Travelers Companies reported quarterly earnings that surpassed expectations, according to an analysis by TD Cowen.
Travelers’ strong performance was attributed to robust underwriting gains, higher net investment income, and reduced catastrophe losses.
Travelers posted core earnings per share (EPS) of US$7.01, exceeding TD Cowen’s estimate of US$5.05 and the consensus estimate of US$5.10. Pre-tax catastrophe losses were reported at US$125 million, significantly below TD Cowen’s estimate of US$268 million.
The lower-than-expected cat losses contributed to a consolidated combined ratio of 85.8%, surpassing TD Cowen’s projection of 92.7% and the 94.5% combined ratio recorded in the same period last year.
Travelers reported net written premiums (NWP) of US$9.994 billion, a 13% increase over the previous year. This figure also exceeded TD Cowen’s estimate of US$9.74 billion. Travelers’ underwriting expense ratio improved to 27.4% from 27.9% year over year and 28% in the previous quarter. The company also executed share buybacks worth US$66 million during the reporting period.
Travelers’ business insurance segment reported after-tax income of US$857 million, beating TD Cowen’s estimate of US$870 million and growing significantly from the US$725 million posted in the same period last year. The underlying combined ratio for the segment was 86.8%, while NWP was US$5.018 billion – a 14% increase, driven by strong renewal premium change, retention, and increased levels of new business.
After-tax income for the bond and specialty insurance segment was US$240 million, exceeding TD Cowen’s estimate of US$201 million and up from US$221 million during the same period last year. The underlying combined ratio for the segment was 80.6%.
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The personal insurance segment posted after-tax income of US$520 million, surpassing the TD Cowen estimate of US$184 million and marking a substantial recovery from the US$61 million loss in the previous year. The underlying combined ratio for the segment was 85.9%. NWP for the segment was US$3.987 billion, a 13% year-over-year increase.
Travelers’ auto insurance segment reported an underwriting loss of US$82 million. This was a significant improvement from the US$202 million loss reported in the previous year. The underlying combined ratio for the auto insurance segment was 102.7%, slightly higher than TD Cowen’s projection of 101%, but still lower than the 110.5% combined ratio recorded in the same period last year. NWP for the segment was US$1.831 billion, a 13% year-over-year increase.
Travelers’ homeowners insurance segment posted underwriting income of US$585 million, a massive increase from the US$5 million reported in the same period last year. The underlying combined ratio was 69.7%, significantly improving on TD Cowen’s projection of 86.4% and the 82.2% combined ratio reported in the previous year. NWP for homeowners insurance was US$1.995 billion, up 14% year over year.
Earlier this month, Global 500 named Travelers one of the insurance sector’s most valuable brands. The insurance giant also recently acquired Corvus Insurance, a managing general underwriter for cyber insurance.
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