Travelers remains open to M&A following strong Q2

Travelers reported $2.2 billion in second-quarter core income, or $10.04 per diluted share, as underwriting gains and higher investment income contributed to a core return on equity of 24.9%.

Net written premiums reached $11.5 billion. Business Insurance generated $6 billion in net written premiums, up 5% after adjusting for the sale of the company’s Canadian business. Personal Insurance reported segment income of $827 million and a combined ratio of 79.5%. Retention was 82% in auto and 85% in homeowners and other.

During the company’s July 17 earnings call, Chairman and CEO Alan Schnitzer said Travelers remains interested in strategic acquisitions and would be able to finance an attractive opportunity.

“We are highly attuned to M&A opportunities and confident that whenever attractive M&A opportunities come around, that we’ll find a way to finance them. So our view of M&A doesn’t change relative to the capital—excess capital that we have,” Schnitzer said.

Travelers’ most recent acquisition was cyber insurer Corvus Insurance, purchased for approximately $435 million in November 2023. Earlier deals include Trov in 2022, InsuraMatch in 2020, Zensurance in 2018 and Simply Business for approximately $490 million in 2017.

Bottom Line: Travelers has regularly used acquisitions to add digital distribution and underwriting capabilities. Its last deal, the $435 million acquisition of Corvus, closed in January 2024, meaning Travelers has now gone about two and a half years without another announced acquisition.