Storm losses also drove up combined operating ratio
US insurer Travelers reported a drop in first quarter profits after sustaining $226 million in catastrophe losses.
Losses from hail, tornado and wind activity increased cat losses by $19 million during the quarter. These losses also drove up the combined operating ratio (COR) by 3.7 percentage points to 96%.
The company’s net income was $617 million for the quarter, down $74 million from the same period in 2016. In the first quarter, the business and international insurance segment income declined to $468 million, from $476 million, after reserves were increased $51 million for the Ogden discount rate adjustment in the UK.
Travelers’ consolidated net written premiums increased by 5% during the quarter to $6.5 billion and the firm’s net investment income rose to $610 million, from $544 million.
Travelers chief executive Alan Schnitzer said: “Core income of $614 million and core return on equity of 10.8% reflected unusually high first quarter catastrophe losses that arose from a record number of tornado and hail events,”
Schnitzer added: “We were pleased with our underlying underwriting results and that loss trends were stable and consistent with our expectations for all of our businesses, including personal auto. We were also pleased with our investment results this quarter.”