Travelers, a major insurance company, reported a significant drop in its financial performance for the first quarter of 2025, largely due to the devastating wildfires in California. The company recorded catastrophe losses of $2.266 billion from these fires, leading to a net income of $395 million. This is a sharp decline compared to the $1.123 billion net income reported in the same quarter last year.
In addition to the net income drop, Travelers’ core income also fell to $443 million, down from $1.096 billion in early 2024. Despite these setbacks, the company managed to offset some losses through better underwriting performance and gains from investments.
Travelers’ consolidated combined ratio, which measures the company’s profitability, rose to 102.5%. However, the underlying combined ratio improved by 2.9 percentage points, reaching 84.8%. The company reported a 32% increase in underlying underwriting income, totaling $1.583 billion before taxes. This was supported by net favorable prior year reserve development of $378 million, which helped cushion the financial impact of the wildfires.
Net investment income also increased by 10%, reaching $930 million before taxes. Operating cash flows for the quarter amounted to $1.360 billion. Travelers saw a 3% rise in net written premiums, totaling $10.515 billion. Business insurance premiums grew by 2%, while bond and specialty insurance increased by 6%. Personal insurance premiums rose by 5%.
Travelers’ chairman and CEO, Alan Schnitzer, emphasized the company’s ability to earn core income of $443 million, or $1.91 per diluted share, despite the catastrophe losses. He highlighted that strong underlying results and increased investment income helped offset the financial blow.
During this quarter, Travelers returned nearly $600 million in excess capital to its shareholders, including $358 million spent on share repurchases. The company also announced a 5% increase in its quarterly dividend, raising it to $1.10 per share.
As the company faces the financial fallout from the wildfires, it remains to be seen how these losses will shape its future strategies and affect investor confidence.