Sandy Eats Into Travelers Profit, but Still Beats Estimates
The super storm that ravaged swaths of the northeast in November buffeted Travelers earnings, as the company reported sharply lower fourth quarter earnings that were impacted by higher than normal insurance claims.
The New York-based insurance giant reported adjusted earnings of 72 cents a share on Tuesday, versus $1.51 a year ago, on revenues of $5.38 billion. Travelers attributed its top line disappointment to super storm Sandy, which flattened parts of New York and New Jersey, and left more than $50 billion worth of damages in its wake.
Nonetheless, the company managed to beat Wall Street's Doomsday forecasts by a mile, sending its stock surging by more than three percent in pre-market trading.
Analysts had expected Travelers to report earnings excluding items of 14 cents a share on $5.34 billion in revenue, according to Thomson Reuters consensus estimates.
On a conference call with analysts, Travelers CEO Jay Fishman warned that in light of Sandy, changing weather patters could continue to impact the insurance industry for years to come. "People will think differently about concentrated flood risk for years to come," Fishman said, adding that he didn't expect buildings in Lower Manhattan to be flooded after Sandy made landfall in New York.
"We are analyzing flood concentrations differently than we did before," the CEO added.
Nonetheless, Fishman added that Travelers is about to "enter 2013 with a sense of optimism. Our results were strong, and exemplary of our strategy."
Fishman singled out the performance of Travelers personal line, saying he was "not satisfied" with it. He added that rate increases and steady loss rates would help improve that segment.
Travelers estimated in December that net losses from Super Storm Sandy would be about $650 million after tax.
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