What Key Factors Drove Travelers’ Q4 And Full-Year Results?

by Trefis Team
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The Travelers Companies, Inc (NYSE:TRV) released its Q4 results on January 22, with a fourth quarter underlying combined ratio of 91.1% and consolidated combined ratio of 97.5%. Despite the lowest quarterly underlying combined ratio since 2016, catastrophe losses remained significant to the point of reducing Q4 2018 consolidated combined ratio by 8.8%.

Consistent with the overall strategy to boost premiums and improve productivity and efficiency, net earned premiums increased by 5% similar to last year and total claims increased by 4%, much slower than last year. Retention and renewal premium charges for three business segments were about at 85% and 5%, respectively.

Catastrophe Losses

Catastrophe losses for the quarter were $610 million, of which $450 million were related to the California wildfires and $158 million from Hurricane Michael. In response to high catastrophe losses in recent years, the company plans to update its actuarial models giving more weight to recent years and higher expected losses.

Business Insurance

The net written premiums grew by 5% to $15 billion in 2018. On the other hand, earnings were impacted by higher commercial auto losses. As explained by management, the higher losses in commercial auto were attributed to increased attorney involvement and longer claim development patterns. Overall, there was a positive impact of business center initiatives that were taken during the year, with new business premiums of $561 million in 2018.

Bond and Specialty

The net written premiums for Bond and Specialty grew by 7% to $2.52 billion in 2018. The yearly underlying combined ratio improved to 79.4% from 83.2% in 2017, on account of higher underwriting income and prior year development.

Personal Insurance

Personal Insurance net written premiums grew by 6.6% to $10.22 billion in 2018. The yearly underlying combined ratio saw a 50-basis point improvement over last year to 91.0% in 2018.


We currently have a price estimate of $125, which is about in line with the market price. You can use our interactive dashboard to modify key drivers and see how they impact Travelers’ valuation.

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