Second quarter net income down at Travelers after higher cat losses

The Travelers Companies, Inc. has reported a net income of $683 million for the second quarter of the year, down from $925 million in the same quarter last year because of higher catastrophe losses.

Catastrophe losses for the three months ended June 30 this year totaled $284 million, the New York-based insurer reported Tuesday. Last year’s second quarter net income also benefited from “favorable tax and legal settlements,” in addition to lower cat losses, it noted.

Operating income for the second quarter was $673 million, compared with $816 million in the same period of 2013.

Quarterly net written premiums were $6.2 billion, up 6% from the prior year quarter ($5.8 billion), primarily due to the acquisition of Dominion of Canada in November 2013, according to the statement.

The combined ratio for the quarter was 95.1%, compared with 94.3% in Q2 last year.

Net income for the first half of the year stands at $1.74 billion, down slightly from $1.82 billion for the first six months of 2013.

“Our results year-to-date were very strong and demonstrated our continued success in actively managing our businesses to produce superior returns on capital over time,” Jay Fishman, Travelers’ chairman and CEO commented in a statement Tuesday.

“In Business Insurance, the cumulative effect of the price increases we have achieved over the last several years, combined with our highly analytic approach to risk selection, has resulted in a product portfolio that is achieving meaningfully improved and attractive returns.”

“That said, we are not declaring mission accomplished,” he noted. “There remains opportunity to further improve the product portfolio by continuing to take appropriate action on those accounts or classes of business that still do not meet our return thresholds and by achieving additional rate increases for those accounts that continue to experience unusual weather volatility,” he said.”

“In Personal Insurance, we still have more work to do to improve our returns, but we have made considerable progress in both Auto and Homeowners. The market response of Quantum 2.0, our new auto product, is particularly encouraging. Finally, Financial, Professional & International Insurance posted record operating income.

“In summary, we will continue to execute on our long-held financial strategy of building and sustaining meaningful competitive advantages, delivering superior profitability and returns, and returning excess capital to shareholders. As a consequence, we remain well positioned to continue to deliver compelling shareholder value over time.”