Travelers report rising net income as combined ratio strengthens in Q1

Leading U.S. insurer Travelers reported an underwriting gain of $659 million for the first quarter of 2022 and a combined ratio of 91.3%, as catastrophe losses, net of reinsurance, fell $675 million from compared to the comparable period of the previous year.

The carrier’s underwriting income improved by $442 million year-over-year, as catastrophe losses fell from $835 million in the first quarter of 2021 to $160 million in the first quarter of 2022.

Somewhat offsetting the lower catastrophe charge in the quarter, the favorable net reserve development of $153 million in the first quarter of 2022 was $164 million lower than the first quarter a year earlier.

On a consolidated basis, Travelers saw a 5.3% improvement in its combined ratio, year-over-year, to 91.3%. On an underlying basis, the company’s combined ratio weakened slightly from 89.5% in the first quarter of 2021 to 91.2% in the first quarter of 2022.

Along with strong underwriting performance, Travelers reported record net premiums written of $8.4 billion for the quarter, up 11% from the prior year quarter. Premium growth is visible across the business, with 9% in commercial lines, 22% in bond and specialty lines and 12% in personal lines.

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On the asset side of the balance sheet, Travelers reported net investment income of $637 million for the first quarter of 2022, up from $701 million a year earlier.

Overall, the company’s net income improved 39% to more than $1 billion, while core revenue grew nearly 50%, year-over-year, to reach $1.1 billion.

Alan Schnitzer, Chairman and Chief Executive Officer (CEO), said: “We are off to an excellent start in 2022, with strong contributions to our results from both underwriting and investments. Core revenue for the quarter was $1.0 billion, or $4.22 per diluted share, generating a return on core equity of 15.5%. These results were driven by net earned premiums of $8.0 billion, 9% higher than the same period last year, and an excellent combined ratio of 91.3%. The underlying underwriting income of our business segments was particularly strong. Our high-quality investment portfolio generated net after-tax investment income of $539 million.

“These results, along with our strong balance sheet, allowed us to return $773 million of excess capital to our shareholders this quarter, including nearly $560 million in share buybacks. In recognition of our strong financial position and confidence in our business prospects, I am pleased to share that our Board of Directors has declared a 6% increase in our quarterly cash dividend to $0.93 per share, marking 18 consecutive years of dividend increases with a compound annual growth rate of 9% over this period.

“The significant investments in innovation and technology that we have been making for some time are driving our performance today and transforming Travelers into the insurance company of the future. We innovate on a foundation of excellence to ensure our continued success through relevant, differentiating and hard-to-replicate competitive advantages. With this and our talent advantage, we are confident in our ability to continue to build shareholder value over time,” he added.

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Sallie R. Loera