MW Travelers takes a hit from California wildfires, but still surprises with profit upside

By Ciara Linnane

An underwriting gain and higher investment income offset high catastrophe losses

Travelers Cos. Inc.'s stock rose 2% early Wednesday, after the property and casualty insurer's fiscal first-quarter earnings swept past estimates as an underwriting gain and higher investment income weighed against a rise in catastrophe losses.

"We are pleased to report a substantial profit for the quarter despite the devastating January California wildfires," Alan Schnitzer, chairman and chief executive, said in prepared remarks.

New York-based Travelers $(TRV)$ had net earnings of $395 million, or $1.70 a share, for the quarter to March 31, down from $1.123 billion, or $4.80 a share, in the year-ago period. Adjusted for one-time items, it had EPS of $1.91, well ahead of the 79-cent FactSet consensus.

Adjusted income fell to $443 million from $1.096 billion a year ago, weighed by an increase in catastrophe losses stemming from the California wildfires. Catastrophe losses came to $2.266 billion pre-tax after losses of $712 million a year ago.

Revenue rose 5% to $11.810 billion, while FactSet was expecting $10.841 billion. Net written premiums rose 3% to $10.515 billion, while FactSet was expecting $10.710 billion.

The company's underlying underwriting income rose 32% to $1.583 billion pretax. The FactSet consensus was for a loss of $524 million.

The company's combined ratio rose to 102.5% from 93.9% a year ago. The FactSet consensus was for a combined ratio of 105.0%..

The ratio is a metric that measures the profitability and financial health of an insurer. It's calculated by dividing the total of an insurance company's claim-related losses and expenses by the amount of premium income it earned.

The underlying combined ratio improved 2.9 points to 84.8%, while FactSet was expecting 87.1%.

Net investment income rose 84% to $930 million from $846 million.

"All three segments contributed to these terrific underlying results with strong and higher net earned premiums and excellent underlying profitability," Schnitzer said. "All three segments also contributed meaningful levels of net favorable prior year reserve development."

The business-insurance business, which offers property and casualty insurance to customers mostly in the U.S., delivered an underwriting gain of $195 million, down from $334 million a year ago. Net written premiums rose 2% to $5.7 billion.

Bond and specialty insurance delivered an underwriting gain of $170 million, up from $144 million a year ago. Net written premiums rose 6% to $999 million.

Personal insurance, which includes property and casualty coverage for individuals and households, including car and homeowners coverage, delivered an underwriting loss of $670 million, after a gain of $99 million a year ago. Net written premiums rose 5% to $3.8 billion.

The company raised its quarterly cash dividend by 5% to $1.10 a share.

The stock has gained 11.9% in the last 12 months, while the Dow Jones Industrial Average DJIA has gained 6.8%.

-Ciara Linnane

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 16, 2025 08:03 ET (12:03 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.