Welcome to our 2021 Annual Meeting of Shareholders. I confess I'm disappointed that for the second year in a row we're gathering virtually. I look forward to our in-person annual meetings, and I suspect that many of you who have attended in the past do too. It's an opportunity to gather with our shareholders, many of whom are also employees, and reflect on the past year, discuss the future, and celebrate our successes. We'll do our best this year to present a meaningful virtual meeting, but I'm already looking forward to next year and optimistic that we'll be together. With that, I'd like to call the meeting to order. I'd also like to introduce and thank our Corporate Secretary, Wendy Skjerven.
Wendy will run the show today and make sure we take care of business. Before I turn it over to Wendy, I'd also like to introduce our Independent Director nominees, all of whom are with us today. As is Don Shepard, our friend and long-serving director, who will be retiring after today's meeting. Our Independent Director nominees are Alan Beller, Janet Dolan, who's Chair of the Investment and Capital Markets Committee, Patricia Higgins, Bill Kane, Chair of the Audit Committee, Tom Leonardi, Clarence Otis, Chair of the Compensation Committee, Liz Robinson, Pete Ruegger, Chair of the Nominating and Governance Committee, Todd Schermerhorn, our Lead Director and Chair of the Risk Committee, and Lori Thomsen. It's at this point in the meeting that I usually ask our directors to stand and be recognized.
This year, under the circumstances, on behalf of 30,000 Travelers employees and all of our shareholders, let me just thank the board for its leadership and counsel. They serve this company extraordinarily well, and I could not be more grateful. I would like to extend a special thank you to Don Shepard, who, as I mentioned, will be retiring after today's meeting. Don has been a part of our board for more than a decade. He served as the Chair of our Compensation Committee for most of those years, and at one time or another, he served on each of our other board committees. Over the course of his tenure, Don has attended 218 out of 224 board and committee meetings. As I shared with the board last night, that is a Hall of Fame batting average, and he has been a Hall of Fame director. Thank you, Don.
I'd also like to extend a special welcome to Tom Leonardi, who joins our board today. I met Tom 10 years ago when he became the Connecticut Insurance Commissioner. Those of you who know Tom or know of his background understand why we're so pleased that he's joining us. Welcome, Tom. In a minute, I'll turn things over to Wendy, who will conduct the formal portion of the meeting. After that, I'll be back to share a few comments about our performance and how it reflects the successful execution of our strategy. Because it's an important part of creating truly sustainable success, I'll spend a few minutes talking about some of the terrific work we've been doing in our communities. Finally, before we wrap up, I'll answer questions from shareholders. If you're a shareholder and would like to ask a question, please submit it now.
Out of consideration for other shareholders, we ask that you submit only one question. We also ask that you identify yourself. With that, I'm pleased to turn the meeting over to Wendy.
Thank you, Alan, and good morning, everyone. Please note that our meeting today will be governed by fair and orderly procedures as determined by the Chair in accordance with the laws of the State of Minnesota, which is the state in which we are incorporated, in addition to the rules of the meeting, which are posted to the virtual meeting website. The polls will remain open until after the presentation of the items of business, and the question queue will remain open until the close of this business portion of the meeting. Any shareholder who has not yet voted or wishes to change their vote may do so by clicking on the voting button on the web portal and following the instructions there. Shareholders who have sent in proxies or voted via telephone or internet and do not want to change their vote do not need to take any further action.
I would like to note that American Election Services has been appointed as the Inspector of Election for today's meeting, and a representative of American Election Services is participating in today's meeting. Our outside auditor, KPMG, is also represented at the meeting. I also need to formally report on the notice of meeting and the presence of a quorum here today. Notice of this meeting was duly and properly mailed or made available on or about April 2nd 2021, to each shareholder of the company as of the close of business on March 23, 2021. Those shareholders are entitled to vote by proxy at this meeting. The holders of a majority of the voting power of the shares entitled to vote at this meeting are present by proxy. Accordingly, a quorum is present. The meeting is now lawfully convened and ready to transact business.
