New York, NY – The Travelers Companies, Inc. recently reported net income of $975 million, or $4.13 per diluted share, for the quarter ended March 31, 2023, compared to $1.018 billion, or $4.15 per diluted share, in the prior year quarter. Core income in the current quarter was $970 million, or $4.11 per diluted share, compared to $1.037 billion, or $4.22 per diluted share, in the prior year quarter.
Core income decreased primarily due to higher catastrophe losses and lower net favorable prior year reserve development, partially offset by a higher underlying underwriting gain (i.e., excluding net prior year reserve development and catastrophe losses) and higher net investment income. The underlying underwriting gain in the current quarter included a one-time tax benefit of $211 million. This tax benefit is included in the income tax line in the Consolidated Statement of Income and accordingly does not impact the combined ratio or the underlying combined ratio. Net realized investment gains in the current quarter were $6 million pre-tax ($5 million after-tax), compared to net realized investment losses of $23 million pre-tax ($19 million after-tax) in the prior year quarter. Per diluted share amounts benefited from the impact of share repurchases.
“We are very pleased to report excellent results for the quarter, particularly in light of the high level of severe weather activity across the United States,” said Alan Schnitzer, Chairman and Chief Executive Officer. “Core income for the quarter was $970 million, or $4.11 per diluted share, generating core return on equity of 14.5%. Core income benefited from record net earned premiums of $8.9 billion, up 10% compared to the prior year period, an excellent underlying combined ratio of 90.6% and a one-time tax benefit. Catastrophe losses in the quarter were elevated at $535 million pre-tax ($422 million after-tax). Our high-quality investment portfolio generated after-tax net investment income of $557 million.
“Our best-in-class marketplace execution delivered 12% growth in net written premiums this quarter to a record $9.4 billion, with all three segments contributing. In Business Insurance, we grew net written premiums by 15% to $5.2 billion. Renewal premium change in the segment remained historically high at 9.6%, while retention remained very strong at 87%. Record new business of $639 million was up 17%. In Bond & Specialty Insurance, net written premiums increased slightly, with excellent retention of 90% and new business growth of 25% in our management liability business. Surety net written premiums were once again strong. Given the attractive returns, we are very pleased with the strong production results in both of our commercial business segments. In Personal Insurance, top-line growth of 12% was driven by higher pricing. Renewal premium change increased to 20.2% in our Homeowners and Other business and 13.9% in our Auto business.
“Our results, along with our strong balance sheet, enabled us to return $680 million of excess capital to our shareholders this quarter, including $462 million of share repurchases. In recognition of our strong financial position and confidence in the outlook for our business, I am pleased to share that our Board of Directors declared an 8% increase in our quarterly cash dividend to $1.00 per share, marking 19 consecutive years of dividend increases with a compound annual growth rate of 8% over that period. The Board also authorized an additional $5 billion of share repurchases.
“The year is off to a terrific start with another strong quarter of profitability and growth driven by our underwriting and investment expertise. At the same time, we continue to successfully execute on our innovation strategy, which has contributed to significantly accelerated premium growth, superior returns and industry low volatility over the past decade. With the best talent in the industry, we remain well positioned for success through a wide range of economic and operating environments and confident in our ability to continue to create shareholder value over time.”
The complete results release is available here: Travelers First Quarter 2023 Results