Travelers Companies NYSE: TRV reported third-quarter 2026 core income of $1.95 billion, or $9.18 per diluted share, as strong underwriting profitability across all three insurance segments and record investment income supported results.
Chairman and Chief Executive Officer Alan Schnitzer said the insurer generated a 22.1% core return on equity during the quarter and a 24.1% core return on equity over the trailing four quarters. Pre-tax underwriting income was $1.4 billion, while the reported combined ratio improved to 86.8% and the underlying combined ratio was 84.1%.
“It was another in a run of successful quarters with very strong underwriting performance across all three segments and a record result from our investment portfolio,” Schnitzer said.
Investment Income, Capital Returns and Reserve Development
After-tax net investment income increased 7% from a year earlier to $908 million, surpassing $900 million in a quarter for the first time, according to Chief Financial Officer Dan Frey. The increase reflected higher invested assets, higher average yields on fixed maturities and a strong result from non-fixed-income investments.
Travelers expects after-tax fixed-income net investment income of about $875 million in the fourth quarter, bringing its projected 2026 total to $3.3 billion. For 2027, the company expects fixed-income net investment income to exceed $3.6 billion, beginning at roughly $875 million in the first quarter and rising to about $965 million in the fourth quarter.
Frey said new-money rates on third-quarter purchases were approximately 120 basis points above the yield embedded in the company’s existing portfolio. Higher interest rates during the quarter increased Travelers’ after-tax net unrealized investment loss to $6.4 billion at Sept. 30, from $2 billion at June 30. He said the unrealized loss was driven by interest rates rather than credit quality and does not alter the company’s approach of generally holding fixed-income securities to maturity.
Travelers returned $1.8 billion to shareholders during the quarter, including $1.5 billion in share repurchases and $261 million in dividends. Since the beginning of 2025, the company has returned $8 billion through repurchases and retired 12% of the shares outstanding at that time, Schnitzer said.
Adjusted book value per share was $172.47 at quarter-end, up 9% from year-end and 15% from a year earlier. Operating cash flow totaled $3.9 billion in the quarter and $8 billion year to date. In July, Travelers issued $750 million of five-year debt at a 4.95% rate.
Catastrophe losses were $538 million before tax, primarily from tornado and hail events in the central United States. The company also reported $234 million of pre-tax favorable prior-year reserve development across all three segments. Business Insurance recorded a $295 million asbestos charge from its annual review, but produced $336 million of favorable development excluding asbestos.
Business Insurance Posts Record Segment Income
Business Insurance reported record third-quarter segment income of $1.04 billion. Net written premiums reached a third-quarter record of $5.9 billion, up 4% domestically after adjusting for the sale of Travelers’ Canadian business. Excluding property, domestic net written premiums rose 6%.
The segment’s combined ratio improved two points to 90.9%, while its underlying combined ratio was 88.9%. President Greg Toczydlowski said Travelers continued to reduce national property writings where pricing and policy terms did not meet its return objectives.
- Renewal premium change was 4.1% overall and 7% excluding property.
- Retention was 86%, with stable or higher retention in every line.
- New business reached $699 million, up 4% from the prior-year quarter.
- Middle-market renewal premium change was 5.4%, with retention of 89% and new business up 10% to $431 million.
- Select business renewal premium change was 7.8%, while new business rose 3% to $139 million.
Toczydlowski said predictive models, external data sources such as aerial imagery and proprietary claim information were supporting risk selection, pricing segmentation and property underwriting decisions.
Bond & Specialty Growth Accelerates
Bond & Specialty Insurance generated record segment income of $309 million and a combined ratio of 77.3%. Net written premiums rose 12% to $1.2 billion.
In domestic management liability, retention was 89%, renewal premium change improved sequentially to 3.8%, and new business increased 18% from the prior-year quarter. The surety business posted 21% net written premium growth, which President Jeff Klenk attributed largely to production from premier contractors participating in major public and private infrastructure projects, along with new customer relationships.
Frey also said Travelers increased the percentage of cyber business ceded through a quota-share reinsurance arrangement effective Oct. 1. The change is expected to reduce fourth-quarter net written premiums by about $165 million and full-year 2027 premiums by roughly $230 million, primarily in Bond & Specialty, with a de minimis expected effect on earnings.
Personal Insurance Maintains Strong Profitability
Personal Insurance reported segment income of $706 million, supported by underlying underwriting income and favorable prior-year reserve development. The segment’s combined ratio was 83.5%, while its underlying combined ratio improved one point from a year earlier to 76.7%.
Net written premiums were $4.4 billion as pricing moderated while retention remained solid. President Michael Klein said homeowners new-business premium increased year over year for a third consecutive quarter as Travelers deliberately deployed property capacity.
Auto’s combined ratio was 87.1%, including favorable prior-year development, and its underlying combined ratio was 87.3%, an improvement of one point from the prior-year quarter. The result included an approximately 1.5-point benefit from re-estimating prior quarters in the current year. Klein cautioned that fourth-quarter auto underlying loss ratios have historically run five to six points above the average of the first three quarters because of winter weather and holiday driving.
In auto, retention was 81% and renewal premium change was slightly negative. In homeowners and other, retention was 85%, while renewal premium change continued to moderate amid strong profitability and replacement costs that were generally aligned with insured values.
Innovation, Claims and Market Outlook
Schnitzer said Travelers is investing in technology, artificial intelligence and claim strategies intended to address legal system abuse and rising liability loss costs. The company has developed a digital claims-resolution tool for unrepresented claimants, which had engagement from more than 80% of offered claimants in a pilot, he said. Travelers is also using AI to help claims professionals analyze large files, identify issues and provide more detailed loss information to underwriters.
During the question-and-answer session, Schnitzer said the overall commercial pricing environment was “stable” and that loss trends, including social inflation, remained in line with company expectations. He reiterated Travelers’ view that its current level of underlying underwriting income has durability, while noting the figure could move higher, lower or remain flat in 2027.
Management also said it expects its full-year 2026 expense ratio to come in slightly below 29%, with a similar level anticipated for 2027. Frey said stronger underwriting profitability has increased variable costs such as profit sharing and contingent commissions, an outcome the company was willing to accept given its margin performance.
About Travelers Companies (NYSE:TRV)
Travelers Companies, Inc is an insurance provider that offers property and casualty coverage to individuals, businesses and organizations. The company operates through three primary segments: Personal Insurance, Business Insurance, and Bond & Specialty Insurance.
Its products and services include automobile and homeowners insurance, workers' compensation, commercial property and casualty coverage, general and professional liability insurance, surety and fidelity bonds, and specialized insurance solutions for industries and businesses with complex risks.
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