Travelers Companies Q3 EPS Misses Consensus On Mounting Catastrophe Losses

The Travelers Companies Inc TRV reported Q3 2023 revenues of $10.64 billion, up 14% Y/Y, beating the consensus of $10.33 billion.

Net written premium rose 14% Y/Y to $10.49 billion on growth across Business Insurance (+16% Y/Y) and Personal Insurance (+14% Y/Y) segments and Bond & Specialty Insurance (+4% Y/Y).

Core income declined 14% Y/Y to $454 million due to higher catastrophe losses ($850 million pre-tax) resulting from several severe wind and hail storms in multiple states. 

Core EPS of $1.95, down 11% Y/Y, missed the consensus of $2.99.

Combined ratio for the quarter was 101.0%, up from 98.2% in Q3 2022, while underlying combined was 90.6%, compared to 92.5% a year ago.

Alan Schnitzer, Chairman and CEO said, "In Business Insurance, we grew net written premiums by 16%. Renewal premium change in the segment was very strong at 12.9%. Renewal rate change accelerated sequentially to 7.9%, while retention remained historically high at 87%. New business was strong and higher broadly across the segment. In Bond & Specialty Insurance, we grew net written premiums to a milestone $1 billion, achieved 91% retention of our high-quality management liability business and grew net written premiums in our industry-leading surety business by 13%."

"Given the attractive returns, we are very pleased with the strong production results in both of our commercial business segments. In Personal Insurance, 14% top-line growth was driven by higher pricing. Renewal premium change was 19.4% in our Homeowners and Other business and increased to a record high 18.2% in our Auto business."

Buyback: The company repurchased 0.6 million shares for $101 million. As of September 30, Travelers had a capacity worth $6.105 billion remaining under its share repurchase authorizations. 

Dividend: Travelers Companies declared a dividend of $1.00 per share, payable on December 29, 2023, to shareholders of record as on December 8, 2023.

Price Action: TRV shares are trading higher by 1.26% at $171.49 premarket on the last check Wednesday.