The items of business for today's meeting were set forth in the company's proxy statement. There are four items of business on our agenda today. The first order of business is to act on the election of directors. The candidates listed in the proxy statement were nominated for election as directors. Since no other candidates were offered as nominees following the procedures described in the proxy statement and our bylaws, nominations are closed. The second order of business is to act on the proposal to ratify the appointment of KPMG to serve as the independent registered public accounting firm of this company. The third order of business is to act on the non-binding proposal to approve executive compensation. The fourth order of business is to approve an amendment to the Travelers Companies Inc Inc amended and restated 2014 stock incentive plan.
Now that we have been through the items of business, the polls are closed. I have received a preliminary report from the Inspector of Election. Based on the preliminary report, I now declare the director nominees named in the 2021 proxy statement duly elected, the proposal to ratify the selection of KPMG duly adopted, the non-binding vote on executive compensation approved, and the amendment to the Travelers Companies Inc, amended and restated 2014 stock incentive plan approved. The final actual vote count will be reported on a Form 8-K within the next few days and recorded in the minutes of this meeting. Now that the business portion of the meeting is over, the question queue is closed. In a moment, I'll turn it over to Alan for his remarks and for the question-and-answer session.
To the extent that there are questions on the same subject matter, we will combine those when responding. We will also omit questions that are not germane to this shareholder meeting or relate to individual circumstances. If you submitted a question regarding your insurance policy and provided your name and contact information, we will contact you directly. If you have additional questions, please contact Abbe Goldstein of Investor Relations. Abbe's contact information is available on the investor section of our website at travelers.com. Before turning it back to Alan, I would like to provide our customary cautionary statement. Our comments today may include certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. All statements, other than statements of historical facts, may be forward-looking and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied.
These risks and uncertainties are described in more detail under forward-looking statements in our most recent Form 10-K and Form 10-Q filed with the U.S. Securities and Exchange Commission. Any forward-looking statements speak only as of today, and we undertake no obligation to update forward-looking statements. We may mention measures that may be non-GAAP financial measures, such as core income. Reconciliations are included in our recent earnings press release and other materials that are available on the investor section of our website at travelers.com. With that, I'll turn the meeting back to Alan.
Wendy, as always, thank you very much. Wendy's a great partner, and we're fortunate to have her as our Corporate Secretary. With the formal portion of the meeting adjourned, let's spend a few minutes on how Travelers navigated the challenges of the pandemic while continuing to deliver outstanding results and make progress toward our long-term goals. For a more complete discussion of how we performed and continued to transform in 2020, I invite you to read my annual letter to shareholders. None of us could have predicted exactly how this past year and a half would play out. When I spoke to you this time last year, I was confident that we were well-positioned to weather the storm, just as we've weathered so many others.
Today, I'm pleased to report that not only have we weathered the storm, we're stronger by nearly every measure and remain on the course we set long before the pandemic hit. In 2020, we grew net written premiums to a record $29.7 billion and delivered core income of $2.7 billion, generating a core return on equity of 11.3%, both up from the prior year. We also delivered record underlying underwriting income, a measure of our core business strength. Those results stand on their own as excellent, but they are particularly strong in the context of the extremely difficult economic and operating environment the industry faced last year: a global pandemic, a shrinking economy, a record high number of catastrophe events, record low interest rates, and continuing challenges from the tort environment.
Importantly, we delivered these strong results while continuing to invest in the future and leverage our scale and resources to pursue our ambitious innovation agenda. In short, under difficult circumstances, we performed remarkably well. Our results reflect the value of our strong underwriting culture, the benefit of our data and analytics, the dedication of our highly engaged and talented workforce, and the franchise value we bring to our customers and distribution partners. All that, together with our proven strategy and strong track record of execution, gives me confidence that we are well-positioned to capitalize on opportunities in 2021 and beyond as the economy recovers and to continue to create shareholder value. Let me also put this past year's results into a broader context. I've shared before our belief that any commitment to delivering industry-leading return on equity over time requires a strategy to grow over time.
To that end, a few years ago, we laid out a strategy to achieve profitable growth in the context of the forces of change we've previously identified as impacting the industry. Despite the challenging economic and operating environment, 2020 was another successful year of the execution of that strategy. Since 2016, we've grown net written premiums at a 4.5% compound annual rate, substantially outpacing both GDP growth over that same period and our growth rate over the prior years in the decade. We accomplished that while maintaining a stable underlying combined ratio. That tells us we haven't grown by underpricing the product or changing our risk profile. The growth has come organically from customer segments, products, geographies, and producers that we know well.
