Travelers doubles profits in Q3 2020 despite elevated cat losses

Profits at US property/casualty insurer Travelers plummeted in the third quarter of 2020 due to net unfavorable prior year reserve development and investment gains. The improvement, however, was partly offset by higher catastrophe losses from wildfires and windstorm.

The company's chief executive officer Alan Schnitzer said he is "pleased" with the quarterly result and highlighted the strength of its top line, particularly in light of the ongoing challenges in the economic environment.

Travelers reported that its net profit more than doubled to $827 million in the third quarter of 2020, compared to $396 million in the same period last year.

The combined ratio during the period also improved 6.6 points to 94.9 percent. This compares to 101.5 percent in the third quarter of 2019.

Net written premiums grew 3 percent over the prior year quarter to $7.77 billion, driven by retentions that remained consistently high across businesses, as well as strong renewal rate change in all three segments.

The company saw catastrophe losses of $397 million pre-tax, compared with $241 million pre-tax in the prior year quarter. These losses primarily resulted from the derecho windstorm in the midwestern region of the US, the Glass wildfire in California, Tropical Storm Isaias, Hurricane Laura and additional wildfires in the western US.

Travelers stated that these catastrophe losses were well above the 10-year average for the third quarter.

Schnitzer said: “Our earnings this quarter reflect strong underlying underwriting income, resulting from record quarterly net earned premiums and an underlying combined ratio which improved 2.6 points to 91.5%."

“From a position of strength, we continue to actively pursue our innovation agenda and invest in our strategic priorities to extend our lead in risk expertise, provide best-in-class experiences to our customers and distribution partners, and improve productivity and efficiency," he added.

"With our significant competitive advantages, including our highly engaged and talented workforce, we are well positioned to capitalize on opportunities and successfully grow our business as the economy continues to reopen.”