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Travelers Crushed Earnings Forecasts and Is Now Cutting Some Car Insurance Rates. Is the Insurance Price Spike Over?
- Travelers' Q3 2026 core EPS was $9.18, versus about $7.25 expected. Revenue was $12.41 billion.
- Its combined ratio was 86.8%, meaning it paid out about 87 cents in claims and costs for every dollar of premium. The underlying ratio was 84.1%.
- Catastrophe losses were $538 million before tax, mostly from tornadoes and hail in the central US.
- Travelers took about 10 auto rate decreases in the quarter, in the low single digits. Auto renewal pricing was slightly negative.
- It returned $1.8 billion to shareholders, including $1.5 billion of buybacks.
What happened
The Travelers Companies, one of the largest US property and casualty insurers, reported third-quarter results last week. It beat forecasts by a wide margin.
| Measure | Q3 2026 |
|---|---|
| Core EPS | $9.18 (forecast about $7.25) |
| Revenue | $12.41 billion (forecast about $11.31 billion) |
| Core income | $1.95 billion |
| Core return on equity | 22.1% |
| Combined ratio (reported) | 86.8% |
| Underlying combined ratio | 84.1% |
| Catastrophe losses (pre-tax) | $538 million |
| Net written premiums | $11.5 billion |
| Share buybacks | $1.5 billion |
Source: Travelers Q3 2026 earnings call via Investing.com.
The underlying combined ratio has now been below 86% for nine straight quarters. In plain English, Travelers is making a lot of money on the policies it writes, before even counting what it earns by investing customers' premiums.
The part drivers will care about
After years of steep increases, car insurance pricing at Travelers has turned:
- Auto renewal premium change was slightly negative in the quarter.
- The company took about 10 auto rate decreases, in the low single digits.
Insurers cut rates when their auto business becomes very profitable and competition picks up. That doesn't mean everyone's bill drops. Your premium depends on where you live, your car and your record. But it's a sign the industry-wide price spike of 2023-2025 has run its course, at least for some carriers.
Homeowners pricing is still rising, but more slowly. New homeowners business grew for the third straight quarter. CEO Alan Schnitzer called the overall pricing environment "stable" and said he wasn't ready to call a bottom in property pricing.
Why the stock barely moved
Despite beating forecasts by about 25%, Travelers shares were roughly flat to slightly higher in early trading, according to reports, and slipped at one point after the release. Investors were weighing the strong quarter against the prospect of lower prices ahead. When an insurer starts cutting rates, future profit growth usually slows.
There was also a $295 million asbestos-related charge in Business Insurance, an old liability that keeps resurfacing for long-established insurers.
Using AI to cut costs
Schnitzer said Travelers is using AI in claims handling and underwriting and expects its technology spending to "bend the loss cost curve." For insurers, even a small drop in claims costs goes straight to profit.
What it means for you
As a driver: It's a good time to shop your policy. When large carriers start cutting rates, rivals often follow. Get quotes before your renewal, and check bundling and telematics discounts.
As a homeowner: Expect smaller increases, not cuts, especially in storm and wildfire regions.
As an investor: Insurers are cash machines in good years. Travelers says it has returned $8 billion through buybacks since the start of 2025 and retired 12% of its shares. Learn how that boosts per-share earnings in Share Buybacks Explained.
What to watch next
- Other insurers' results this week and next, especially auto-focused carriers.
- Hurricane and wildfire losses in the fourth quarter.
- Auto rate filings in large states.
Frequently asked questions
How did Travelers do in Q3 2026?
Travelers reported core earnings of $9.18 per share for the third quarter of 2026, well above the roughly $7.25 analysts expected, on revenue of $12.41 billion. Core income was $1.95 billion and its combined ratio was 86.8%.
Are car insurance rates going down in 2026?
For some drivers, possibly. Travelers said auto renewal pricing was slightly negative in the third quarter and that it took about 10 auto rate decreases in the low single digits. That reflects much better profitability after years of large increases. Your own premium still depends on your state, insurer, car and driving record.
What is a combined ratio in insurance?
The combined ratio is claims plus expenses divided by premiums earned. Below 100% means the insurer makes an underwriting profit. Travelers' 86.8% means it kept about 13 cents of every premium dollar before investment income.
Are home insurance prices still rising?
More slowly. Travelers said homeowners renewal premium increases continued to moderate in the third quarter. Catastrophe losses from storms, wildfires and hail remain the main reason home insurance stays expensive in high-risk areas.
Why do insurance companies buy back so much stock?
Highly profitable insurers generate more capital than they need to back their policies. Travelers says it has returned $8 billion through buybacks since the start of 2025 and retired 12% of its shares, which raises earnings per share for remaining shareholders.
Primary sources
Data & disclaimer: This article is for educational purposes only and is not financial or investment advice. Figures reflect data available as of Oct 20, 2026, and conditions change — always confirm current pricing, rates and rules with the provider before you act. Written by Elizabeta Dimoska. See our editorial standards and disclosure.
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