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Travelers sees rate hikes continue; Q1 profit up over 15%

Alan Schnitzer.

Travelers Cos. Inc. said Wednesday that commercial insurance rates continued to rise in most lines during the first quarter as it reported growth in net income and revenue.

While the insurer reported higher catastrophe losses during the quarter and a slight increase in general liability reserves for prior-year losses, sustained quarterly renewal rate increases helped drive improved profitability, Travelers executives said on its earning call with analysts.

Travelers, usually the first major property/casualty insurer to report quarterly results, is often seen as a bellwether for the industry.

In business insurance, its main commercial segment, Travelers saw 7% average renewal premium increases, which include rate and exposure changes, said Greg Toczydlowski, president of business insurance.

“It was also up almost two and a half points from the first quarter of 2023,” he said. “Umbrella, property and auto led the way, all with renewal rate change in or very close to double digits.”

Management liability renewal rates increased 2.8%, down from the 5.6% increase in the same period last year but up from the 2.1% increase in the fourth quarter, and workers compensation renewals increased in the low single digits.

There was no net prior-year reserve development in the quarter in its business insurance segment, primarily because better-than-expected loss experience for workers compensation was offset by higher-than-expected loss experience in general liability, Travelers said.

The increase in general liability reserves did not indicate any significant new developments, said Travelers Chairman and CEO Alan Schnitzer.

“When you look at the overall reserves we have for these lines, these are very small adjustments,” he said.

Travelers reported a profit of $1.12 billion for the quarter, a 15.2% increase from the same period last year.

Catastrophe losses for the quarter were $712 million, compared with $535 million in last year’s first quarter, primarily from losses in the central and eastern United States, Travelers said in its earnings statement.

Net written premium increased 8.4% to $10.18 billion. By sector, business insurance net written premium increased 8.5% to $5.6 billion, bond and specialty rose 6.4% to $943 million, and personal insurance increased 8.6% to $3.64 billion.

Travelers’ combined ratio for the quarter improved to 93.9% compared with 95.4% in the same period last year.

Net investment income for the quarter was $846 million, a 27.6% increase over the 2023 period.