Insurance

Travelers profit misses as higher claims weigh on underwriting gain

Key Points
  • Travelers missed Wall Street estimates for second-quarter profit, as weather-related losses led to an 18% drop in underwriting gain.
  • Strong wind and hailstorms during the quarter tore apart homeowners' roofs, pummeled cars, and wreaked havoc, triggering a spate of claims that proved to be challenging for U.S. insurers, including Travelers.
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Travelers posts EPS miss, revenue beat

Insurer Travelers missed Wall Street estimates for second-quarter profit on Tuesday, as weather-related losses led to an 18% drop in underwriting gain.

Strong wind and hailstorms during the quarter tore apart homeowners' roofs, pummeled cars, and wreaked havoc, triggering a spate of claims that proved to be challenging for U.S. insurers, including Travelers.

Claims rose 5.7% to $4.82 billion, leading to a drop in underwriting gain to $74 million in the quarter.

Catastrophe losses, net of reinsurance, fell 25% to $367 million but was better compared with a year earlier when it was $488 million.

New York-based Travelers, often seen as a bellwether for the insurance sector as it typically reports before its competitors, said net written premiums rose 4.5% to $7.45 billion.

Net investment income rose 9% to $648 million, due to higher returns from its fixed income and private equity portfolio business.

The company reported a combined ratio of 98.4% compared with 98.1% a year earlier. A ratio below 100% means the insurer earns more in premiums than it pays out in claims.

Net income rose to $557 million, or $2.10 per share, in the quarter ended June 30, from $524 million, or $1.92 per share, a year earlier.

On an adjusted basis, the company earned $2.02 per share, while analysts were expecting $2.28 per share, according to IBES data from Refinitiv.

Total revenue rose 4.8% to $7.83 billion.