Over that same period, through our ongoing and relentless focus on optimizing productivity and efficiency, we've also improved our expense ratio by about two points compared to the run rate from earlier in the decade. The result of all of that is significantly higher underlying underwriting income, meaningfully higher cash flow from operations, and double-digit growth in invested assets. Those results have contributed to our ultimate objective of creating shareholder value through industry-leading return on equity over time. Our core return on equity has increased in each of the last three years and averaged approximately 11% over that period. That's a meaningful margin over both the 10-year treasury and our cost of equity. That's after bearing the impacts of significant catastrophe and not catastrophe weather, a meaningful increase in social inflation, historically low interest rates, and a global pandemic.
In other words, our performance last year and over recent years is a direct result of the successful execution of our financial and operational strategies. That is the flywheel that sets everything we do in motion. The successful execution of our financial strategy and strategic initiatives is only one component of our comprehensive approach to value creation. The other, as I've shared with you in recent years, is our commitment to taking care of our customers, our communities, and our employees, or as we refer to it, the Travelers Promise. That is our purpose: taking care of the people we're privileged to serve. We view the Travelers Promise as inextricably linked with our mission to create long-term shareholder value. Only by faithfully keeping the Travelers Promise will we earn the support of key stakeholders essential to creating shareholder value.
Only by successfully creating shareholder value will we earn the resources we need to keep the Travelers' Promise. In my annual letter to shareholders, I share some examples of the Travelers' Promise in action. I encourage you to take a look at the innovative ways we took care of our stakeholders through the pandemic. I hope you'll agree that it all illustrates what it means to do well by doing good. To put an exclamation point on that, I'd like to conclude my remarks this morning with some special footage from a company-wide service project we undertook last year, which we called Literacy for Learning. For too many students, the inability to read at a proficient level remains a stubborn barrier to advancement. Literacy is fundamental to education, and education is, of course, key to economic mobility and inclusive prosperity. Inclusive prosperity is important to Travelers' long-term sustainable success.
Through our Literacy for Learning project, we distributed literacy-related school supplies across the country in communities where we live and work. During the pandemic, this included donating computers to facilitate remote learning. We started the project by partnering with DonorsChoose, an online nonprofit that matches donors with opportunities to satisfy unmet classroom needs. We satisfied every single literacy-related need on the DonorsChoose platform in elementary schools surrounding all the offices across the country where Travelers has a significant presence. That's more than 250 schools, all with resource needs, serving more than 30,000 students. We also partnered with United Way to support literacy efforts in the United States, Canada, and Europe. We did not stop there. We decided to pick two schools, one in Hartford and one in Charlotte, and really go over the top. I'd like to share a video with you of what that looks like.
Let's roll the tape.
MD Fox is the Pre-K-8 school serving 640 beautiful and capable students, and we are fortunate to have dedicated teachers here each and every day. This thing up here goes...
I have 23 very lively, animated personalities in here with a range of abilities. They're wonderful kids.
Many of our students come from neighborhoods that have high concentrations of poverty. With that level of poverty, there are barriers and challenges that our students face every single day.
Some kids aren't living at a home. They're living in a shelter. I have children who are dealing with abuse. I have kids who have PTSD just from the existence of living in the city.
These kids deserve to have what other people have, and they have amazing brains, and they have a lot to show and to give.
Every morning, as soon as she got up...
I'll tell you what those simple things and not having access to those simple things do. One is you can't really access the learning, right? If there are supplies that you are missing, then you're not going to fully experience the activity or a lesson.
See what it says?
I have a next student in here who's going to solve cancer. I have the next one who's going to figure out how to live on Mars. How do you know that I don't? If you don't help, we're assuming that they can't and won't contribute. I think that's a terrible, sad state.
Thank you all so much for being here. As you all know, today is all about the community's part of the Travelers Promise.
We're putting kids together for some local schools here in Connecticut to really focus attention on literacy. Part of the reason we're here doing that is just to help teachers be able to have what they need in the classroom to teach children how to read.
In the United States, something like 2/3 of our fourth graders can't read at a proficiency level. We are partnering with an organization called DonorsChoose, which matches teacher requests for classroom supplies with donors.
