Travelers Companies reported a $333 million net profit after taxes for the third quarter, down from $1.05 billion in the third quarter last year.
Hurricane Irene and weaker investment returns hurt results. Its pre-tax losses from catastrophes in the quarter topped $600 million.
But the insurer reported that total net written premiums were up four percent, reflecting continued renewal price gains across all three business segments and increased purchasing by business insurance customers. Business insurance net written premiums were up seven percent.
The company said this was the third sequential quarter renewal price gains in business insurance.
“We were pleased to see improved pricing in the quarter across the segment,” said Brian MacLean, president and chief operating officer. “We continued to achieve renewal price gains across all product lines, led by workers’ compensation as well as significant improvements in property lines. Results in the quarter included reduced underwriting margins related to previously anticipated earned pricing and loss cost trends, as well as the impact of higher non-catastrophe weather-related losses.”
Operating income in the current quarter of $332 million after tax decreased $526 million from the prior year quarter primarily due to a $487 million after-tax decrease in underwriting results largely attributable to significantly higher catastrophe losses.
The underwriting results in the current quarter reflected a GAAP combined ratio of 104.5 percent compared to 90.6 percent in the prior year quarter. This increase of 13.9 points in the combined ratio included a $489 million pre-tax increase in catastrophe losses (increase of 8.6 points) as well as a $38 million pre-tax decrease in net favorable prior year reserve development (increase of 0.8 points). Catastrophe losses in the current quarter primarily resulted from Hurricane Irene and Tropical Storm Lee.
MacLean said personal lines business was also hurt by higher non-catastrophe weather-related costs and the company is “actively pursuing targeted pricing and changes in terms and conditions so as to improve profitably.”
The net favorable prior year reserve development in the current quarter included a $114 million after-tax ($175 million pre-tax) increase to asbestos reserves, compared to a $91 million after-tax ($140 million pre-tax) increase in the prior year quarter.
Total revenues of $6.407 billion in the current quarter decreased $75 million, or 1 percent, from the prior year quarter largely due to a $224 million decrease in net realized investment gains, partially offset by a $183 million increase in earned premiums.
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