Third quarter net income at Travelers Cos. fell 11% compared to the prior-year quarter to $404 million on higher catastrophe losses and unfavorable reserve development.
As one of the first insurers to report quarterly results, New York-based Travelers said it booked $850 million of catastrophe losses net of reinsurance in Q3 compared to $512 million for the same time a year ago.
Financial results were also affected by net unfavorable prior-year reserve development of $154 million pretax. Travelers said the unfavorable development was driven by run-off operations in the general liability line, including an addition of $284 million of asbestos reserves. The company said it completes its annual review of asbestos claims in Q3 every year. Also, there was reserve strengthening attributed to childhood sexual molestation claims and environmental claims in Q3, Travelers reported.
Travelers booked a $136 million Q3 underwriting loss compared to a profit of $115 million last year. Catastrophe losses and unfavorable reserve development primarily drove up the insurer’s Q3 combined ratio to an unprofitable 101 compared to 98.2 last year during the same quarter.
For the year thus far, Travelers’ net income is down 33% to about $1.4 billion and its combined ratio is 101 compared to 96 in 2022.
The underlying combined ratio at Travelers is 90.6 for Q3 and 90.8 for nine months of 2023. CEO Alan Schnitzer said in a statement that the insurer is “pleased with the underlying fundamentals of our business.”
“The underlying combined ratio in our commercial segments remained excellent (89.7), and the underlying combined ratio in personal insurance improved by more than 5 points to 94.2,” Schnitzer added.
Related: Travelers CEO: ‘Strong’ Commercial Hikes to Continue
In the personal insurance segment, Travelers recorded a Q3 underwriting loss of $408 million compared to a loss of $267 million a year ago. The combined ratio for the segment was 110 in Q3.
Domestic net premiums written in auto and homeowners increased a total of 15% to about $4.2 billion.
Topics Catastrophe Trends Profit Loss
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