Travelers' Q1 combined ratio decreased 1.5 points year on year to 93.9% as an improvement in the insurer’s underlying results outweighed higher catastrophe losses in the first set of 2024 results.
Travelers reported $498mn of cat losses in its personal lines segment, up from $331mn a year ago, while the business insurance unit cat hit rose to $209mn from $199mn.
The insurer said Q1 cat activity was driven by severe wind and hail storms in the central and eastern regions of the US.
The result suggests that some carriers could experience higher-than-expected cat losses in the quarter despite a relatively quiet period in coastal areas. (For a results preview see: Q1 Preview: Absence of bad news is not necessarily good news)
While cat losses impacted the carrier’s results, the firm recorded an underlying improvement as its core CoR decreased to 89.2% from 89.6% in Q1 2023.
The decline was mostly driven by the company’s personal lines book, which saw a 6.8-point decrease to 86.1% in Q1, fueled by the auto and homeowners segments.
Top line: Travelers grew NWP by 8.4% year on year to $10.2bn. Business insurance NWP rose 9% to $5.6bn driven by middle-market and national accounts, while personal lines climbed 9% to $3.6bn. Bond and specialty NWP increased 6% to $943mn.
Reserves: Travelers booked slightly less favorable reserve development in Q1.
The business insurance unit reported no net prior year reserve development, as better than expected loss experience in domestic workers’ comp for multiple accident years was offset primarily by higher-than-expected loss experience in the general liability segment for recent accident years.
Personal lines and specialty recorded net favorable development of $67mn and $24mn, respectively.
Rates: Q1 renewal rate changes decelerated to 7% sequentially from 7.3% in Q4 and 7.8% in Q3 2023.
However, rate increases in the quarter, excluding national accounts, came in higher than 4.6% in Q1 last year.
Meanwhile, retention rates remain almost unchanged at 86% compared to 87% in the prior quarters.
Corvus: On January 2, the carrier completed the takeover of cyber MGA Corvus.
In Q1, Travelers recorded at fair value $478mn of assets acquired and $51mn of liabilities assumed as part of the deal, including $390mn of identifiable intangible assets and goodwill.
As of Q1, the assets acquired from Corvus were included in the insurer’s bond & specialty insurance segment results.
Investment: Net investment income at the carrier increased 27.6% to $846mn in Q1.
The firm said that income from the fixed income investment portfolio increased over the prior year quarter due to a higher average yield and growth in fixed maturity investments.
Meanwhile, income from the non-fixed income investment portfolio increased over the prior year quarter primarily due to higher private equity partnership returns.
Commentary: “Renewal premium change in the [business insurance] segment remained very strong at 10.6%, while retention remained high at 86% and new business increased 8% to a record $691mn,” Travelers chairman and CEO Alan Schnitzer said.
“In bond and specialty insurance, we grew net written premiums by 6% to more than $940mn with strong retention and new business in our high-quality management liability business. In our industry-leading surety business, we grew net written premiums by 15%.”
“In personal insurance, continued strong pricing drove 9% growth in net written premiums. Renewal premium change was 16.6% in our auto business and 13.4% in our homeowners and other business.”