US primary insurer Travelers has reported an underwriting gain of $659 million for the first-quarter of 2022 and a combined ratio of 91.3%, as losses from catastrophes, net of reinsurance, fell by $675 million from the comparable prior year period.
Somewhat offsetting the lower catastrophe load in the quarter, net favourable reserve development of $153 million in Q1 2022 came in $164 million lower than the prior year Q1.
On a consolidated basis, Travelers has reported a 5.3% improvement in its combined ratio, year-on-year, to 91.3%. On an underlying basis, the firm’s combined ratio weakened slightly from 89.5% in Q1 2021 to 91.2% in Q1 2022.
Alongside a solid underwriting performance, Travelers has announced record net written premiums of $8.4 billion for the quarter, which is up 11% on the prior year quarter. Premium growth can be seen across the business, with 9% in Business Insurance, 22% in Bond & Specialty Insurance, and 12% in Personal Insurance.
On the asset side of the balance sheet, Travelers has reported net investment income of $637 million for the first-quarter of 2022, compared with $701 million a year earlier.
All in all, the company’s net income improved by 39% to more than $1 billion, as core income increased by almost 50%, year-on-year, to $1.1 billion.
Alan Schnitzer, Chairman and Chief Executive Officer (CEO), commented: “We are off to a terrific start in 2022, with strong contributions to our results from both underwriting and investments. Core income for the quarter was $1.0 billion, or $4.22 per diluted share, generating core return on equity of 15.5%. These results were driven by net earned premiums of $8.0 billion, which were 9% higher than in the prior year period, and an excellent combined ratio of 91.3%. Underlying underwriting income in our commercial business segments was particularly strong. Our high-quality investment portfolio generated after-tax net investment income of $539 million.
“These results, along with our strong balance sheet, enabled us to return $773 million of excess capital to our shareholders this quarter, including nearly $560 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 a 6% increase in our quarterly cash dividend to $0.93 per share, marking 18 consecutive years of dividend increases with a compound annual growth rate of 9% over that period.”
“The significant innovation and technology investments we have been making for some time are driving our performance today and transforming Travelers into the insurance company of the future. We are innovating on top of a foundation of excellence to ensure our continued success through competitive advantages that are relevant, differentiating and difficult to replicate. With that and our talent advantage, we are confident in our ability to continue to create shareholder value over time,” he added.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.