Summary of Travelers’ Q2 2022 earnings call

Travelers hosted its Q2 2022 earnings call on July 21st.

The highlights:

  • Core income for the second quarter was $625 million and core return on equity was 9.3%.
  • Travelers reported that business insurance premiums grew by 10%. Renewal premium change was 10.3%. That’s the fourth highest quarterly renewal premium change going back more than 15 years. Renewal premium change included renewal rate change of 4.9%.
  • Retention remained at 86% – a sign of a rational and stable pricing market.
  • In Bond & Specialty Insurance, net written premiums increased by 13%. Retention increased to 88%.
  • In Personal Insurance, net written premiums increased by 12%.
  • Generated net investment income of $595 million after tax for the quarter. More than 90% of its $80 billion portfolio is invested in fixed income securities.
  • Second quarter results include $746 million of pretax catastrophe losses. Travelers accumulated $935 million of qualifying losses toward the aggregate retention of $2 billion on its property aggregate catastrophe XOL treaty.
  • Reported an underlying combined ratio of 92.8%.
  • Second quarter expense ratio is down to 29%.
  • Business Insurance income was $666 million, up about 4% from the prior year. Combined ratio of 92.4% was about 1 point better than the second quarter of 2021. “To sum up, Business Insurance had a terrific first half of the year. We continued to deliver strong results while investing in capabilities to enhance our data and analytics leadership, digitize the commercial transaction and develop sophisticated and relevant products to drive profitable growth for the future.”
  • Personal Insurance reported a combined ratio of 111%. In automobile, the second quarter combined ratio was 104.3% and the underlying combined ratio was 101.8%, an increase of about 10 points relative to the prior year quarter. The increase reflects elevated vehicle replacement and repair costs. In Homeowners and Other, the second quarter combined ratio was 118% – primarily due to severe wind and hail events across several regions in the US.