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April 21, 2020

Travelers’ 1Q profits fall on higher catastrophe losses

Photo | Contributed Travelers Cos. has a major presence in downtown Hartford.
By HBJ Staff

Property-casualty insurer Travelers Cos. on Tuesday said its first-quarter profits fell 25% partially because of higher catastrophe losses, which included an $86-million charge associated with the COVID-19 crisis.

For the three months ended March 31, the New York-based insurer, which has a major presence in downtown Hartford, recorded net income of $600 million, or $2.33 a diluted share, down from $796 million, or $2.99 a share, in the same period last year.

Travelers posted revenue of $7.91 billion in the quarter, up 3% from $7.67 billion in the first quarter of 2019.

The insurer’s earnings last quarter fell short of Zacks Investment Research’s consensus earnings estimate of $2.88 per share.

Travelers said catastrophic losses in the first quarter rose to $333 million pre-tax vs. $193 million in the year-ago period. That was partly driven by some of the deadliest tornadoes the state of Tennessee has recorded in years. (Two tornadoes with winds up to 175 mph left at least 24 people dead this week in central Tennessee, according to CNN.) It also recorded a charge of $86 million pre-tax related to COVID-19 and economic conditions.

The hit from catastrophe losses was partially offset by a higher underlying underwriting gain, the insurer said.

An uptick in claims, such as expanding workers' compensation coverage or others to cover business interruptions as a result of the COVID-19 pandemic, could negatively impact the company's “financial position and/or liquidity," Travelers said in its first-quarter earnings report. 

The company said it could also be adversely impacted due to currency exchange fluctuations in the international financial markets, among other potential consequences of the health crisis.

“Although there are many uncertainties surrounding COVID-19’s impact on our global economy and on us, it has been in the most challenging circumstances that the strength of our AA-rated franchise and the value we provide to all of our stakeholders shine through,” Travelers CEO and Chairman Alan Schnitzer said in the earnings report.

Meantime, Travelers last month pledged $5 million to COVID-19 coronavirus relief efforts. That marks its largest-ever charitable donation to a crisis.

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