Travelers Cos. posted a 39% jump in first-quarter net income, with premium-rate increases and new business fueling revenue gains. Sharply lower catastrophe costs compared with the year before also boosted profits.
The property-casualty insurer reported net income of $1.02 billion, with catastrophe costs dropping to a pretax $160 million, down from $835 million. Industrywide, U.S.-focused carriers are expected to enjoy favorable comparisons with their year-earlier results due to the lower level of catastrophes. In the first quarter of 2021, winter and wind storms slammed the U.S. to make it a particularly costly three months.
Travelers is among the largest issuers of insurance to U.S. businesses, and it sells car and home insurance to individuals and families. Part of the Dow Jones Industrial Average, the company is one of the first big property-casualty insurers to report quarterly earnings, and its results are watched closely as a bellwether for others.
The first-quarter is expected to be tougher on property-casualty insurers with world-wide operations. Wells Fargo Securities estimates insured catastrophe losses of about $12 billion, driven by global events including European windstorms, a Japanese earthquake and Australian floods.
Some carriers with global presences also are expected to book losses from Russia’s invasion of Ukraine, analysts said.
Travelers’ core income, which excludes certain items considered nonrecurring and is tracked by Wall Street analysts, increased 48% to $1.04 billion.
Travelers’ net written premiums, a commonly used measurement of revenue growth, surged 11% to $8.37 billion, to a record, with each of its segments contributing. In its large unit for insuring business clients, the premiums increased by 9%, reflecting strong renewal-premium change, as well as higher levels of new business. Its bond-and-specialty-insurance unit enjoyed a 22% increase in net written premiums.
Both those segments posted strong increases in income.
The personal-insurance segment, which combines results for the company’s car and home insurance operations, had premium growth of 12%, but income fell 28% to $225 million. The decline was driven primarily by an unfavorable comparison to a low level of losses in the prior-year quarter when the Covid-19 pandemic was still holding back driving activity.
U.S. car insurers’ first-quarter results also have been hurt by higher claims costs, partly tied to supply-chain issues, analysts said. In recent months, insurers have been rapidly raising rates to try to get ahead of inflation, which has boosted the prices of car repairs, replacements and rentals. Many insurers are boosting premiums by 6% to 8% while some are asking for double-digit increases, according to industry executives and analysts.
Travelers Chief Executive Alan Schnitzer said in the earnings release that the board had increased the quarterly cash dividend by 6% to 93 cents a share, marking 18 consecutive years of dividend increases.
This story has been published from a wire agency feed without modifications to the text
