Travelers has published its first quarter 2024 financial results, reporting 16% growth in net income despite an elevated level of catastrophe losses compared to the prior year quarter.
The insurer saw its net income rise to $1.123 billion in Q1 2024, a figure that compares to the $975 million reported in Q1 2023. Core income also increased, to $1.096 billion from $970 million in the same quarter last year.
According to the insurer, the increase in core income was mainly due to higher net investment income and a higher underlying underwriting gain, which was partially offset by higher catastrophe losses.
The underlying underwriting gain was higher than in the prior year quarter, notwithstanding that the prior year quarter included a $211 million one-time tax benefit.
Net realized investment gains in the current quarter were $35 million pre-tax ($27 million after-tax), compared to $6 million pre-tax ($5 million after-tax) in Q1 2023.
Q1 2024 included an elevated level of catastrophe losses of $712 million pre-tax, compared to $535 million pre-tax in the prior year quarter. These quarters cat losses primarily resulted from severe wind and hail storms in the central and eastern regions of the United States, Travelers noted.
It is worth noting that, while this quarter’s cat losses are elevated, given the $3.5 billion attachment point of its main per-occurrence cat XoL treaty, these events are not the type of losses that would trigger Travelers’ reinsurance. But it does highlight how higher reinsurance attachment points, and a move away from frequency events by reinsurers, is resulting in the primary market retaining more of these types of losses.
Despite the rise in cat losses, the insurer’s combined ratio improved 1.5 points, to 93.9%, due to an improvement in the underlying combined ratio (2.9 points), partially offset by higher catastrophe losses (1.1 points) and lower net favorable prior year reserve development (0.3 points).
Underlying combined ratio also saw an improvement, going from 90.6% in Q1 2023 to 87.7% in Q1 2024.
Travelers also reported net written premiums of $10.18 million in this year’s first quarter, an 8% increase compared to the $9.39 million reported in the same period last year.
The firm’s Business Insurance segment saw an increase in income of $8 million, to $764 million after-tax. This was mainly due to higher net investment income, partially offset by a lower underlying underwriting gain.
Its combined ratio improved to 93.3% due to a lower underlying combined ratio (0.4 points) and lower catastrophe losses (0.3 points), partially offset by no net prior year reserve development compared with net favorable prior year reserve development in the prior year quarter (0.4 points).
The segment’s underlying combined ratio improved 0.4 points to a very strong 89.2%. Net written premiums increased to $5.596 billion, reflecting strong renewal premium change (10.6%) and retention (86%), as well as higher levels of new business, the insurer noted.
Segment income for Bond & Specialty Insurance was $195 million after-tax, a decrease of $12 million, primarily due to lower net favorable prior year reserve development, partially offset by higher net investment income.
Combined ratio improved to 84.5% and underlying combined ratio to 86.5%. The segment’s net written premiums of $943 million increased 6%, reflecting strong production in both surety and management liability.
Travelers Personal Insurance segment also saw an increase in income, to $220 million after-tax. This was due to a higher underlying underwriting gain, higher net favorable prior year reserve development and higher net investment income, partially offset by higher catastrophe losses.
The combined ratio improved to 96.9%, as well as the underlying combined ratio of 86.1%. Net written premiums of $3.643 billion increased 9%, reflecting strong renewal premium change in both Domestic Automobile (16.6%) and Homeowners and Other (13.4%).
Alan Schnitzer, Chairman and Chief Executive Officer, commented: “The year is off to a terrific start with strong profitability and production in all three segments, as well as higher investment income. In short, we’re firing on all cylinders. We also continue to invest in important strategic initiatives.
“We have demonstrated success in executing our innovation strategy, which has contributed to superior returns with industry-low volatility, growth in our premium base and higher adjusted book value per share. With this momentum and the best talent in the industry, we remain well positioned for success this year and beyond.