Travelers Concludes Q2 With Good News on Multiple Fronts

July 20, 2021 by Niket Nishant and Alwyn Scott

U.S. property and casualty insurer Travelers Cos Inc delivered an unusually large beat of second-quarter profit expectations on Tuesday, helped by higher premiums, lower catastrophe losses and a surge in returns from investments.

The New York-based company, seen as a bellwether for the U.S. insurance sector as it typically reports before its peers, said net written premiums, a measure of revenue, jumped 11% to $8.14 billion.

Its adjusted, or core, income totaled $879 million, or $3.45 per share, for the three months ended June 30, far more than the $2.39 analyst had expected, according to Refinitiv IBES data.

In the year-ago period, the insurer reported a loss of $50 million, or 20 cents a share, due to severe storms and claims related to civil unrest.

The reopening of economies with the rollout of COVID-19 vaccinations has provided some respite to insurers, helping Travelers retain customers and expand its auto and homeowners-focused businesses.

The company posted underwriting gains of $324 million for the quarter, compared with a loss of $280 million a year ago.

Catastrophe losses fell to $475 million in the latest quarter from $854 million a year ago.

Travelers’ pre-tax net investment income more than tripled to $818 million, as higher returns on its non-fixed income investments countered weakness in the mainstay fixed-income assets that have struggled due to record-low interest rates.

The company reported a combined ratio of 95.3%, compared with 103.7% a year earlier. A ratio below 100% means the insurer earned more in premiums than it paid out in claims.

Total revenues rose 17% to $8.69 billion, and the company said it bought back $401 million worth of shares in the quarter.