Travelers posts Q2 loss; weather losses worse than Hurricane Katrina
Travelers Cos. has reported second-quarter net and operating loss of $364 million and $377 million due to “extraordinary” tornado activity in April and May.
Travelers catastrophe losses in the quarter of $1.09 billion after tax ($1.67 billion pre tax), or $2.56 per diluted share. The company previously disclosed a range of $1.00 billion to $1.05 billion after tax for estimated catastrophe losses in the months of April and May.
Net written premiums up 2% reflecting pricing gains across all three business segments. Company achieved pricing gains in all Business Insurance product lines, led by gains in workers’ compensation.
Book value per share up 2% from year-end 2010, and adjusted book value per share (excludes after-tax net unrealized investment gains) up slightly from year-end 2010. Capital remains generally unchanged from the end of first quarter 2011.
“Our second quarter loss was due to the extraordinary tornadoes and hail storms that caused devastation across significant portions of the United States,” commented Jay Fishman, Chairman and Chief Executive Officer, in a statement. “To put this in perspective, these losses for us were larger than those we incurred from Hurricane Katrina in 2005 and the equivalent of losses we would expect from a 1-in-100 year hurricane. The human impact of these storms was extraordinary, including significant loss of life. Our thoughts are very much with those who have been affected personally. We were pleased that, notwithstanding the highly unusual frequency and severity of these events, the company’s capital remained generally unchanged, reflecting our underlying earnings strength and thoughtful capital management strategy. We also appreciate the responsibility these events have placed on our entire claim organization and are proud of the speed and dedication with which they are responding.”
“Pricing continued to improve across our diversified commercial insurance businesses. In particular, we were very pleased with the pricing gains we achieved in Business Insurance. All product lines within Business Insurance showed improved positive renewal rate change, most significantly in workers’ compensation. We were also encouraged that audit premiums, which turned positive in the first quarter, continued to increase. In Personal Insurance the production and pricing trends remained generally consistent with first quarter trends.
“As has been our plan over the past year, we continue to seek rate gains on a measured basis, particularly where specific accounts require increased rate. We have been successful in this regard overall and our strategy remains unchanged,” concluded Mr. Fishman.
