Travelers TRV -2.14% Cos. posted a 2% increase in fourth-quarter net income to hit a company record, with strong growth in premium volume contrasting with a year-earlier period hard-hit by the Covid-19 pandemic’s disruptions to the economy.
Travelers, one of the nation’s biggest sellers of insurance to businesses and a top consumer-car insurer, reported net income of $1.33 billion, up from $1.31 billion. Its closely watched core income, which excludes realized capital gains and other items judged nonrecurring items, also was up 2%, to $1.29 billion from $1.26 billion.
But net written premiums surged 10% to $8 billion as the insurer benefited from an economy vastly different from the year before, when business shutdowns and other disruptions caused by the Covid-19 pandemic were widespread across the U.S.
In the most-recent fourth quarter, premium from renewing business surged 9.2%, Travelers said, reflecting higher insured amounts and rate increases. In addition, new business was up 16% year-over-year.
The carrier’s big unit for insuring business clients reported a 22% gain in segment income to $867 million, while its business of selling car- and home-insurance policies to households posted a 28% decline to $327 million. The worsened result for the personal-insurance segment reflected a tough comparison with the year-earlier period, when mileage was depressed across the U.S. as a result of the pandemic, and wreck volume was down sharply industrywide.
In recent quarters, Americans have returned to the roads, and mileage is returning in many parts of the country to or near pre-pandemic levels.
Travelers’ most-recent results also were aided by higher net investment income. While low interest rates have crimped interest income from the bonds dominating their investment portfolios, Travelers and other big insurers hold a small slice of alternative investments that have been performing well in recent quarters. Travelers said its net investment income of $743 million increased 10%, primarily due to higher private-equity and real-estate partnership returns.
Travelers’ catastrophe costs, net of reinsurance, increased 7% to $36 million from $29 million. The most-recent damage included tornadoes that hit Kentucky and neighboring states and wildfires that destroyed suburban areas outside Boulder, Colo.
The company, part of the Dow Jones Industrial Average, is one of the first big property-casualty insurers to report quarterly earnings, and its results are watched closely as a bellwether for others.
Write to Leslie Scism at [email protected]
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