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The traveler’s profit falls on higher cat losses, lower investment income



Travelers Cos. Inc. reported a lower profit for the second quarter on Thursday as disaster losses increased and investment income fell, but the insurer saw revenues increase as interest rates and insured exposures continued to rise.

Travelers reported $ 551 million in net profit for the second quarter, a decrease of 41% compared to the same period last year. The insurer’s total expense ratio deteriorated to 98.3% during the quarter, compared to 95.3% during the same period last year, when disaster losses increased by 57.1% to $ 746 million. Net investment income fell 13.6% to $ 707 million.

The deterioration also reflected a strong development during the comparable quarter last year, said Dan Frey, CFO, in a conference call with analysts.

“The previous year̵

7;s quarter included a very benign level of cat losses and record returns from the portfolio of non-interest income,” he said. “Although cats were higher year over year, they were not oversized relative to our second quarter model estimates.”

The travelers’ cost ratio fell slightly to 29%, Frey said. The insurer reported $ 291 million in favorable pre-tax net reserve growth in the second quarter, he said.

Net income premium increased by 10.9% to USD 9.02 billion.

In the Commercial Insurance Division, net premiums increased by 9.9% to $ 4.37 billion, and segment revenues increased by 3.6% to $ 666 million.

The increase in profits was driven by higher favorable net reserve development and higher insurance revenues, says Greg Toczydlowski, president, business insurance, at Travelers.

The premium change for insurance renewals for domestic companies increased by 10.3% for the quarter, he said.

The increase “includes a change in the renewal rate of 4.9%, which was half a point higher than the first quarter, and exposure growth of almost 6%,” he said.

Its bond and specialty division reported a 12.6% increase in net income premium to $ 962 million and segment revenue increased by 21.9% to $ 228 million.


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