Travelers Profit Misses on Higher Reserves for Claims

Insurer Travelers Cos Inc reported a lower-than-expected quarterly profit on Tuesday as it bolstered its reserves to cover asbestos-related and other claims, sending its shares down nearly 4% in trading before the bell.

The insurer said it set aside an additional $220 million for asbestos claims reserves in its business insurance unit, compared with a year earlier. It also set aside higher claims reserves in its commercial auto business.

Travelers Chief Executive Officer Alan Schnitzer flagged an “increasingly challenging tort environment” and “higher non-catastrophe weather-related losses” for weak results.

Earned premiums rose 4.3% to $7.18 billion, while combined ratio improved to 101.5% from 96.6%. A ratio below 100% means the insurer earns more in premiums than it pays out in claims.

Catastrophe losses, net of reinsurance, fell $23 mln to $241 million from a year earlier, after wildfires and hurricanes hit its earnings last year.

Net investment income fell about 4% to $622 million. Insurers typically invest money they get from premiums into stocks and bonds to earn profits.

The company posted an underwriting loss of $149 million, compared with a gain of $198 million a year earlier.

New York-based Travelers, a Dow component that is also seen as an industry bellwether, is among the biggest sellers of insurance to U.S. businesses and sells auto and propertyinsurance to individual customers.

Net income fell to $396 million, or $1.50 per share, in the third quarter ended Sept. 30 from $709 million, or $2.62 per share, a year earlier.

On an adjusted basis, the company earned $1.43 per share, while analysts were expecting $2.35 per share, according to IBES data from Refinitiv.

The company’s total revenue rose about 4% to $8.01 billion.