(Reuters) – Property and casualty insurer Travelers Companies Inc reported a nearly 29% fall in quarterly profit on Thursday, hurt by higher catastrophe-related claims and lower returns on its investments.
The company’s core income fell to $625 million, or $2.57 per share, in the second quarter ended June 30, from $879 million, or $3.45 per share, a year earlier.
New York-based Travelers, often seen as a bellwether for the insurance sector as it typically reports before its industry peers, said net written premiums rose 11% to $9.02 billion in the quarter.
The insurance industry had over the past two years faced claims from businesses losing revenue because of the coronavirus-led crisis and canceled events among others, even though many have been insulated by virus exclusions in their contracts.
While pandemic-related claims have slowed, the insurance industry now faces hefty claims from the Ukraine crisis and greater uncertainty brought on by higher claims costs this year from inflation.
Travelers reported catastrophe loss net of reinsurance of $746 million in the quarter, compared with $475 million a year earlier, impacted mainly by severe wind and hail storms in several regions of the United States.
Global insured catastrophe losses in the first half of 2022 were estimated at $39 billion – 18% higher than the 21st century average of $33 billion, with severe convective storm events in the United States and Europe alone accounting for 54% of the total, according to broker Aon.
Underwriting gains fell to $113 million from $324 million a year earlier, while pretax net investment income dropped to $707 million from $818 million a year earlier.
The company reported a combined ratio of 98.3%, compared with 95.3% a year earlier. A ratio below 100% means the insurer earned more in premiums than it paid out in claims.
(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Maju Samuel)
