Travelers, a leading property and casualty insurer, recently announced its second-quarter earnings, revealing results that exceeded market expectations despite some setbacks in premium growth. The company's earned premiums for the second quarter reached an impressive $10.24 billion, a substantial increase from $9.22 billion reported in the same quarter last year.
However, this figure fell short of analysts’ predictions, which had anticipated earned premiums to hit $10.42 billion. As a result, Travelers’ shares experienced a notable decline, dropping 7.3% during midday trading sessions. In terms of net written premiums, Travelers reported a solid growth of 8%, totaling $11.12 billion.
Within the business insurance sector, net written premiums increased by 7% to $5.54 billion, owing to a healthy renewal premium change along with strong retention rates and heightened levels of new business acquisition, as detailed by the company. The personal insurance division also posted robust numbers, with premiums climbing by 9% to $4.54 billion, complemented by an 8% growth in bond and specialty insurance, which reached $1.04 billion. The company’s adjusted earnings showcased a remarkable surge, jumping to $2.51 per share compared to just $0.06 in the previous year, surpassing street estimates of $2.
This growth can be attributed to a combination of factors including a higher underlying underwriting gain, favorable developments from prior-year reserves, and an increase in net investment income. As a result, the company reported a total revenue increase of 12%, reaching $11.28 billion. Chief Executive Alan Schnitzer expressed his satisfaction with the results, stating, "We are pleased to have generated a strong bottom line result in a quarter that included a record level of severe convective storms across the US." The company reported that catastrophe losses widened slightly, amounting to $1.51 billion as compared to $1.48 billion in the prior-year quarter, primarily due to wind and hail storms affecting several US states. The combined ratio, which serves as a critical indicator of underwriting profitability, was recorded at 100.2%, a notable improvement from 106.5% in the same quarter last year, emphasizing the company's strengthened positioning. "With a strong and diversified business and balance sheet, we delivered 13.6% core return on equity over the last 12 months, despite elevated industrywide catastrophe losses," Schnitzer noted.
With such momentum and ample opportunities on the horizon, he concluded that the company remains well poised for sustained success in the upcoming year and beyond..