Wildfire losses obscured what executives of Travelers described as outstanding underlying results for the insurer’s first quarter—
and looking ahead, the company is well-positioned to face the impacts of macroeconomic uncertainty, the chief executive said.
During a first-quarter earnings conference call to discuss results that included $395 million of net income, a 102.5 co
mbined ratio and 3% growth in net premiums to $10.5 billion, Travelers Chair and CEO Alan Schnitzer concluded his opening r
emarks by voluntarily answering a yet-to-be-asked question: How will economic uncertainty will impact Travelers for the rest of the year?
“It’s just a fraction of auto and property losses that are physical damage-related—and only a fraction of those are from materials that would be impacted by the tariffs.”
Alan Schnitzer, Travelers
“We are a market leader in a diversified portfolio of businesses, each with a strong value proposition to offer to our customers and distribution partners. Our underlying margins
are in great shape, and in each segment, we have attractive loss ratios and expense ratios that reflect years of strategic focus,” he said. In addition, a “thoughtfully manag
ed” investment portfolio can deliver “highly reliable returns including through periods of market stress,” he said, adding that a “a fo
rtress balance sheet featuring a strong capital base” also positions the comp
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any to travel “what feels like an uncertain macroeconomic road ahead.”
More directly responding to a specific question about the impacts of tariffs
on the personal and commercial lines businesses, Schnitzer focused in on personal auto and suggested the impact would be minimal and manageable.
“It’s just a fraction of auto and property losses that are physical damage-rel
ated—and only a fraction of those are from materials that would be impacted by the tariffs,” Schnitzer stated.
The CEO said the most likely impact for Travelers could be “a one-time impact to physical damage repair costs” affecting the priva
te passenger auto line. Assuming tariffs remain in place as announced, “we’d expect somewhere around a mid-single digit increase to [p
ersonal insurance] auto severity,” he said, stressing this would be a “one-time impact, not a slope impact.”
“From there, the impacts diminish pretty significantly,” for other lines, he said, also predicting that the actual impact on personal auto severity could be even lower.
“We think participants in the value chain will likely seek to mitigate the impact through some combination of advanced inventory
buildup, substitution of goods, reorganization of supply chain, lower tariff pass thro
ugh rates. [And] the actual impacts could be mitigated by other factors, for example, extended lives of cars on the road,” Schnitzer suggested.
Finally, he highlighted Travelers profit margins for personal auto. They’re in “a pretty good place, and if recent favorable loss trends persist, [then] we may be able to absorb w
hatever the impact is inside our loss picks,” he said..
“We’re prepared to watch and react to the extent that we need to,” he said, noting tha
t Travelers has the tools and capabilities see loss trends quickly and reflect them in pricing models.
For the personal auto line, Travelers reported a first-quarter 2025 combined
ratio of 83.4 on $1.9 billion of written premiums. While premiums were flat compared to first-quarter 2024, the auto combined ratio improved 11.2 points.