Catastrophe Losses From California Wildfires Hurt Travelers Earnings
January 23 2018 - 8:13AM
Dow Jones News
By Nicole Friedman
Travelers Cos. earnings fell in the fourth quarter due to losses
from recent wildfires in California.
On Tuesday, the insurance firm said its pretax catastrophe
losses, net of reinsurance, totaled $499 million during the
quarter, compared with the range of $525 million to $675 million it
provided in November.
The company's catastrophe losses were $137 million a year
earlier.
New York-based Travelers, part of the Dow Jones Industrial
Average, is among the largest sellers of insurance to U.S.
businesses and sells car and home insurance to individuals and
families. It is one of the first big property-casualty insurers to
report quarterly earnings, and its results are watched closely as a
bellwether for others that follow.
The insurance industry was slammed in the second half of 2017
with three major hurricanes -- Harvey, Irma and Maria -- along with
earthquakes in Mexico and wildfires in California. The industrywide
losses from all of those events could near or exceed $100 billion,
according to risk-modeling firms.
In September, Travelers paused its share buyback program as it
assessed the impacts of Hurricanes Harvey and Irma. It resumed
buybacks in November.
Much of the damage from last year's natural disasters was borne
by reinsurers. These are specialty firms that agree to take
responsibility for some of the risk in policies sold by insurers to
businesses and individuals.
Travelers posted core operating earnings of $633 million, or
$2.28 a share, down from $919 million, or $3.20 a share, in the
year-earlier period.
Core operating earnings are a widely watched industry benchmark
because they exclude realized capital gains and losses in
companies' big investment portfolios as well as items that aren't
considered recurring in nature.
Travelers reported a $129 million charge on its deferred tax
assets due to the new U.S. tax law.
Net premiums written, an important measure of revenue growth,
rose 6% to $6.4 billion from $6.1 billion.
Overall, Travelers reported net income of $551 million, or $1.98
a share, down 40% from $943 million, or $3.28 a share, a year
earlier. Total revenue, which includes investment income, rose 4%
to $7.5 billion.
Analysts surveyed by Thomson Reuters had expected earnings of
$1.51 a share on $6.3 billion in revenue.
Travelers announced last month that its president and chief
operating officer, Brian MacLean, is set to retire at the end of
March.
Cara Lombardo contributed to this article
Write to Nicole Friedman at nicole.friedman@wsj.com
(END) Dow Jones Newswires
January 23, 2018 07:58 ET (12:58 GMT)
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