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Last week, insurance giant Travelers reported solid premium growth and a healthy underwriting profit in the first quarter, reinforcing the notion that premium increases will remain for the “foreseeable future,” according to Andrew McGee, an analyst at Third Bridge.
In the earnings call, Travelers CEO Alan Schnitzer said written premiums increased 8% from Q1 2023 to nearly $10.2 billion. Travelers also reported a 1.5-point YoY improvement in its combined ratio—a measurement of underwriting profitability—to 93.9%.
Travelers reported written premiums increases in each of its three main business segments: business insurance, bond and specialty insurance, and personal insurance.
Business insurance written premiums increased 9%, thanks in part to a “very strong” renewal premium increase of 10.6% in Q1, Schnitzer noted.
“The combination of strong pricing and retention reflects deliberate execution on our part and a marketplace that continues to be generally disciplined in the face of persistent headwinds,” he said.
Bond and specialty insurance net written premiums increased 6%, driven by a 15% uptick in written premiums in its surety business and “record new business” in its management liability business, Schnitzer said.
Personal insurance saw a 9% YoY increase in written premiums amid “continued strong pricing,” Schnitzer said. Renewal rates grew 16.6% on personal auto policies and 13.4% on homeowners’ policies.
McGee said the strong premium growth in each of Travelers’ business segments shows “the rate environment remains elevated.”
“Our experts have been saying rates will remain in this range for the foreseeable future due to the significant increase in repair costs for personal lines and social inflation continuing to drive claims higher,” McGee told CFO Brew in an emailed statement. Social inflation is a term that describes increased loss costs for insurance due to increasingly expensive legal settlements and growing jury verdicts.
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