Travelers CEO sees tariff impact on company as ‘manageable’

Increases in automobile and property insurance loss costs should be manageable if the Trump administration’s tariffs remain in place, Travelers Cos. Inc.’s top executive said Wednesday as the insurer reported catastrophe-hit first-quarter results.

However, Travelers Chairman and CEO Alan Schnitzer, said it’s too early to tell how the economic uncertainty will affect the insurer’s policyholders.

In addition, the company’s chief financial officer said recent financial market volatility will not appear in Travelers’ results until the second quarter.

Travelers is traditionally the first major commercial insurer to report quarterly results – often seen as a bellwether for the industry – and is the first to hold a results call with analysts since President Trump announced various tariff increases. While the level of tariffs has fluctuated, several industry observers have said they will likely increase insurers’ loss costs, particularly related to imported auto parts.

The impact of the tariffs will be “pretty manageable for us,” Mr. Schnitzer said.

“It’s just a fraction of auto and property losses that are physical damage related, and only a fraction of those are for materials that would be impacted by the tariffs,” he said.

The biggest hit would be a one-time impact on physical damage repair costs for private passenger autos, Mr. Schnizer said.

“We think participants in the value chain will likely seek to mitigate the impact through some combination of advanced inventory build-up, substitution of goods, reorganization of supply chain, lower tariff pass-through rates — things like that,” he said.

Travelers will “watch and react to the extent that we need to,” Mr. Schnitzer said.

He said the tariffs’ effect on insurance will likely not be felt until the second half of the year and also noted that it’s too early to tell how economic uncertainty will affect Travelers’ policyholders.

Travelers reported net income of $395 million in the first quarter, down from $1.12 billion in the same period in 2024. Catastrophe losses, primarily from the California wildfires in January, were $2.3 billion, compared with $712 million in the comparable period last year.

The company reported a combined ratio of 102.5% in the quarter, compared with 93.9% in the same quarter last year. Net written premium increased 3.3% to $10.52 billion.

After-tax net investment income for the quarter increased 9% to $763 million.

“The impact of the decline in financial markets that occurred in the first quarter will be reflected in our second-quarter results,” said CFO Daniel Frey.

In business insurance, its main commercial segment, Travelers saw an average renewal rate change of 6% in the quarter, said Greg Toczydlowski, president of business insurance.

“The small tick down from Q4 was driven by our national property book, where returns are very strong after several years of compounding rate and improvements in terms and conditions,” he said.