Travelers bumps Q1 net 40% as nat cat falls away; premiums rise 11%

US insurance group  Travelers increased net profit in the first quarter by 39% year on year to just over $1 billion, as a massive reduction in catastrophe losses overcame lower prior year reserve developments and weaker investment income.

Net written premiums rose 11% year on year to $8.37 billion to kick off what became a tripling of underwriting income.

The combined ratio of 91.3% improved 5.3 points as lower catastrophe losses took 9.3 points. Catastrophe claims fell to a mere $160 million in the first quarter, down from $835 million in the year prior period.

That mass reduction in claims was partially offset by lower net favourable prior year reserve development, which added 2.3 points to the combined ratio and a higher underlying combined ratio, up 1.7 points to 91.2%.

In  Travelers’ business segment, net written premiums of $4.5 billion were up 9%, on what management called “strong renewal premium change” at 9.1%, and an all-time record retention rate at 87%, as well as higher levels of new business.  “Strong retention is a sign of a stable and rational rate environment,” CEO Alan Schnitzer told the investor call by way of outlook.

The segment took the lion's share of the reduction in catastrophic losses, taking 11.4 percentage points from the segment's combined ratio to 90.6%. The underlying combined ratio of 91.8% improved 1.9 points on improvements for both loss and expense components.

Personal insurance brought net written premiums of $3.0 billion, up 12% from the prior year period. Domestic automotive net written premiums increased 9%, including renewal premium growth of 3.1%. Domestic homeowners and other net written premium increased 17% on renewal premium growth of 12.3%.

But personal insurance suffered a post-pandemic rise in claims. Management spoke to rising frequency and severity in auto as the key driver and vowed to keep the pace on tariff submissions to state regulators.

Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.