The Travelers Companies reported net income of $396 million for the third quarter compared to $709 million in the prior year quarter.
Core income in the current quarter was $378 million compared to $687 million in the third quarter for 2018. The insurer said its core income decreased primarily due to net unfavorable reserve development in commercial general liability, commercial auto and asbestos claims that the insurer attributed primarily to a challenging tort environment.
Net written premiums increased by 7% to a record $7.6 billion, with each business segments contributing.
Net realized investment gains were $23 million pre-tax compared to $29 million pre-tax in the prior year quarter.
“Despite the impacts of an increasingly challenging tort environment facing our industry and higher non-catastrophe weather-related losses, our underlying underwriting results were solid,” commented Alan Schnitzer, chairman and chief executive officer, in prepared remarks.
He said the quarter saw 4% growth in earned premiums and “continued disciplined and thoughtful expense management.”
However, the quarter’s earnings were affected by net unfavorable reserve development in Business Insurance. Schnitzer said that while workers’ compensation reserves continued to develop favorably, asbestos, general liability and commercial auto reserves developed unfavorably primarily due to the more challenging tort environment. The Business Insurance reserves included a $220 million increase in asbestos reserves, compared with a $225 million increase in the prior year quarter.
Net favorable prior year reserve development also occurred in Personal Insurance and Bond & Specialty Insurance. Catastrophe losses primarily resulted from wind and hail storms in several regions of the United States and Hurricane Dorian.
The combined ratio of 101.5% increased 4.9 points due to net unfavorable prior year reserve development.
In Business Insurance, net written premiums increased 7%.
In Bond & Specialty Insurance, net written premiums increased by 13%.
In Personal Insurance, net written premiums increased by 7%, with Agency Auto up 3% and Agency Homeowners up 11%.
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