(Reuters) — Property/casualty insurer Travelers Cos. Inc. on Wednesday reported a 20% drop in quarterly profit as it was hit by hurricane-related claims and lower returns on its investments.
The company’s core earnings fell to $526 million, or $2.20 per share, in the third quarter, from $655 million, or $2.60 per share, in the year-ago period.
New York-based Travelers, often seen as a bellwether for the insurance sector because it typically reports ahead of its industry peers, posted record growth of 10% to $9.2 billion in the quarter.
Hurricanes Ian and Fiona, as well as severe storms in many regions of the United States, pushed the insurer’s pretax catastrophe losses to $512 million, from $501 million in last year’s third quarter.
Insurers are bracing for a hit of up to $57 billion from Hurricane Ian in Florida and South Carolina, risk modeling firm Verisk said earlier this month.
Industry experts already expect the hurricane’s impact to drive some insurance companies out of business, homeowners into delinquency and make insurance less available in regions like Florida.
The insurance industry is also facing substantial demands from the Ukraine crisis and greater uncertainty as a result of higher claims costs from inflation.
Net investment income before tax fell 23% to $593 million, Travelers said.