Travelers reports 50% gain in Q4 net income

Travelers Cos. Inc. on Thursday posted fourth-quarter net income of $1.31 billion, up 50% from the year-earlier period, which executives in an earnings call attributed to gains in underlying underwriting income and lower catastrophe losses.

The New York-based insurer reported net written premium of $7.27 billion, a 3% increase from the fourth quarter of 2019, and an underlying combined ratio of 88.7%, a 3.4-point improvement from the year-earlier period.

“We feel very well-positioned to capitalize on the opportunities ahead as the economy continues to recover and beyond,” said Alan Schnitzer, Travelers’ chairman and CEO.

Net written premium in Travelers’ business insurance segment declined 2% to $3.63 billion. The biggest drop was in workers compensation, with net written premium falling to $699 million, from $817 million in the last quarter of 2019.

The business insurance segment’s underlying combined ratio improved 2.8 points to 93.6% as a result of earned pricing that exceeded loss cost trends, said Greg Toczydlowski, president of business insurance.  

The segment also achieved record renewal rate change of 8.4%, up nearly four points, with increases in all lines except workers compensation.

“I expect the favorable rate environment to continue and persist at levels that will result in expanding margins for a while,” Mr. Schnitzer said.

However, new business in the business insurance segment declined $35 million, to $440 million, “given lower levels of economic activity and given hardening market conditions,” Mr. Toczydlowski said.

In the bond and specialty segment, net written premium increased to $800 million, from $714 million in the fourth quarter of 2019.

Dan Frey, Travelers’ chief financial officer, noted that losses related to COVID-19 have been modest, with the business insurance and bond and specialty segments “evenly” impacted.

“We continue to take a cautious approach in estimating the impact of COVID-related losses given the ongoing uncertainty in this environment,” he said.

More insurance and risk management news on the coronavirus crisis here.