Travelers reports highest-ever level of Q1 catastrophe losses

Travelers reports highest-ever level of Q1 catastrophe losses

Commenting on the first-quarter, Alan Schnitzer, Travelers Chairman and Chief Executive Officer, stated, “We are really delighted to report very first quarter core income of $699 million, or $2.73 per diluted share, both up from the prior year quarter in spite of our highest-ever level of very first quarter catastrophe losses. Higher core income resulted from extremely strong underlying underwriting earnings, as well as higher levels of favorable previous year reserve development and net financial investment income, which together more than offset the record level of disaster losses. Bond and Specialty Insurance and Personal Insurance both benefited from higher earned premiums and continued strong margins.” These outcomes, along with our strong balance sheet, enabled us to return $613 million of excess capital to our shareholders this quarter, including $397 million of share repurchases. In Personal Insurance, net composed premiums increased by 7%, driven by strong renewal premium modification of 7.7% in our Homeowners company and strong retention and new business in both Auto and Homeowners.

U.S. primary insurance carrier Travelers has actually reported what its CEO Alan Schnitzer calls its “highest-ever level of first quarter disaster losses”, which it appears are largely due to the United States winter season storms.Travelers doesnt break out its losses from Februarys US winter storms and Texas deep freeze event, however the business says that its first-quarter 2021 disaster losses are mainly associated to winter storms and wind storms in the United States, so its safe to assume the freeze occasion is the significant contributor.
Which shows the size of the effect and the loss it will have across insurance and reinsurance markets, in starting the year with a particularly high loss burden, which will likely now play into the mid-year reinsurance renewal settlements.
Travelers has actually reported $835 million of pre-tax disaster losses for Q1 2021, which compares to just $333 million pre-tax in the previous year quarter.
Nevertheless, the insurance provider was still able to provide an underwriting revenue, with its consolidated combined ratio reported as 96.6% for the duration.
Discussing the first-quarter, Alan Schnitzer, Travelers Chairman and Chief Executive Officer, said, “We are really delighted to report very first quarter core earnings of $699 million, or $2.73 per diluted share, both up from the prior year quarter regardless of our highest-ever level of first quarter disaster losses. Greater core earnings arised from really strong underlying underwriting earnings, in addition to greater levels of favorable prior year reserve advancement and net investment earnings, which together more than balance out the record level of disaster losses. Underlying underwriting earnings was meaningfully higher than in the prior year quarter, driven by greater net made premiums and a hidden combined ratio which enhanced to an outstanding 89.5%. The underlying underwriting result was strong in each of our 3 segments. In Business Insurance, the underlying combined ratio enhanced by more than 3 points. Bond and Specialty Insurance and Personal Insurance both benefited from higher earned premiums and continued strong margins. Our premium financial investment portfolio carried out well, producing net financial investment earnings of $590 million after-tax.
” These outcomes, in addition to our strong balance sheet, enabled us to return $613 countless excess capital to our shareholders this quarter, including $397 million of share repurchases. In recognition of our strong financial position and confidence in our service, I am pleased to share that our Board of Directors stated a 4% increase in our quarterly cash dividend to $0.88 per share, marking 17 consecutive years of dividend increases with a compound yearly development rate of 9% over that period. The Board also authorized an extra $5 billion of share repurchases.
” For the quarter, net written premiums grew 2%, driven by continued strong renewal premium change and retention in each of our 3 sectors. In Business Insurance, renewal premium change increased to 9.2%, its highest level given that 2013, while retention stayed strong. In Bond & & Specialty Insurance, net composed premiums increased by 9%, driven by renewal premium change of 10.8% in our management liability business, while retention stayed strong. In Personal Insurance, net composed premiums increased by 7%, driven by strong renewal premium modification of 7.7% in our Homeowners business and strong retention and brand-new company in both Auto and Homeowners.
” The strength of our underwriting and financial investment expertise enabled us to provide strong success, notwithstanding the serious winter season weather condition. Our tested technique, strong track record of execution, leading analytics and talent benefit give us confidence that we are well positioned to capitalize on opportunities as the economy recuperates and to continue to produce significant shareholder value over time.”
$506 countless the disaster losses was up to Travelers organization insurance coverage section, with $305 million in the personal insurance section.
That is intriguing provided the forecasts that the US winter storms would mainly be an individual lines loss, which Travelers appears might have eliminated somewhat, with its business lines system seemingly taking the larger catastrophe loss hit in Q1.
Reinsurance capital might not have actually supplied all that considerable a support to Travelers in the first-quarter, being the start of its year for its renewed aggregate reinsurance.
As we d formerly explained, for 2021, Travelers upsized on its aggregate catastrophe reinsurance defense, with the renewed treaty set to cover 70% of a $500 million layer, so $350 countless protection and a $150 million retention.
Travelers 2021 aggregate reinsurance treaty covers qualifying losses from PCS-designated catastrophe occasions in North America in excess of $5 million per catastrophe occasion, approximately an optimum of $250 million per-event, with the attachment for the coverage sitting at $1.9 billion.
The first-quarter disaster losses will have worn down a substantial quantity of the deductible sitting underneath the aggregate reinsurance, however with nine months left of the year to run it seems the full coverage most likely remains intact in the meantime.

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