US primary insurer Travelers has reported net income of $551 million for the second quarter of 2022, which represents a 41% decrease on the $934 million recorded in the same period last year.
Travelers explained that its core income decreased primarily due to higher catastrophe losses, lower net investment income and a lower underlying underwriting gain, which excludes net prior year reserve development and catastrophe losses.
These negative factors were partially offset by higher net favourable prior year reserve development.
Additionally, Travelers notes that its core income in the prior year quarter benefited from a low level of catastrophe losses and very strong net investment income driven by record returns in the alternative investment portfolio.
Net realized investment losses for Q2 this year were $95 million pre-tax, or $74 million after-tax, compared to net realized investment gains of $61 million pre-tax, or $47 million after-tax, in the prior year quarter.
Looking at the larger H1 period for 2022, Travelers results are more positive, with net income only declining by 6% from $1.67 billion to $1.57 billion.
This mild decrease was primarily due to net realized investment losses compared to net realized investment gains in the prior year period, partially offset by higher core income.
And core income during H1 actually increased by $84 million to $1.66 billion primarily due to lower catastrophe losses, partially offset by lower net investment income, lower net favorable prior year reserve development and a lower underlying underwriting gain.
The combined ratio deteriorated by 3.0 percentage points to 98.3% for the Q2 period and improved by 1.1 points to 94.8% for H1.
“We are pleased to report very strong second quarter 2022 results, with both underwriting and investment income contributing meaningfully to our performance,” said Alan Schnitzer, Chairman and Chief Executive Officer.
“Building on our excellent results in the first half of the year, we are confident about our outlook,” he continued.
“Benefiting from the investments we have made and continue to make as part of our Perform and Transform call to action, guided by our decades of experience successfully executing in a variety of macro-economic conditions and supported by an outlook for improving fixed income returns, we remain well positioned to deliver industry-leading returns and shareholder value over time.”
