Travelers posts stronger underwriting gain for 2024 despite rise in cat losses

Primary insurer Travelers has reported improved underwriting results for both the fourth quarter and full year 2024, as an increase in net favorable prior year reserve development more than offset a rise in catastrophe losses for both periods.

Travelers has today reported net income of $2.1 billion for Q4’24 and $5 billion for the full year, compared with $1.6 billion and $3 billion, respectively, in 2023.

Core income also improved year-on-year, from $1.6 billion to $2.1 billion for the quarter and from $3.1 billion to $5 billion for the full year.

At the same time, total revenues rose by 10% to $12 billion for the fourth-quarter and increased by 12% to $46.4 billion for full year 2024, when compared with the same periods in 2023.

Impressively, Travelers’ underwriting performance improved considerably year-on-year, rising $412 million to $1.8 billion in Q4’24, and rising by more than $2 billion to almost $3 billion for the full year 2024.

The stronger underwriting gains come despite a rise in catastrophe losses, net of reinsurance, to $175 million for the quarter and to $3.3 billion for the full year, compared with $125 million and $3 billion, respectively, in the prior year.

The carrier confirms that catastrophe losses primarily resulted from Hurricane Milton, as well as an increase in estimated losses related to Hurricane Helene, a Q3’24 event.

The rise in cat losses during both periods was more than offset by a $130 million rise in net favourable prior year reserve development in Q4’24 to $262 million, and an increase of $566 million to $709 million for the full year.

As a result, the insurer’s combined ratio strengthened by 2.6 percentage points to 83.2% in Q4’24 and strengthened by 4.5 percentage points to 92.5% for the full year 2024.

In terms of top line growth, Travelers has today reported that net written premiums swelled 7% year-on-year to $10.7 billion for the fourth quarter, and rose by 8% to $43.4 billion for full year 2024.

On the asset side of the balance sheet, net investment income for the firm rose from $778 million in Q4’23 to $955 million in Q4’24 and moved up from $2.9 billion for full year 2023 to $3.6 billion for full year 2024.

Alan Schnitzer, Chairman and Chief Executive Officer, commented on the results: “The strong results and financial position that we are reporting today enable us to be there when our customers need us most, including in the event of devastating tragedy, as our friends and neighbors in Los Angeles are experiencing right now. In that regard, we are very pleased to report record core income for the quarter of $2.1 billion driven by strong growth in earned premiums and excellent profitability. Net earned premiums increased 9% to $10.9 billion, and the combined ratio improved 2.6 points to 83.2%. The improvement in the combined ratio was driven by very strong underlying profitability and higher net favorable prior year reserve development. Earned premiums and underwriting margins were strong in all three segments. Our high-quality investment portfolio performed well, generating after-tax net investment income of $785 million.

“For the full year, core income was up 64% to more than $5 billion, or $21.58 per diluted share, generating core return on equity of 17.2%. Full year results were driven by strong earned premiums, excellent underwriting margins and a higher level of net investment income.

“These results, together with our strong balance sheet, enabled us to grow adjusted book value per share by 13% during the year to $139.04, after making important investments in our business and returning more than $2.1 billion of excess capital to shareholders through dividends and share repurchases.

“Through continued terrific marketplace execution across all three segments, we grew net written premiums during the year by 8% to $43.4 billion and in the quarter by 7% to $10.7 billion. In Business Insurance, we grew net written premiums in the quarter by 8% to $5.4 billion. Renewal premium change in the segment remained strong at 9.6%, including renewal rate change of 6.9%, while retention also remained strong at 85%. In Bond & Specialty Insurance, we grew net written premiums by 7% to $1.1 billion, with excellent retention of 88% in our high-quality management liability business. In our industry-leading surety business, we grew net written premiums by 19%. In Personal Insurance, net written premiums grew 7% to $4.3 billion, driven by continued strong renewal premium change, particularly in our Homeowners business.

“The depth and breadth of our franchise value was on full display in 2024. The compelling value proposition that we offer to our customers and distribution partners drives our top line. Underwriting excellence delivers strong profitability and cash flow. Investing expertise along with a growing portfolio and higher reinvestment rates contributes to meaningful growth in net investment income. All of that contributes to strong returns and meaningful growth in book value per share. With this momentum, we are very confident in the outlook for Travelers in 2025 and beyond.”

Given it’s a Q1 2025 event, Travelers’ Q4’24 results did not include any kind of estimate for the ongoing LA wildfires, although CEO Schnitzer did comment on the destructive outbreak.

“On behalf of all of us at Travelers, I want to acknowledge the tragic wildfires that have devastated communities across Los Angeles. Our hearts go out to everyone affected – those who have lost their homes, their businesses, and, most tragically, their loved ones. At times like these, words alone of course are not enough. As a company rooted in the communities we serve, we will be there for our customers and neighbors to support them as they recover and rebuild. We also extend our deep gratitude to all of the first responders who have been working tirelessly and to our claim professionals who demonstrate day in and day out to our customers and agents the value of the Travelers promise,” said the CEO.

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