U.S. primary insurer Travelers has announced net written premium growth of 3% and an improved underlying combined ratio of 91.6% for the first-quarter of 2019, driven by a new catastrophe reinsurance treaty.
Travelers’ Q1 2019 results announcement reveals net income of $796 million and core income of $755 million, up 19% and 11% on the same period last year, respectively.
According to Travelers, lower catastrophe losses ($95mn net of reinsurance) in the period was a driver of the improved core income, as was an increased underlying underwriting gain.
Travelers recorded record gross written premiums (GWP) in Q1 2019 of $7.8 billion, an increase of 6% and which reflects growth across all business segments. Net written premiums increased by 3% to $7.06 billion, which the firm says is a reflection of its new catastrophe reinsurance treaty.
Effective January 1st, 2019, Travelers entered into a new property aggregate catastrophe excess-of-loss reinsurance treaty, which covers losses over $5 million from PCS-designated cat events in North America.
As evidenced by its results, the new catastrophe reinsurance treaty has had a positive impact, contributing to premium growth and helping to improve the firm’s underlying combined ratio, with the help of muted catastrophe losses.
Alan Schnitzer, Chairman and Chief Executive Officer (CEO) of Travelers, commented on the firm’s Q1 performance: “We are very pleased to report first quarter core income of $755 million, up 11% over the prior year quarter, and core return on equity of 13%.
“We delivered strong underwriting results as reflected in our combined ratio of 93.7%. We produced a strong underlying underwriting result thanks to continued underwriting excellence and also through top-line growth and thoughtful expense management, both benefiting from the successful execution of our strategic initiatives.”
Net investment income declined for the firm in Q1, falling by 3% to $496 million, after-tax. At the same time, shareholders equity grew 6% from the end of 2018, amounting to $24.34 billion.
Commenting on the firm’s premium growth across the business, Schnitzer added: “We are also pleased with our continued successful marketplace execution. We generated record gross written premiums of $7.8 billion, a 6% increase over the prior year quarter. Net written premiums, which reflect a new catastrophe reinsurance treaty, grew 3%. In Business Insurance, gross written premiums increased by 6% as we achieved renewal premium change of 6%, including renewal rate change of more than 2%, in both cases the highest levels in almost five years.
“At the same time, we maintained historically high retention and generated a higher level of new business. In Bond & Specialty Insurance, gross written premiums increased by 4%, driven by continued historically high retention and new business in Domestic Management Liability. In Personal Insurance, gross written premiums increased by 6%, reflecting growth in both our Agency Automobile and Agency Homeowners businesses.
“Our strong first quarter performance in terms of both profitability and production is a terrific start to the year, and we continued to make significant progress on our ambitious innovation agenda.”
