Non-cat weather losses push up Travelers’ Q3 combined ratio

The Travelers Companies Inc. recently reported its third-quarter combined ratio deteriorated by six points while Q3 net premiums written were up 3% year over year.

New York City-based Travelers reported Oct. 20 its financial results for the period ending Sept. 30. Net premiums written were $6.389 billion in the most recent quarter, compared to $6.191 billion in Q3 2015. All figures are in United States dollars.

The third quarter combined ratio was 92.9% this year, up from 86.9% in Q3 2015 “due to a higher underlying combined ratio (3.3 points) and lower net favorable prior year reserve development (2.7 points).”

The underlying combined ratio was 92.1% in Q3 2016, compared to 88.8% in Q3 2015. The impact of catastrophes on the combined ratio was 1.4% in the third quarter of this year and of 2015.

“The underlying combined ratio of 92.1% increased 3.3 points, primarily driven by higher non-catastrophe weather-related losses, higher loss estimates in the personal automobile product line for bodily injury liability coverages, including the re-estimation of losses incurred in the first six months of 2016 and the impact of loss cost trends that modestly exceeded earned pricing in the Business and International Insurance segment, as expected, partially offset by lower levels of what the Company defines as large losses,” Travelers said in a filing with the U.S. Securities and Exchange Commission.

The loss and loss adjustment ratio was 61.2% in Q3 2016, up from 55.2% in Q3 2015.

For the first nine months of the year, Travelers had a combined ratio of 92.8% this year, up 3.9 points from 88.9% in 2015. Also in the first nine months, the loss and loss adjustment ratio was 61.2% this year, up from 57.2% in 2015.

Travelers reported net income of $716 million on revenue of $6.96 billion in the most recent quarter, compared to net income of $928 million revenue of $7.8 billion in the same period of 2015.

For the first nine months of this year, Travelers reported net income of $2.071 billion on revenue of $20.43 billion, compared to net income of $2.573 billion on revenue of $20.14 billion in the first nine months of last year.

During the latest quarter, Travelers reported premiums of $3.692 billion in business and international insurance,

$529 million in bond and specialty insurance and $1.988 billion personal insurance. Within personal insurance, Travelers reported premiums of $1.026 billion auto and $962 million homeowners and other.

The international segment provides, among other things, personal lines and small commercial insurance in Canada through The Dominion of Canada General Insurance Company, which the Travelers acquired in 2013, the firm said earlier this year in its annual report for 2015. Travelers also writes marine, property and aviation (among others) through Lloyd’s Syndicate 5000, for which Travelers provides 100% of the capital.

Company-wide, net investment income dropped to $582 million in the most recent quarter from $614 million in Q3 2015.

“While returns from our high-quality fixed income portfolio declined in line with our expectations due to the continued low interest rate environment, returns from our non-fixed income portfolio improved from recent quarters and were comparable to the prior year quarter,” stated Alan Schnitzer, chief executive officer of Travelers, in a release.