Travelers Boosted Q2 Net Income, Thanks to Lower Cat Losses and Investment Income Spike

July 23, 2019

The Travelers Companies managed to boost its net income to $557 million for the second quarter, six percent more than the $524 million in the prior year quarter. Lower catastrophe losses and higher net investment income helped fuel the improvement.

Travelers said that those results were partially offset, however, by elevated non-catastrophe weather-related losses and lower net favorable prior year reserve development.

Total net written premiums grew in all of its business segments by four percent overall, reaching $7.5 billion, a company record. Commercial lines premiums were up 6.7 percent. Personal lines premiums increased 6 percent.

Net investment income of $648 million pre-tax ($548 million after-tax) increased 9 percent. Net investment gains were $25 million pre-tax, compared to $36 million pre-tax in the prior year quarter.

“Our performance this quarter and year-to-date reflect both the successful execution of our long-term strategy and our relentless execution in the marketplace every day. In an environment of persistently low interest rates, ongoing uncertainty surrounding weather-related losses and a more challenging tort environment, we will continue to leverage the power of our franchise to meet our return objectives, including by selectively and thoughtfully seeking price and improved terms and conditions,” Alan Schnitzer, chairman and chief executive officer, said in prepared remarks.

Second quarter combined results:

Business Insurance second quarter results:

Business Insurance income was $351 million after-tax, a decrease of $34 million attributable primarily due to higher catastrophe losses, a lower underlying underwriting gain and lower net favorable prior year reserve development, partially offset by higher net investment income.

Net written premiums of $3.874 billion increased 2 percent, benefiting from continued strong retention and higher renewal premium change.

Business Insurance underwriting results:

Bond & Specialty second quarter results

Income for Bond & Specialty Insurance was $174 million after-tax, a decrease of $30 million that was primarily due to lower net favorable prior year reserve development.

Net written premiums of $710 million increased 9 percent, with contributions from both management liability and surety.

Bond & Specialty underwriting results:

Personal Insurance second quarter results

Personal Insurance income was $88 million after-tax, compared to a loss of $17 million in the prior year quarter. Segment income benefited primarily from lower catastrophe losses and higher net investment income, partially offset by a lower underlying underwriting gain.

Net written premiums of $2.866 billion increased 6 percent. Agency Automobile net written premiums increased 3 percent, driven by renewal premium change of 5 percent. Agency Homeowners and Other net written premiums increased 11 percdent, driven by renewal premium change of 7 perdent and higher levels of new business.

The Personal Insurance combined ratio of 100.2 improved 4.7 points due to lower catastrophe losses (6.7 points), partially offset by a higher underlying combined ratio (2.0 points).

Source: Travelers Cos.

*A version of this story appeared previously in our sister publication Insurance Journal.