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Strong commercial results boost Travelers’ profit

Alan Schnitzer

Travelers Cos. Inc. reported Thursday that its fourth-quarter net income rose 2% to $1.333 billion on the strength of its commercial segments, which offset challenges in personal lines.

“We are particularly pleased with the continued strong

underlying fundamentals of our commercial businesses, where we are seeing the margin expansion we anticipated,” Travelers Chairman and CEO Alan Schnitzer said during a morning earnings call with investors.

Net written premiums increased 10% to $7.995 billion, and the New York-based insurer saw net investment income climb 10% to $743 million, or $624 million after taxes.

Travelers’ combined ratio for the quarter worsened to 88% from 86.7% in the fourth quarter of 2020.

In the business insurance segment, however, the combined ratio improved to 87% from 89.8% in the fourth quarter of 2020, and the unit saw its underwriting gain jump 37% to $523 million from $382 million in the year-earlier period.

Net written premiums increased 9% in the business insurance segment to $3.966 billion. Mr. Schnitzer said on the call the segment’s new business was up 16%, and the fourth-quarter renewal premium change was 9.2%.

In the bond and specialty segment, net written premiums grew 13% to $905 million, as the business saw a $147 million underwriting gain, 6.5% higher than in the fourth quarter of 2020.

“In both commercial business segments, written margins continue to expand as written pricing outpaces estimated loss trends, and we expect that to continue for a while,” Mr. Schnitzer said.

The strong showing by the business segments helped offset underlying challenges in personal lines, as auto loss frequency returned to normal levels, he said.

For the year, Travelers’ net income rose 36% to $3.662 billion, and its combined ratio improved to 94.5% from 95% in 2020.

Net written premiums increased 7% to $31.959 billion, and net investment income surged 36% to $3.033 billion, or $2.541 billion after-tax.

Chief Financial Officer Dan Fry said on the call that investment income is expected to be “modestly higher” in 2022.

In the business insurance segments, full-year net written premiums rose 4% to $16.092 billion, and the combined ratio improved 4.6 points to 95.7%.