Travelers Q2 Income Continues to Fall On Higher Catastrophe Losses

The Travelers Companies (NYSE: TRV), one of the largest property and casualty (P&C) insurers in the U.S., reported its Q2 earnings on July 20. The company’s total operating income declined by 16% year-over-year (y-o-y) and its combined ratio (the ratio of claims to premiums earned) increased by 350 basis points to 96.7%. The decline was primarily triggered by relatively high levels of catastrophe and non-catastrophe weather-related losses caused by significant U.S. tornado and hail activity. This was the highest level of first half of catastrophe losses for TRV since 2011. Overall, the quarter was fairly disappointing, and could be a drag on full year earnings going forward.

Although the business and international insurance division income grew by nearly 7%, the declining personal and bond insurance incomes will continue to challenge the company. The net income for personal insurance declined by nearly 87% to just $12 million this quarter, which is low by virtually any standard.

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