Travelers sees decline in profit due to catastrophes and COVID-19

Property/casualty insurer Travelers has reported a decline in the group's net profit in the first quarter of 2020, primarily due to higher catastrophe losses and charges related to the COVID-19 pandemic.

The company posted a net income of $600 million for the quarter ended March 31, 2020, compared to $796 million in the prior year quarter. The fall was primarily due to higher catastrophe losses of $333 million pre-tax, compared with $193 million pre-tax in the prior year quarter.

The net written premiums grew by 4 percent in the quarter to more than $7.3 billion, while the consolidated combined ratio was 95.5 percent.

Travelers said that its improved underlying underwriting gain was adversely impacted by net charges of $86 million pre-tax ($68 million after-tax) associated with COVID-19 and related economic conditions.

Net realized investment losses in the current quarter were $98 million pre-tax, driven by the mark-to-market impact on the company’s equity investments caused by the recent disruption in global financial markets, compared to net realized investment gains of $53 million pre-tax ($41 million after-tax) in the prior year quarter.

“The events of the last few months have been challenging, and our hearts go out to all those affected by the COVID-19 global pandemic,” said Alan Schnitzer, chairman and chief executive officer, adding that the company's "strong underlying results, which included the impact of charges related to the COVID-19 pandemic, were more than offset by higher catastrophe losses."

Schnitzer said: “Although there are many uncertainties surrounding COVID-19’s impact on our global economy and on us, it has been in the most challenging circumstances that the strength of our AA-rated franchise and the value we provide to all of our stakeholders shine through.

"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. We have the talent, technology, risk management processes and procedures, and, importantly, financial strength to manage through these extraordinary times and to continue to deliver meaningful shareholder value over time.”