Travelers returns to underwriting profit in Q3’24 despite rise in catastrophe losses

The Travelers Companies has today reported an underwriting gain of $685 million for the third quarter of 2024 despite a rise in catastrophe losses, net of reinsurance, to $939 million, while substantial net favorable prior year reserve development and higher net investment income also contributed to a rise in net income to $1.26 billion from $404 million a year earlier.

An underwriting result of $685 million is a stark improvement on the underwriting loss of $136 million seen in Q3 2023, as is net favourable prior year development of $126 million compared with unfavourable development of $154 million last year.

Catastrophe losses, net of reinsurance, increased $89 million year-on-year to the aforementioned $939 million, driven by hurricane Helene in Florida and severe wind and hail storms in multiple states.

In line with last year, catastrophes had an 8.8 percentage point impact on the firm’s Q3 combined ratio, somewhat offset by the 1.2 percentage point favourable impact from prior year reserve development, leading to a Q3 2024 combined ratio of 93.2%, compared with 101% in Q3 2023. The underlying combined ratio strengthened from 90.6% to 85.6%.

In terms of growth, Travelers has reported an 8% rise in net written premiums to $11.3 billion from $10.5 billion, with growth seen across all business segments.

On the asset side of the balance sheet, Travelers has reported a $135 million year-on-year rise in net investment income to $904 million.

Total revenues hit $11.9 billion in Q3 2024, up from $10.6 billion in Q3 2023. All in all, net income for the third quarter of 2024 increased by $856 million year-on-year to $1.26 billion.

Alan Schnitzer, Chairman and Chief Executive Officer, Travelers, commented: “We are pleased to report excellent results for the quarter, with both underwriting and investment income contributing meaningfully to our strong performance. Core income for the quarter was more than $1.2 billion, or $5.24 per diluted share, generating core return on equity of 16.6%. Our results benefited from a 10% increase in net earned premiums to a record $10.7 billion and an excellent combined ratio that improved nearly 8 points to 93.2%. Very strong underlying profitability and net favorable prior year development drove the improvement in our combined ratio. Both underwriting income and underlying margins were strong in all three of our segments. Our high-quality investment portfolio generated after-tax net investment income of $742 million. These results, along with our strong balance sheet, enabled us to return $496 million of excess capital to our shareholders this quarter, including $253 million of share repurchases.

“Through terrific marketplace execution across all three segments, we grew net written premiums in the quarter by 8% to a record $11.3 billion. In Business Insurance, we grew net written premiums by 9% to $5.5 billion. Renewal premium change in the segment remained very strong at 10.5%, including renewal rate change of 7.3% that was higher sequentially, while retention was strong and higher sequentially at 86%. In Bond & Specialty Insurance, we grew net written premiums by 7% to a record $1.1 billion, with excellent retention of 90% in our high-quality management liability business. In our industry-leading surety business, we grew net written premiums by 7%. In Personal Insurance, net written premiums grew 7% to a record $4.7 billion, driven by continued strong renewal premium change, particularly in the homeowners book.

“Our excellent profitability and continued strong premium growth both this quarter and year-to-date are a reflection of our powerful franchise value. Driven by our formidable earnings power across underwriting and investments, we delivered 15.9% core return on equity over the last twelve months. We continue to grow book value per share, while making important strategic investments in our business and returning excess capital to shareholders. With this momentum, we are very confident in our outlook for our business into 2025 and beyond.”

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