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(Reuters) — Travelers Corp. is girding for “significant” losses from Hurricane Michael, which caused destruction in Florida and six other U.S. states this month, Chief Financial Officer Daniel Frey said on Thursday.
Travelers, one of the largest U.S. property/casualty insurers, is still reviewing the losses but expects them to be “manageable,” Mr. Frey said in a call with analysts to discuss third-quarter results. They will not preclude the company from restarting a stock buyback program planned for next week, he added.
Hurricane Michael occurred in early October, so its losses will affect fourth-quarter results. During the third quarter, Travelers’ profit more than doubled, driven by lower catastrophe losses and an increase in premiums and investment income.
Net premiums written rose 6% to $7.06 billion, helped by improved prices coupled with higher levels of retention.
Higher returns from its fixed income and private equity portfolio business helped boost investment income by 20% to $547 million.
Net of reinsurance, Travelers’ catastrophe losses plunged 62.3% to $264 million in the quarter, and the insurer incurred higher-than-expected losses in September in the aftermath of Hurricane Florence that hit North Carolina, a state where the company has a large presence.
The insurer’s combined ratio improved to 96.6% from 103.2% a year earlier.
Net income rose to $709 million in the quarter from $293 million.
Total revenue rose 5.4% to $7.7 billion.
The insurer incurred a $436 million charge from catastrophe losses in the same period last year due to mounting claims arising from hurricanes Irma, Maria and Harvey, which hit the United States.
Travelers has closed more than 90% of homeowners’ claims stemming from Hurricane Florence, Chief Executive Officer Alan Schnitzer said during the call.
The Travelers Cos. Inc. on Tuesday said Daniel S. Frey will become chief financial officer, effective Sept. 1, replacing Jay S. Benet, who has held the position since 2002.