The Travelers Companies, Inc. has posted a net income of $1.626 billion for the fourth quarter of 2023, driven by higher core income, partially offset by net realized investment losses compared to net realized investment gains in the same period of 2022.
At $1.626 billion, the insurer’s net income increased by a significant $807 million from the same period in 2022.
Core income in the quarter was $1.633 billion, compared to $810 million in the prior year quarter. Travelers said that core income increased primarily due to a higher underlying underwriting gain, as well as lower catastrophe losses and higher net investment income.
At the same time, net realized investment losses in Q4 sat at $11 million pre-tax ($7 million after-tax), compared to net realized investment gains of $7 million pre-tax ($9 million after-tax) in the prior year quarter.
Net written premiums also improved for Travelers in Q4, reaching a staggering $9.994 billion, representing a 13% increase from last year.
Overall, Travelers has also reported a combined ratio of 85.8% for the fourth quarter of 2023, against 94.5% from the same period in 2022. Catastrophes losses, net of reinsurance contributed just 1.2 percentage points of to the Q4 combined ratio, compared with 5.2 percentage points in 2022.
Alan Schnitzer, Chairman and Chief Executive Officer, commented: “We are very pleased to report exceptional top- and bottom-line results for the fourth quarter. Core income, earnings per share and return on equity were all record highs for the quarter, driven by both underwriting and investment results. Record underlying underwriting income resulted from net earned premiums of $10 billion, up more than 13% over the prior year quarter, and an underlying combined ratio which improved 5.5 points to a record 85.9%. Each of our business segments contributed to the improvement.
“We are also pleased to have delivered full year core income of $3.1 billion, generating core ROE of 11.5%, notwithstanding elevated industry-wide catastrophe losses and an operating environment for our Personal Insurance business that, while improving, was difficult during the year. Our high-quality investment portfolio generated after-tax net investment income of $2.4 billion for the year, driven by strong and reliable returns from our growing fixed income portfolio.”
For the full-year 2023, Travelers has reported a $149 million increase in net income to $2.991 billion, supported by a higher core income and lower net realized investment losses.
In addition, core income for the full-year also increased by $74 million to $3.072 billion, which was mostly driven by a higher underlying underwriting gain and higher net investment income, partially offset by higher catastrophe losses and lower net favorable prior year reserve development.
All in all, Travelers has also reported a combined ratio of 97.0% for 2023, compared with 95.6% a year earlier. This includes a 2.4 percentage point rise in the contribution of catastrophes losses, net of reinsurance to 7.9 percentage points.
Schnitzer, added: “Looking ahead, the fundamentals across our business are in excellent shape. In Business Insurance, we are growing while achieving very strong margins. Our Bond & Specialty business continues to produce excellent returns, and we added to our expert cyber capabilities with the strategic acquisition of Corvus. Our Personal Insurance business is showing significantly improved profitability, and the outlook is for continued improvement.
“Record cash flows have enabled us to make important strategic investments in our business, return excess capital to shareholders and grow our investment portfolio to nearly $93 billion. Combined with higher fixed income yields, this sets us up for higher levels of net investment income moving forward. With another year of very strong results in the books, continued strategic investment in pursuit of our focused innovation agenda and the best talent in the industry, we could not feel more confident about how we are positioned for 2024 and beyond.”
Travelers also provided an update on its 1.1 2024 reinsurance renewal today, revealing that it increased the size of its core corporate catastrophe excess-of-loss reinsurance by 76% to $3.525 billion.
