Travelers reports renewal premium hikes, profit increase

Travelers Cos. Inc. reported a significant increase in profit for the third quarter, despite a jump in catastrophe losses, as renewal premiums rose in most lines and investment income grew.

Its commercial insurance segment reported premium increases in every line except workers compensation, Travelers’ senior executives said on a call with analysts Thursday morning.

Travelers reported a $1.26 billion profit for the third quarter, more than three times its profit for the same period last year.

Its combined ratio improved nearly 8 points to 93.2%, despite catastrophe losses net of reinsurance rising to $939 million, compared with $850 million in last year’s third quarter.

More than half the catastrophe losses related to Hurricane Helene. Hurricane Milton, which struck two weeks later, occurred in the fourth quarter. Travelers’ preliminary loss range for Milton is $75 million to $175 million, net of reinsurance.

The insurer also reported net favorable reserve development of $126 million in the third quarter.

Net premium written increased 7.9% to $11.32 billion, and net investment income more than doubled to $904 million.

In its business insurance segment, net written premium increased 8.6% to $5.52 billion.

“Renewal premium change in the segment remained very strong, increasing to 10.5%, driven by strong contributions from the liability coverages,” said Travelers Chairman and CEO Alan Schnitzer.

Average renewal rate change for the segment accelerated to 7.3% in the quarter, he said, compared with 6.5% in the second quarter. The market “is reacting in a generally disciplined way to the headwinds of social and economic inflation,” Mr. Schnitzer said.

In Travelers’ bond and specialty business, net written premium grew 7% to $1.07 billion, driven by good retention in its management liability line and strong production in surety, he said.

Excess and surplus lines net written premium has grown 13% this year, Mr. Schnitzer said.

Renewal premium change was at or close to double digits in every line other than workers compensation, said Greg Toczydlowski, president of business insurance.

“Umbrella and auto continued to lead the way with rate increases well into double digits,” he said. “Every line was at or higher than the second quarter.”

In the middle market, renewal premium increased 10.6%, about one point higher than the second quarter, Mr. Toczydlowski said. More than three quarters of the insurer’s middle-market policyholders saw rate increases, he said.