3 Yr
The total return reinsurer group represents a group if reinsurers comprised of ACGL, AXS, RE, and Source: Company data, Goldman Sachs Global Investment Research
RNR who leverage a total return strategy with regards to their investments.

Exhibit 146: WRB Company Profile

Price $80.29 S/O (m) 177
Price Target $99 Volume 442.0 WRB 3.6% 6.2% 20.1% 20.9% 15.4% NAIC 3 NAIC 4 US Gov
+/- 23.3% XLF -2.2% 4.2% 42.3% 32.4% 30.6% 1% 1% Mortgage
3% Other Gov
Dividend Yield 2.0% S&P500 3.9% 6.6% 31.2% 25.1% 50.6% Loans 6%
Equity
0%
Total Return 25.3% Securities
7% Real Estate
NAIC 2 9%
BVPS Estimates Price Chart (Indexed) 16% Other Fixed
4Q21E 2021E 2022E 2023E Income
200
BVPS $38.39 $38.39 $42.92 $47.91 0% Munis &
BVPS ex-AOCI $39.47 $39.47 $44.00 $48.99 Utilities
180 21%
Earnings Estimates
4Q21E 2021E 2022E 2023E 160 Structured
GS EPS Estimates $1.25 $4.83 $5.43 $6.02 Products
Consensus EPS Estimates $1.19 $4.65 $5.07 $5.75 28%
140
NAIC 1 Corporate
ROE ex-AOCI 14.7% 14.7% 14.8% 14.6% 82% Debt
120 26%
P/E 16.0x 16.6x 14.8x 13.3x

100

Repurchases ($m) 30 182 65 71 80
TTM Business Mix
Key Financials 60
Net Premiums Written ($m) 2136 8724 9634 10201
40 Net realized
Combined Ratio 88.0% 89.5% 87.9% 87.7% investment Revenues
Nov-18
Apr-19
Jun-19
Nov-19
Apr-20
Jun-20
Nov-20
Apr-21
Jun-21
Nov-21
Feb-19
Sep-19
Jan-20
Sep-20
Jan-21
Sep-21
Prior Year Development -0.2% -0.1% -0.4% -0.4% gains from non-
3% insurance
CAT 1.7% 2.4% 2.1% 2.1% business
Underlying Combined Ratio 86.5% 87.3% 86.2% 86.0% WRB SPX XLF NII
5%
Reinsurance 7%
NPE
11% Reinsurance
Insurance
Historical Price / NTM Projected Earnings service fees 24%
Price to Earnings Price to BVPS ex-AOCI 1%
32.0x 2.8x
Fwd P/E Mean +1 Std Dev -1 Std Dev P/BV Mean +1 Std Dev -1 Std Dev
27.0x 2.3x
1.8x Insurance NPE Insurance

22.0x
73% 76%
17.0x 1.3x
12.0x 0.8x
Nov-18
Nov-19
Feb-19
Jun-19
Nov-20
Nov-21
Apr-19
Sep-19
Jun-20
Jun-21
Apr-20
Sep-20
Apr-21
Sep-21
Jan-20
Jan-21
Nov-18
Nov-19
Nov-20
Nov-21
Jun-19
Jun-20
Jun-21
Apr-19
Apr-20
Apr-21
Sep-21
Feb-19
Sep-19
Sep-20
Jan-20
Jan-21
$60 16.0% 10
2016 2017 2018 2019 2020 2021E 2022E 2023E
9
14.0% Share Repurchases ($m) 132 48 25 18 346 182 65 71
$50 8
Dividends ($m) 184 188 255 308 84 267 282 310
$48.99
12.0% 7
Divi & Repo ($m) 316 236 280 326 430 449 347 381
$44.00
$40
BVPS ex-AOCI
10.0% 6
$39.47
Op. ROE
5
$35.84
$34.52
$30 8.0%
$32.50
4 Core Earnings ($m) 437.4 315.7 531.7 589.1 437.8 900.7 1009.2 1118.2
$29.32
6.0% 3 Divi & Repo (% of Earn) 72% 75% 53% 55% 98% 50% 34% 34%
$20
2
4.0%
$10 1
2.0% 0
Dec-20
Nov-21
Nov-21
Jun-21
Jun-21
Feb-21
Feb-21
Apr-21
Apr-21
Jul-21
Jul-21
Jul-21
Aug-21
Aug-21
Oct-21
Oct-21
Sep-21
Sep-21
Jan-21
Jan-21
Mar-21
Mar-21
May-21
May-21
$0 0.0%
2017 2018 2019 2020 2021E 2022E 2023E
22 November 2021 <0<

