Travelers cedes more cyber premium to reinsurers from 1 October

Travelers has increased the proportion of cyber business ceded to its quota share reinsurers, reducing its net written premiums while leaving expected earnings broadly unchanged, according to executives.

Daniel Frey, Travelers' chief financial officer, said the change took effect on 1 October. It will reduce net written premiums by about $165m in the fourth quarter and about $230m across 2027, mainly in the Bond and Specialty segment.

"We expect the impact on bottom line earnings to be de minimis in both years," Frey told the insurer's third-quarter earnings call on 16 October, according to Reinsurance News.

Jeffrey Klenk, president of Bond and Specialty Insurance, said cyber has always been one of the insurer's most heavily reinsured lines. Its book is weighted towards middle market and Main Street businesses.

"A substantial majority of our limits are at $1 million or less. Those accounts that are above that are predominantly at $5 million or less," Klenk said, before accounting for the reinsurance protection.

An analyst asked whether private insurers could continue to underwrite cyber or whether a federal backstop would be needed. Chief executive Alan Schnitzer said active discussions were taking place but did not take a position on the outcome.

Klenk described cyber as one of the most important topics facing customers. He said the exposure remained dynamic and that advanced AI models were adding to it.

Reinsurance News also reported that Travelers uses continuous monitoring from its acquisition of cyber managing general underwriter Corvus Insurance to help policyholders patch vulnerabilities.

Travelers reported third-quarter net income of $1.917bn, or $9.04 per diluted share. Core income was $1.947bn, or $9.18 per diluted share.

Its combined ratio was 86.8% and its underlying combined ratio was 84.1%. Net written premiums reached $11.48bn, compared with $11.473bn in the prior-year quarter.

The increased cession gives cyber reinsurers a larger share of Travelers' premium from 1 October. The figures supplied by Frey quantify the premium transferred, but Travelers expects little effect on bottom-line earnings.

The structure also sits alongside the insurer's limit management and monitoring. Travelers is keeping most limits at $1m or less, using reinsurance on top and helping policyholders address vulnerabilities during the policy period.

Related coverage: MS Amlin says AI tool will halve reinsurance wording review time and Allphins says reinsurers are checking accumulation before they bind.

Sources

• Travelers: Third quarter 2026 results
• Reinsurance News: Travelers increases ceded percentage to cyber quota share reinsurance

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