Travelers CEO on Q1 Results: ‘We’re Firing On All Cylinders’ With Net Income Up 16%
The Travelers Companies, Inc. today reported first quarter net income of $1.123 billion, compared to $975 million in the prior year quarter.
Core income in the current quarter was up 14% to $1.096 billion, compared to $970 million in the prior year quarter. The insurer reported a combined ratio of 93.9, an improvement of 1.5 points over last year’s first quarter.
Strong core income was driven by record net earned premiums of $10.1 billion, up 14% compared to the prior year period, and the combined ratio of 93.9 that improved notwithstanding elevated catastrophe activity, primarily in the central and eastern regions of the United States. Catastrophe losses came in at $712 million pre-tax, compared to $535 million pre-tax in the prior year quarter.
The underlying underwriting gain was higher than in the prior year quarter, notwithstanding that the prior year quarter included a $211 million one-time tax benefit.
Net written premiums were up 8% to $10.182 billion, with growth in all three of the insurer’s segments: Business Insurance grew net written premiums by 9% to $5.6 billion; Bond & Specialty Insurance grew net written premiums by 6% to more than $940 million. with surety up 15%; and Personal Insurance drove 9% growth in net written premiums.
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Net realized investment gains in the current quarter were $35 million pre-tax compared to $6 million pre-tax in the prior year quarter.
“The year is off to a terrific start with strong profitability and production in all three segments, as well as higher investment income. In short, we’re firing on all cylinders,” said Alan Schnitzer, chairman and chief executive officer, in prepared remarks.
Schnitzer said the firm has had success in executing its innovation strategy, which has contributed to “superior returns with industry-low volatility, growth” in its premium base and higher adjusted book value per share.
On today’s call with analysts, CEO Schnitzer gave a shoutout to independent agents and brokers, calling them a “robust and important” part of the industry and a critical competitive advantage for Travelers. He said Travelers appreciates that it is a top market in a majority of its independent agencies.
He said the company seeks to be “indispensable” to its agents and build “deep relationships” with them. “We don’t take those relationships for granted,” he added.
As part of building those relationships, the company has been investing in digitizing the value chain. As an example, he cited giving agents insights into how their books of business are faring with digitized comprehensive data loss reports. It has also begun integrating property surveillance photos into the agents’ quoting workflow to give them a better understanding of their homeowners’ clients. He also noted that Travelers continues to fund education for new and established producers.
Segment Results
Business Insurance renewal premium was up 10.6% from a year earlier. The Business Insurance combined ratio was 84.5, an improvement of 4.5 points.
The Bond & Specialty combined ratio was 84.5.
Segment income for Personal Insurance was $220 million after-tax, an increase of $137 million. The Personal Lines combined ratio of 96.9 was an improvement of 4.6 points. Personal Lines net written premiums of $3.643 billion increased 9%, reflecting strong renewal premium change in automobile and homeowners and other lines.
Travelers is the first major carrier to report its quarterly results.
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