I started DonorsChoose as a history teacher at a public high school in the Bronx. My colleagues and I would spend a lot of our own money on books, field trips, paramicroscopes. I just figured there were people out there who'd want to help teachers like us. DonorsChoose is a really simple way for anyone to help a classroom in need. Public school teachers all over America create classroom project requests on our site, and donors can choose the projects that they want to support.
Don't hit the ground on the bus. Take a seat.
A very special surprise for Hartford Elementary School today.
Welcome to M.D. Fox.
Seven and first grade over here. Everybody else around the corner.
Fifty volunteers from Travelers taking over the hallways with wagons stuffed with free school supplies.
It was wonderful because I know there's so many resources that the students don't have, and as a school, we cannot provide.
Surprise, everyone.
I said, "Look at all this stuff." It was wonderful. It was amazing.
M.D. Fox and M.D. Fox with teachers.
There were books for all of them.
Some more journals.
There were hands-on activities for them to do. We had different STEM kits. There were school supplies.
Look at this. More books.
Everything that they do now that they already like doing as students is so much better. Like, so much better. I'm so excited.
I did not quite expect that. You see all the red shirts. It was beautiful. It was a beautiful sight. That is a message, certainly, that this school and our community matter to Travelers. It was like a surreal moment in time. I lost it. I just kept looking at her thinking, "Is she saying what I think she's saying to me?
It's better than Christmas.
She said, "We know you went to DonorsChoose." I said, "What?" I looked in the... I could not believe it. I just... I do not even have words. Still, it is... It was really kind. Sorry. It was really nice. For our students and even for our staff, it is just added validation, right, that they matter, that learning matters. To have an adult, an added adult, communicate to a student that reading matters each and every day, that is so important to us.
The torch was lit in Hartford with the funding of Literacy Classroom Projects. That torch is now being passed to Travelers. Employees will be able to find literacy requests created by public school teachers in their communities. When we received this challenge from Alan, naturally, we looked at it, "Hey, this is a great way to come full circle.
As many students are still learning from home, technology is more important than ever. One local school got a big boost going into second semester. Sterling Elementary School got a $50,000 donation from Travelers to help them buy Chromebooks for students.
Our school is located in South Charlotte. We serve majority Hispanic students, about 40% African American. We are a Title I school.
One thing that our school has really been focused on this year is providing equity to all kids, making sure they have access to instruction.
These Chromebooks that are given through the school, that's pretty much their only computer or maybe their only access to the internet, their only way to stay connected to the school during virtual learning.
We were just like, "Oh my gosh, $50,000? That's going to get us a whole lot of Chromebooks." It was just like, "Yes, our kid's going to have what they need, and we don't have to try to run around and figure out what we're going to do." It just felt like just a saving grace.
Dear Travelers, thank you for bringing us books. Thank you for the reading games. I really enjoyed the book.
Now I don't have to find a good book.
It was so kind of you.
It's a day that the students will never forget, and I know teachers will not forget. It's like facing humanity. It grounds me because there's still people out there that care. Thank you from the bottom of my heart.
You're welcome.
This has been a really difficult year. I have a very challenging group of kids. I just honestly say this is the best ever. It might be just the kick in the butt I needed to keep going.
Pretty amazing, right? Having been there, I can tell you that it was as satisfying and heartwarming as you can imagine. Of course, none of what you just saw in that video or heard about in terms of our financial performance would have been possible without the remarkable commitment of Travelers' employees. I would like to conclude my remarks today with a heartfelt thank you to all of them for their tireless efforts over the past year and a half. Even in the midst of concerns about their own safety and responsibilities for homeschooling their kids and taking care of their loved ones, they never wavered from our purpose of taking care of the people we are privileged to serve or our mission of creating shareholder value. I could not be more impressed by this team or proud to be a part of it.
