Elevated Catastrophe Losses From Hail and Wind Storm Hurt Travelers Companies Q1 Profit, Stock Slides

The Travelers Companies TRV reported a mixed first quarter, with earnings lagging analyst' expectations. Core income per share reached $4.69 from $4.11 a year ago, missing the $4.90 consensus forecast. Net income per share rose to $4.80 from $4.13 a year earlier.

The stock declined after the results. The New York-based company offers auto, home, and business property casualty insurance.

For the first quarter, net written premiums increased by 8% to $10.18 billion, while total revenues also increased 16% Y/Y to $11.23 billion, beating the Street consensus of $10.51 billion. The company attributed performance to strong profitability, production in all three segments, and higher investment income.

The quarter included an elevated level of catastrophe losses of $712 million pre-tax, compared to $535 million pre-tax in the prior year quarter.

Catastrophe losses primarily resulted from severe wind and hail storms in the central and eastern regions of the United States.

The company's underlying combined ratio fell from 90.6% to 87.7% in the quarter. The lower the ratio, the more profitable the insurance company, and vice versa.

The quarterly net investment income increased 28% to $846 million pre-tax ($698 million after-tax). Income from the fixed-income investment portfolio increased over the prior year's quarter due to a higher average yield and growth in fixed-maturity investments.

Dividend: The Board declared a 5% growth in the regular quarterly dividend to $1.05 per share. 

Travelers Companies stock gained over 30% in the last 12 months. Investors can gain exposure to the stock via Invesco KBW Property & Casualty Insurance ETF KBWP and IShares U.S. Insurance ETF IAK.

Price Action: TRV shares are down 3.20% at $215.98 premarket on the last check Wednesday.

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