Travelers Shares Surge on New Business and Rate Increases

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 good growth numbers helped send Travelers shares up nearly 6% around midday.

Wall Street analysts noted that the company was continuing to push through single-digit premium-rate increases in its core unit of insuring businesses. The increases are down modestly from the third quarter, but pricing is still ahead of the carrier’s loss-cost trends, some noted. The carrier’s big unit for insuring business clients reported a 22% gain in segment income to $867 million.

Meanwhile, the unit that sells 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 in large numbers. Michael Klein, a Travelers executive vice president, said in an earnings call that, “broadly speaking in the quarter, we saw miles driven and claims frequency largely approaching pre-pandemic levels.”

He said data indicate “increases in distracted driving” tied to cellphone use, which is among factors playing into the higher year-over-year wreck activity. The biggest drivers of costs in replacing and repairing vehicles continue to be higher prices for used cars, labor and parts, he said.

Travelers has begun increasing car-insurance rates in some states and has requests for increases pending at state insurance departments in others. On the home-insurance side, Mr. Klein said Travelers is seeking rate increases, as well, to deal with higher labor and materials costs in rebuilding, and it is increasing customers’ coverage values to reflect the higher costs.

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]