Travelers Posts Earnings Drop Amid Higher 'Catastrophic Losses’

Insurance giant Travelers  (TRV) - Get Free Report on Tuesday reported first-quarter earnings that rang in significantly below analysts’ forecasts amid an increase in what it called "catastrophic losses" related to natural disasters like tornadoes and snow storms, and also Covid-19.

The New York-based company said it earned $600 million, or $2.33 a share, down from $796 million, or $2.99 a share, a year ago. Adjusted earnings were $2.62 a share. Analysts polled by FactSet had been expecting per-share earnings of $2.85 a share.

Revenue came in at $7.91 billion, above the $7.67 billion posted a year ago and also above analysts’ forecasts of $7.4 billion. Net written premiums were $7.35 billion vs. $7.06 billion in the first quarter of 2019.

Catastrophic events including storms and other natural disasters were partially responsible for the lower year-on-year numbers, though the coronavirus pandemic also had an impact on earnings as the company prepped its books for potential claims going forward.

The company clocked “catastrophe” losses of $333 million pretax compared to $193 million pretax in the prior-year quarter. That included Covid-19-related net charges of $86 million pretax included in underwriting gain.

Realized investment losses of $98 million driven by the mark-to-market impact on the company’s equity investments caused by the recent disruption in global financial markets also played a role in the lower-than-expected results, the company said.

“Our balance sheet is extremely strong, our debt-to-capital ratio is comfortably within our target range, our holding company liquidity of $1.6 billion is well above our target level and we have a very high-quality investment portfolio,” CEO Alan Schnitzer said in a statement.”

Meantime, the company’s board said it approved a quarterly cash dividend increase of 4% to 85 cents a share.

Shares of Travelers were up 2.54% at $104.37 in trading on Tuesday.