@Travelers.
US P&C giant Travelers was, like usual, one of the first insurers to announce their results for Q2 2023. Overall, the company saw a second quarter net loss of $14 million and core income of $15 million.
Catastrophe (CAT) losses were at $1.481 billion pre-tax compared to $746 million pre-tax in the prior year quarter.
These huge CAT losses could be replicated across the industry after a volatile year of weather events in the US and globally, the ongoing effects of which were partly the cause for several insurers leaving the Florida and California markets.
Continuing issues like the aforementioned could change financial profiles and business strategies of some insurers going forward – including investments.
“This quarter we reported strong underlying results and investment returns,
as well as net favourable prior year reserve development."
The insurer saw a higher underlying underwriting gain, whilst net favourable prior year reserve development was lower.
Net realised investment losses in the current quarter were $35 million pre-tax ($29 million after-tax), compared to $95 million pre-tax ($74 million after-tax) in the prior year quarter.
“This quarter we reported strong underlying results and investment returns, as well as net favourable prior year reserve development, which were offset by an historic level of industry-wide catastrophe losses,” said Alan Schnitzer, Chairman and CEO. “The fact that we were able to generate positive core income notwithstanding $1.5 billion of pre-tax catastrophe losses reflects the strength of our franchise and the resiliency of our underlying business model.”
Net investment income for the quarter was $712 million ($594 million after-tax) compared to $707 million in 2022. For H1 2023, net investment income was $1.375 billion compared to $1.344 billion in 2022.
“Income from the non-fixed income portfolio was solid but decreased from
levels in the prior year quarter, due to lower private equity.”
Net realised investment losses were $35 million pre-tax ($29 million after-tax), compared to $95 million pre-tax ($74 million after-tax) in the prior year quarter.
“Income from the fixed income investment portfolio increased over the prior year quarter due to a higher average yield and growth in fixed maturity investments,” Travelers said in its statement on the results. “Income from the non-fixed income investment portfolio was solid but decreased from very strong levels in the prior year quarter, primarily due to lower private equity and real estate partnership returns. Non-fixed income returns are generally reported on a one-quarter lagged basis and directionally follow the broader equity markets.”
For H1 2023, the company saw a net income of $961 million, which was a decrease of $608 million, due to lower core income, partially offset by lower net realised investment losses, it said.
The company reported a combined ratio of 106.5%, compared with 98.3% a year earlier.