Exhibit 147: Drivers of Alpha Performance - WRB
45%
Alpha
40% E
35%
Launches Lifson Re
Sale of Real Estate Inv.
30% E E
E
25% E
E E E E
20%
E
15%
3-2 stock split E
10%
5%
0%
-5%
E
$6 0.0%
0.5%
$5
1.0%
1.5%
$4
2.0%
$3 2.5%
3.0%
$2
3.5%
4.0%
$1
4.5%
$- 5.0%
EPS Consensus Est. Short Interest as a % of Float
22 November 2021 <0<

Disclosure Appendix
Reg AC
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US P&amp;C Primer

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22 November 2021 | 5:00PM EST

Americas Insurance: Property & Casualty

Pricing Drives Proﬁtable Growth - Initiate on P&C; Buy

P&C Insurance Comp Sheet 10

Our Key Drivers for P&C Value Creation 11

1. Underwriting in a Favorable Commercial Environment: Seizing Opportunity 12

2. Inﬂationary Pressure: Mitigating one of the Primary Risks 15

3. Operating leverage: Top-line growth fuels expense margin expansion 17

4. Balance sheet strength: How much restoration from price is necessary? 19

5. Shifting Distribution in Personal Markets 21

Catastrophes & Reinsurance 43

The Allstate Corporation (ALL; Sell; TP: $106) 48

American International Group (AIG; Buy, on CL; TP: $74) 55

Chubb Limited (CB; Buy; TP: $230) 62

The Hartford Financial Services Group (HIG; Buy; TP: $84) 71

Progressive Corp (PGR; Buy; TP: $104) 82

W.R. Berkley Corporation (WRB; Buy; TP: $99) 100

Disclosure Appendix 107

Source: FactSet, SNL Financial, Goldman Sachs Global Investment Research

Stock calls and key drivers

1. Leverage to the favorable commercial pricing environment

5. Distribution positioning, particularly in personal lines

Through this lens, we come away with the following ratings:

n Buy: AIG (on CL), WRB, CB, HIG, PGR

Driver 1: Leverage to the favorable commercial underwriting environment

NPW growth 22E Gse pricing 22E

Driver 2: Ability to navigate the inﬂationary environment

n Personal insurance: Personal insurers face a more difﬁcult environment as ﬁnancial

Driver 3: Executing on operating leverage during a period of heightened

n WRB is well positioned due to a combination of factors including 1) leaning into

Driver 4: Balance sheet strength coming out of a soft market

Initial loss pick Most recent loss pick 10,000

90% 5,000 -AY1

Our main takeaway from our reserve work include:

redundancy for WRB. Of the commercial insurers we ﬁnd AIG continues to be

Driver 5: Distribution positioning will continue to be a key driver in personal lines

environment is complicated by regulators approving rate a year after auto insurers

21% 22% 24% 25% 26%

Exhibit 10: Company breakdowns by product, geography, type, and class

Revenue by geography U.S. P&C net premiums written by class

100% 98% 100% 98% 100% 100% 98%

P&C Insurance Comp Sheet

Note: Shares of AIG are on the Americas Conviction List

Source: FactSet, Company data, Goldman Sachs Global Investment Research

Our Key Drivers for P&C Value Creation

Leverage to a Favorable Commercial

Distribution Positioning in Personal

Source: Goldman Sachs Global Investment Research

22 November 2021 <<

1. Underwriting in a Favorable Commercial Environment: Seizing

We use a multi-pronged approach to analyzing loss ratios that leverages both

loss ratio trend

loss ratio trend

Source: Company data, Goldman Sachs Global Investment Research

2. Inﬂationary Pressure: Mitigating one of the Primary Risks

Source: Company data, Goldman Sachs Global Investment Research

Our conclusions from the analysis include:

3. Operating leverage: Top-line growth fuels expense margin expansion

Source: Company data, Goldman Sachs Global Investment Research

Exhibit 21: US Statutory travel and

YoY decline in Travel as a % of NPE

2020 YoY decline in Travel YoY decline as a % of NPE

Exhibit 22: P&C expense ratio improvement vs. 2019 levels

US P&C Primer

US P&C Primer