Alan D. Schnitzer
Chairman and Chief Executive Officer at Travelers Companies
Thank you, Abbe. Good morning, everyone. Thank you for joining us today. We are pleased to report a very strong second quarter, including an excellent bottom line result, double-digit top line growth in all three segments, strong and improved profitability in our Commercial Business segment, progress addressing the rental headwinds facing the personal insurance industry, a meaningful contribution from net investment income and another quarter of progress on a number of important strategic initiatives. Core income for the quarter was $625 million or $2.50 per diluted share, generating core return on equity of 9.3%.
These results were driven by record net earned premiums of $8.3 billion, up 9% over the prior year quarter and a solid underlying combined ratio of 92.8% -- environmental issues impacting insurance industry, consolidated results reflect the benefit of our diversified portfolio of businesses. For the 6 months, core -- was ahead of the prior year at $1.66 billion, an excellent first half result. We're particularly pleased with the continued strong underlying results in our commercial businesses.
Looking at the two commercial businesses together, the combined BI-BSI underlying combined ratio of 2.7% for the quarter, an improvement of a point from the prior year quarter. Results in Personal Insurance were impacted by elevated severity in both auto and home. As you'll hear from Michael, we're on the right track in addressing the environmental issues. Excellent operations together with our balance sheet enabled us to grow adjusted book value per share by 8% over the past year after making important investments in our business, turning excess capital to shareholders.
During the quarter, we returned $725 million of excess capital to our shareholders, including $500 million of share repurchases. Turning to the top line, thanks to excellent execution by our colleagues in the field and the strong franchise value we offer to our customers and distribution partners, we grew net written premiums by 11% this quarter to a record $9 billion with, as I mentioned, each of our three segments growing double digits. In Business Insurance, net working premiums grew by 10%. Renewal premium change was 10.3%. That's the fourth highest quarterly renewal premium change going back more than 15 years.
Renewal premium change included renewal rate change of 4.9%. Both measures moved up from the preceding quarter. Retention remained very strong at 86%. We have a high-quality book of business and keeping it as a priority. Also, as we've shared previously, strong retention is a sign of a rational and stable pricing market. Underneath the headline numbers, execution in terms of rate retention at a segmented level was excellent. In Bond & Specialty Insurance, net written premiums increased by 13%, driven by excellent production in both our surety and management liability businesses.
Surety net written premiums were up 24%. Management liability premiums were up 7% driven by a rental premium change of 8.8%, retention that increased to a very strong 88% and strong new business. In Personal Insurance, net written premiums increased by 12%. Renewal premium change was meaningfully higher, both year-over-year and sequentially in auto and homeowners as we continue to execute to improve returns. You'll hear more shortly from Greg, Jeff and Michael about our segment results.
Turning to investments; our high-quality portfolio generated net investment income of $595 million after tax for the quarter, reflecting reliable results from our fixed income portfolio and another quarter of strong returns from our non-fixed income portfolio. Speaking of investments, given the potential for a difficult economic environment ahead, we've included on page 19 of the webcast presentation a slide breaking down the composition of our investment portfolio.
Consistent with our long-time focus on risk-adjusted returns, we're underweight compared to most in terms of risk assets as a percentage of shareholders' equity. Our investment philosophy has served us well over many years and through many different market cycles. It starts with asset allocation. More than 90% of our $80 billion portfolio is invested in fixed income securities. That sets us apart. Inside that, we also have relatively high allocation to municipal bonds for the default rate has been meaningfully lower as compared to corporate bonds. Even within munis, we're discriminating. We're invested in only about 1,000 municipal issuers out of an estimated 80,000.
Virtually all of our municipal bond holdings are rated AA- or higher. Our corporate bond portfolio is curated with the same level of discipline. Virtually all of it is investment grade. And within that, we are meaningful overweight AA and A credits and meaningfully underweight BBB credit. During times of economic distress, credit quality is key and in the sometimes foreseeable and sometimes unforeseeable lead up to those times, when spreads widen and volatility increases, the market doesn't allow for a graceful repositioning of a portfolio. So we stay true to the strategy that has served us well over decades.
Our level of actual impairments over a long period of time has been remarkably low. In 2008 and 2009, with the Moody's default percentage reached 2% to 2.5%, our default rate never reached 1%. In the COVID charge turmoil of 2020, when the Moody's default rate at 1%, our portfolio default rate was around 10 basis points. And given the credit quality of our portfolio, the fact that we hold the vast majority of fixed income investments to maturity, decreases in market value due to rising interest rates as the market is experiencing now have little to no impact on how we run the business or how we view the strength of our capital position.
In terms of our investments in alternative asset class, we don't reach for yield. Our private equity portfolio was well-diversified across strategies, sectors and general partners. Our own real estate is high quality and entirely unlevered. And we have little in the way of hedge funds and higher risk assets. Although we see potential short-term headwinds from recent declines in the equity markets, we also see near-term and potentially ongoing tailwinds from higher interest rates that will benefit our returns going forward.
You'll hear from Dan shortly about how the recent rise in interest rates positively impacts our outlook for fixed income NII. Like everything we do all starts with our talent. We have a world-class investment team that is responsible for executing on our investment philosophy. Those with position-making authority have worked with us and with each other for an average of around 20 years. That reinforces the long-term perspective we bring to our investment portfolio. I'm always grateful for their excellent work but particularly at times like this, I'm reminded of the wisdom of our approach.
It has contributed to a long history of industry-leading returns and industry-low volatility. To sum things up, building on our excellent results in the first half of the year, we're confident about our outlook, benefiting from years of strategic investments as part of our performance transform called action, guided by our decades of experience successfully executing in a variety of macroeconomic conditions and supported by an outlook for improving fixed income returns. We remain well-positioned to deliver industry-leading returns and shareholder value over time.
With that, I'm pleased to turn the call over to Dan.
