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Travelers execs see insurtech investments as good use of excess capital

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Travelers execs see insurtech investments as good use of excess capital

Travelers Cos. Inc. has been working with Amazon and other smart-home device providers to quantify the influence of the use of connected home devices on homeowners' loss experiences.

Michael Klein, executive vice president and president of personal insurance, during a third-quarter earnings call declined to provide exact details on how favorable the impact would be, but he told investors and analysts that Travelers will increase the discount on its latest Quantum Home product to 5% for policyholders who use such devices. Travelers last week announced a partnership with Amazon to offer smart-home kits and insurance through an Amazon digital storefront. The insurer is also offering a free Amazon Echo Dot to certain home insurance policyholders.

CEO Alan Schnitzer said Travelers has deliberately avoided creating a fund or allocating a certain dollar amount to investments in insurtech for competitive reasons but noted that the company viewed those investments as worthwhile.

"The fact of the matter is, we generate a lot of excess capital. And our objective is to reinvest that money anytime ... we think we can create shareholder value with it," Schnitzer said.

Travelers executives also said they are still assessing losses due to Hurricane Michael, which did not factor into third-quarter results. They will, however, have an impact on the fourth quarter in both personal and commercial lines across multiple states.

"At this point, we expect the losses from this storm to be significant in terms of meeting the threshold for inclusion and the schedule of catastrophes in our quarterly SEC filings, but manageable relative to the fourth quarter overall," CFO Daniel Frey said.

The insurer recorded a total combined ratio of 100.6% in the third quarter, an improvement from the 109.8% posted in the year-ago period. California's Carr wildfire and Hurricane Florence added 11 points to the personal lines business' combined ratio, Klein noted.