Travelers underwriting income plummets
US property/casualty insurer Travelers has seen its underwriting income fall sharply in the fourth quarter as well as in the full year of 2017.
The underwriting gain in the three last months of 2017 fell to $266 million from $590 million in the same period a year ago. The results were impacted by catastrophe losses from the California wildfires.
In November 2017, the company had estimated fourth-quarter catastrophe losses related to the California wildfires, including estimated recoveries from reinsurance, to be in the range of $525 million to $675 million pre-tax.
Catastrophe losses in the fourth quarter of 2017 included $656 million pretax ($426 million after-tax) arising out of wildfires in California, partially offset by favourable development of $157 million pre-tax ($102 million aftertax) primarily related to the third quarter 2017 hurricanes.
The underwriting gain in the full year of 2017 was $404 million compared to $1.81 billion in 2016.
The year 2017 has seen record insured losses from global catastrophes such as hurricanes Harvey, Irma and Maria of around $130 billion.
Overall, Travelers’ net income dropped 42 percent year on year to $551 million in the fourth quarter. Net income in the quarter included a charge of $129 million related to the passage of the Tax Cuts and Jobs Act of 2017 (TCJA) in the US.
For the full year of 2017, net income declined 32 percent year on year to $2.06 billion.
“From a position of strength, we continue to invest in our competitive advantages, focusing on extending our lead in risk expertise, improving the experience for customers, agents and brokers, and enhancing productivity and efficiency,” CEO Alan Schnitzer commented. “We are encouraged by the pricing environment, the opportunities afforded by a more level playing field for domestic insurers as a result of corporate tax reform and the prospect of a strengthening economy.
The reported combined ratio in the fourth quarter of 2017 was 95.5 percent compared to 90.0 percent in the same period a year ago.
“Our commercial business continued to perform well and results in our personal auto business improved meaningfully due to the successful execution of the pricing and underwriting actions we began implementing a year ago,” Schnitzer commented.
In the full year of 2017, the combined ratio was at 97.9 percent, up from 92 percent in 2016.
Overall, net written premiums grew 5 percent year on year to $26.22 billion in 2017.
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