Travelers Q4 Profit Jumps 5% to $1.04B, Underwriting Gain Rises

January 22, 2015

  • January 23, 2015 at 8:42 am
    lonestar says:
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    Let’s see where Travelers profits and GWP are a year or two from now. After they terminated several agents in 2014, all that premium in force, and it is a large number, will take 18-24 months to be non renewed and be off the books. Agents, and customers too, have long term memories when these actions are taken. And, many agents are actively rolling their books to other companies. Some companies, such as Safeco, actually have a book roll department and are rolling the books for the agent. Travelers is no longer very well thought of in the agency channel. Attention Travelers investors: Be wary of what can happen in the very near future. Unless all companies become as hostile toward agents as Travelers, I don’t think Travelers will continue to see GWP growth and profits as they saw in 2014. When companies become hostile toward agents, the results of these actions usually take 2-3 years to finally show on the bottom line.

    • January 23, 2015 at 10:09 am
      Yogi Polar Berra says:
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      What were the bottom line results of books from the agents dropped? If you can only consider the premiums, perhaps it is best that the Travelers no longer takes their business?

  • January 23, 2015 at 10:42 am
    lonestar says:
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    Travelers has stated that some of the agents were writing customers that Travelers does not want. If Travelers sets the pricing, and the Travelers policy is the best value, best coverage, and also the best rate for a client, how is that the agent’s fault? This is actually one of the very reasons one of the regional agency managers quit Travelers in the last 60 days. In his mind, it was insane for Travelers to terminate agents for quoting and offering the Travelers product to customers that turned out to not be profitable to Travelers. Keep in mind, Travelers sets the rate according to the risk, based on their own insurance scoring system. So if departing Travelers managers agree that this is lunacy, what does that tell you? Does Travelers think they are going to write a more profitable customer through their direct sales channel? Are they going to terminate their direct sales channel when it is found out the direct channel is writing unprofitable business? If you do not see this irony, then how long have you been a company rep?

  • January 26, 2015 at 10:46 am
    blu lightning says:
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    I’ve seen many postings on here and elsewhare about how agents feel about Travelers, but at the end of the day, what they are doing works. They turn in record profits quarter after quarter in part to things like their direct channel as well as the reduced commissions they offer. They are growing too while many of us are treading water. They simply grow and make money.
    I can only figure that agents are ok with this regardless of what they say in forums like this.
    I’m not going to say whom I work for, but suffice it to say, its a carrier that supports the IA channel exclusively and pays commissions between 1.5 to 2x what Travelers offers, but those higher commission levels don’t bring in either more business or better business. We’ve been reluctant to reduce our commissions in large part from feedback from our agents at our council meetings, but unfortuately that may have to change. Our expense ratio is far higher than Travelers and the largest component is in commission expense.
    For us to be competitive, I think that we are going to have to reduce our commissions to lower our expense ratio and offer pricing similar to Travelers.
    Its sad as both of my parents worked on the agency side and I understand whats involved in operating a small business like an insurance agency, but for us to compete with the likes of Travelers, we are, however reluctantly going to have to bring our expenses into line with theirs later this year.

    • January 26, 2015 at 12:41 pm
      Libby says:
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      Travelers has been consistently posting record profits while at the same time laying off hundreds of people. Their only concern is for their shareholders and not their customer, which is the Independent Agent. WE choose where we place OUR business and lately we have not been choosing Travelers. They can continue to squeeze expenses, lay off employees, and slash commissions in order to provide a healthy return to their shareholders. We will continue to place good business elsewhere.

    • January 26, 2015 at 7:49 pm
      agent14 says:
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      blu, who in the world pays 1.5 to 2 times what Travelers pays? Where do I sign up! That would mean 18 to 24% commission on auto, and 21 to 28% commission on home. When you are that far higher on commission, that will certainly affect your bottom line. However, I have yet to find anyone who can explain to me how by Travelers reducing their auto commissions by 3%, which equates to about a $30 per year lower auto rate for a consumer, if an auto policy annual cost is $1,000. Prior to Quantum 2.NO!, I was not placing clients with other carriers instead of Travelers over a $30 difference. Travelers was hundreds of dollars higher. So don’t try to convince me that by Travelers is going to do a 180 on auto profitability and suddenly be enable to really go after the market place by saving $30 on rate by reducing the agent’s take by 3%. Which, by the way, is reducing the agent’s portion by 20%. If Travelers feels they need to cut commissions, I am fine with that AS LONG AS they don’t feel they have the right to instill a quota. I have a big problem with them doing both. And, just because a company sells a policy direct to a consumer, this does not save the company all of the dollars that would have paid to the agent. With Obamacare, employee benefits, cost of training and turnover, the call centers still cost the companies plenty of dough to operate. I am not saying it costs as much as an agent, I am just saying that they are not saving all of the costs. Look at Esurance and other direct writers. Their data show that their typical client is much less profitable vs. and agent written customer. So I am not yet convinced that selling direct is a money windfall for the companies. I still agree with the other poster above: All investor companies, mutual fund managers, etc: Beware and watch Travelers GWP in about 1.5 to 2 years. I know several agents that are rolling their books to other companies from Travelers. We will see where all the dust settles down the road. If all the other companies don’t follow Travelers in becoming hostile toward agents, then Travelers has a problem.

      • January 27, 2015 at 11:01 am
        Libby says:
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        Considering a well-run insurance company has an expense ratio of 35%+ (depending on the line) saving 15% by going direct is not necessarily a smart move. Especially when carriers have been dumping alot more of the service on the agent. I would cost them AT LEAST another 15% to service their accounts with payroll, overhead, and benefits. We’re a bargain. They’re just too greedy to see that.



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