Insurance giant Travelers (TRV 0.57%) grew net income and net written premiums in the first quarter of 2024, but an unusually high amount of catastrophe losses hurt results. Here's a summary of the company's quarterly filing.

Higher earnings but a $712 million setback

Travelers reported net income of $1.12 billion for the first quarter of 2024, a 15% increase from the same period last year. Diluted earnings per share grew 16% to $4.80, up from $4.13 in Q1 2023. The higher growth rate in earnings per share was driven by the impact of share repurchases in recent periods. The company's total revenue rose to $11.23 billion, a 16% increase from $9.70 billion in the prior year quarter.

Travelers' combined ratio, a key measure of underwriting profitability, improved by 1.5 percentage points to 93.9% compared to the same period a year ago. This improvement was primarily due to improved underlying underwriting margins.

One significant setback in the quarter was a 33% increase in pre-tax catastrophe losses, from $535 million a year ago to $712 million in this year's first quarter. Management primarily blamed the increase on "severe wind and hail storms in the central and eastern regions of the United States."

Net investment income, an important contributor to Travelers' overall results, increased 28% to $846 million in the first quarter. This was driven by higher returns from the company's fixed maturity investments as well as its non-fixed income portfolio. The insurer generated strong operating cash flow of $1.46 billion, a significant increase from $1.01 billion in Q1 2023.

Each segment sees underwriting improvement

In the Business Insurance segment, net written premiums grew 9% to $5.60 billion. The segment's underlying combined ratio improved to 93.3%, reflecting higher business volumes and earned pricing.

In Bond & Specialty Insurance, net written premiums increased 6% to $943 million. The segment's underlying combined ratio deteriorated slightly to 84.5% due to higher general and administrative expenses.

Personal Insurance net written premiums rose 9% to $3.64 billion, with the underlying combined ratio improving a substantial 6.8 percentage points to 96.9%, benefiting from earned pricing increases in both auto and homeowners lines.

Travelers increases its dividend

Travelers maintained a strong capital position, with a debt-to-capital ratio of 24.3% at the end of the first quarter, within the company's target range of 15% to 25%. Excluding net unrealized investment losses, the debt-to-capital ratio was 21.8%.

The company returned $620 million of capital to shareholders through $388 million of share repurchases and $232 million in dividends. Travelers also increased its regular quarterly dividend by 5% to $1.05 per share.

Economic challenges still persist

Travelers noted ongoing challenges related to elevated industrywide loss costs in personal auto and the potential for higher inflation to impact claims severity. However, management believes that Travelers' strong underwriting discipline, pricing actions, and investment strategy position the company well to navigate these headwinds.