As the post-pandemic world comes into focus, I know we will continue to leverage our scale and resources to invest in and innovate for the future. I am as confident as ever in our ability to continue fulfilling the Travelers' promise while delivering meaningful shareholder value. With that, I will turn to the shareholder questions that have been submitted. I will pause just a minute to see what has come in. All right. We have had two questions submitted this morning. The first is from Anne Pratt, and Ms. Pratt submitted the following. "My name is Anne Pratt, attending on behalf of the Connecticut Citizen Action Group. Last month, Travelers pledged to become carbon neutral across its owned operations by 2030. This commitment does not address Travelers' contribution to the climate crisis through its underwriting and investment portfolios. Travelers cannot make any credible sustainability pledges without tackling its unchecked fossil fuel support.
How does Travelers plan to take action this year to stop insuring new fossil fuel projects and companies? How does Travelers plan to take action this year to stop insuring new fossil fuel projects and begin to phase out existing investments and underwriting policies for fossil fuel companies? First of all, Ms. Pratt, thank you very much for your investment in Travelers and for your confidence in this management team. We appreciate your engagement on difficult issues. It helps us to focus on the things that are important and make sure that we're addressing the things that are important to our shareholders. I appreciate you raising this issue in particular. As a risk-return-focused company, we are always evaluating both our underwriting and investment standards to make sure that we're earning an appropriate return for the risk we're taking.
We take into account all relevant factors, and that would include both environmental factors, changing climate conditions in particular, as we think about our underwriting and investing. When it comes to underwriting, coal and tar sands, for example, are not businesses that are particularly attractive to us. They just do not meet our risk and return standards. We have had a relatively broad restriction in place for a pretty long time with respect to insurance products for coal mining and tar sands operations. Our overall underwriting exposure to thermal coal is really de minimis at this point. When it comes to our investment portfolio, we have very minor holdings related to coal and tar sands. Again, just does not meet our return objectives. Beyond that, we do an awful lot to support the transition to a lower carbon economy.
I would direct your attention to sustainability.travelers.com, where we actually have quite a bit of information about our holistic approach to addressing changing climate conditions. It's an important topic for society. It's an important topic for our business, and we appreciate you raising it. The second question comes from the Carpenters, and they submit the following. "Mr. Chairman, the Carpenter Funds hold a total of 339,500 shares of the company's stock. We believe that the company's executive compensation plans should drive the successful execution of the board's long-term strategic business plan. Today's public company executive compensation plans are largely formulaic, peer-related plans with simplistic annual say-and-pay voting reinforcing plan homogeneity. Could you or the compensation committee chair speak on the issue of the standardization of executive compensation plans and whether they may deserve—I'm sorry, whether they may disserve the interests of shareholders and other stakeholders?" Great question.
Again, we appreciate always the Carpenters show up year after year and submit great questions and again focus us on important things. Thank you for that. We discussed this at length in the compensation discussion and analysis section in our proxy statement. I would refer you to that for, I think, a comprehensive response to this. I will say that we agree with you that compensation plans should not be standardized. They should be specifically tailored to a company's particular circumstances and long-term strategic business plans. We are confident that our compensation program does exactly that. Our compensation program measures and takes into account in compensation decisions short and long-term financial and operating performance with a very important emphasis on the primary measure we use to manage our business, which is return on equity.
They also measure and take into account the efficiency with which we deploy capital in our business, the effective management of risk, achievement of particular strategic initiatives, and the individual performance, certainly of executives, and that's true down the line as well. Finally, let me make one other really important point, which we also address in the proxy statement, which is we explicitly do not take a formulaic approach to compensation. Unfortunately, and I think this may be the point of the question, the proxy advisory firms would push us in that direction. There is a preference for some reason among the proxy advisory firms for a formulaic approach to compensation. Our compensation committee rejects that, and our management team rejects that.
The reason we do that is in this business where, in particular, where you do not know the cost of goods sold when you are selling a product, it is really important not to take a formulaic approach. There is just no substitute for both managers and the compensation committee understanding the results we achieve, the operating and economic environment in which we achieve those results, and then based on that, exercising judgment in terms of making compensation decisions. Again, we feel very good that we are not standardized or formulaic. We have got a very thoughtful compensation program, and we think it is also administered very thoughtfully. With that, that concludes the question-and-answer portion of our meeting today. I just want to thank everyone for your participation, for joining in. This is an important meeting, and we appreciate that you show up.
We hope to see you in person next year in Hartford, as I said. In the meantime, take good care.
This now concludes the meeting. Thank you for joining, and have a pleasant day.