Higher Investment Returns Help Offset Catastrophe, Auto Losses for Travelers in Q3

Third quarter profit fell 20% at The Travelers Companies due to higher catastrophe and auto losses but the insurer also reported a 15% boost in investment returns.

Net income of $662 million for the third quarter compared to $827 million for last year’s same quarter. Core income in the third quarter was $655 million compared to $798 million in the prior year quarter. Pre-tax net investment income came in at $771 million, outpacing the $671 million in last year’s third quarter.

Total revenues rose 6% to $8.81 billion, up 6% from the previous year’s third quarter.

Net written premiums were up 7% to a record of $8.3 billion on growth in all three business segments. In Business Insurance, net written premiums grew by 5%. In Bond & Specialty Insurance, they increased by 19% and in Personal Insurance, 7%. Policies in force in both auto and homeowners insurance increased to record levels.

The consolidated underwriting gain for this third quarter was $75 million, down by $264 million from 2020’s third quarter underwriting gain.

The insurer reported a consolidated combined ratio of 98.6. Catastrophe losses were $501 million, compared to $397 million in the prior year quarter, and added 6.4 points to the combined ratio. The underlying combined ratio of 91.4% improved 0.1 points. This third quarter’s catastrophe losses primarily resulted from Hurricane Ida and severe storms in the United States.

The Personal Insurance segment lost $2 million after-tax, compared with segment income of $392 million in the prior year quarter. The Personal Insurance combined ratio of 104.6 increased 18.2 points. Losses in the automobile product line were higher compared to a low level of loss activity in the prior year quarter as a result of the pandemic.

Alan Schnitzer, chairman and chief executive officer, said the strong results reflect the firm’s innovation strategy. “Our below-market-share losses from Hurricane Ida, for example, benefited from investments in all three of our innovation priorities: extending our lead in risk expertise, providing great experiences to our customers and optimizing productivity and efficiency,” he said.