Primary insurance group The Travelers Companies, Inc. has reported net income of $975 million for the first quarter of 2023, which also included an elevated level of catastrophe losses of $535 million pre-tax and a one-time tax benefit of $211 million.
The company’s net income went down 4% this Q1 2023 compared to the $1.018 billion reported in the same period last year.
According to Travelers, this was due to lower core income – $970 million, compared to $1.037 billion in Q1 2022 -, partially offset by net realised investment gains compared to net realised investment losses in the prior year quarter.
The decrease in core income was primarily due to higher catastrophe losses (elevated at $535 million pre-tax) and lower net favourable prior year reserve development, partially offset by a higher underlying underwriting gain (i.e., excluding net prior year reserve development and catastrophe losses) and higher net investment income.
The underlying underwriting gain in the current quarter included a one-time tax benefit of $211 million. This tax benefit is included in the income tax line in the Consolidated Statement of Income and accordingly does not impact the combined 95.4% ratio or the underlying combined ratio, which was 90.6%.
This quarter’s combined ratio went up 4.1 points, from 91.3% in Q1 2022, while underlying combined ratio improved to 91.2%, from 90.6% in the prior year.
Travellers also reported “record” net written premiums of $9.396 billion, up 12% compared to the prior year quarter, with growth in all three segments.
In Business Insurance, the company grew net written premiums by 15% to $5.2 billion. Renewal premium change in the segment remained historically high at 9.6%, while retention remained very strong at 87%. Record new business of $639 million was up 17%.
In Bond & Specialty Insurance, net written premiums increased slightly, with retention of 90% and new business growth of 25% in our management liability business. Surety net written premiums were once again strong.
In Personal Insurance, top-line growth of 12% was driven by higher pricing. Renewal premium change increased to 20.2% in our Homeowners and Other business and 13.9% in our Auto business.
“We are very pleased to report excellent results for the quarter, particularly in light of the high level of severe weather activity across the United States,” said Alan Schnitzer, Chairman and Chief Executive Officer.
He added: “Our results, along with our strong balance sheet, enabled us to return $680 million of excess capital to our shareholders this quarter, including $462 million of share repurchases.
“In recognition of our strong financial position and confidence in the outlook for our business, I am pleased to share that our Board of Directors declared an 8% increase in our quarterly cash dividend to $1.00 per share, marking 19 consecutive years of dividend increases with a compound annual growth rate of 8% over that period. The Board also authorised an additional $5 billion of share repurchases.
“The year is off to a terrific start with another strong quarter of profitability and growth driven by our underwriting and investment expertise. At the same time, we continue to successfully execute on our innovation strategy, which has contributed to significantly accelerated premium growth, superior returns and industry low volatility over the past decade.
“With the best talent in the industry, we remain well positioned for success through a wide range of economic and operating environments and confident in our ability to continue to create shareholder value over time.”
