Travelers swings to loss as it books $1.5 billion in catastrophe losses following tornadoes and hail storms

By Ciara Linnane

There were official catastrophe events on 88 of the 91 days of the quarter, says CEO

Travelers Cos. Inc.'s stock reversed its early losses to trade up 2% Thursday, after the insurer swung to a second-quarter loss as it was hit with $1.5 billion in catastrophe losses.

That was almost double the $746 million in catastrophe losses recorded in the year-earlier period, and was caused by numerous severe wind and hail storms in multiple states.

"This quarter we reported strong underlying results and investment returns, as well as net favorable prior year reserve development, which were essentially offset by an historic level of industry-wide catastrophe losses," Chief Executive Alan Schnitzer said in a statement.

On a call with analysts, Schnitzer said there were PCS-designated catastrophe events on 88 of the 91 days of the quarter. PCS, or Property Claim Services, is the authority on insured property losses from catastrophes in the U.S.

The company (TRV) had six events surpass the $100 million mark in the quarter, the most ever for a single quarter since it began disclosing the table in 2013, said Chief Financial Officer Daniel Frey on the call.

There were seven weather disasters in the U.S. in 2023 so far, according to the National Oceanic and Atmospheric Administration. These included severe flooding in California that started after Christmas and lasted into March, dumping rain and record snowfall in parts of the Sierra and Southern California.

That was followed by a cold wave in the Northeast in early February that downed trees and power lines in New England. The Southeast and Midwest were hammered by tornadoes and severe thunderstorms and hail in March and April.

See also: Heavy rains swamp Northeast again; at least 5 die in Pennsylvania flash flooding

New York-based Travelers posted a net loss of $14 million, or 7 cents a share, for the quarter, after income of $551 million, or $2.27 a share, in the year-earlier period.

The company's adjusted per-share earnings came to 6 cents, well below the $2.05 FactSet consensus.

Revenue rose to $10.098 billion from $9.136 billion a year ago, ahead of the $9.972 billion FactSet consensus.

Net written premiums rose 14% to $10.318 billion.

The company's underlying combined ratio, a measure of overall profitability, stood at 91.1%, down from 92.8% a year ago. The company's net prior year reserve development was $60 million pre-tax,

The company had an underwriting loss of $640 million, after a gain of $113 million a year ago. Net investment income rose 5% to $712 million.

The stock has fallen 9% in the year to date, while the Dow Jones Industrial Average has gained 6%.

-Ciara Linnane

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07-20-23 1446ET

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