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Hailstorms dent Travelers profit

Posted On: Apr. 21, 2016 12:00 AM CST

Hailstorms dent Travelers profit

Travelers Cos. Inc. on Thursday reported net income of $691 million in the first quarter of 2016, a 17.1% decrease from the same period a year earlier due primarily to violent hailstorms in Texas last month.

Severe weather in the Dallas-Fort Worth area in March led to the highest first-quarter catastrophe losses for the insurer since 2010, Travelers CEO Alan Schnitzer said during a Thursday conference call with analysts. That was the year winter storms battered the eastern United States and an earthquake struck in Chile, Travelers said in a statement released at the time.

“It just so happens we have healthy market share in Dallas-Fort Worth, where severe storms were concentrated,” Mr. Schnitzer said, adding that “nothing about the level of losses in that storm are particularly surprising,” and it's “not causing us to rethink anything.”

Travelers Chairman Jay Fishman noted during the call that catastrophe losses were $101 million higher on an after-tax basis than those in the first quarter of 2015.

Meanwhile, net written premiums increased 4.6% over the prior-year quarter to $6.17 billion due to higher levels of retention and new business volumes, as well as positive renewal premium changes in each business segment, the company said in a statement.

“We benefitted in the quarter from the stability and consistency we provide in the marketplace compared to some competitors who are experiencing varying degrees of disruption,” Mr. Schnitzer said during the call.

Travelers also reported a 4.9% increase in net written premiums for workers compensation to $1.20 compared with the first quarter of 2015. The company is the largest workers comp insurer, capturing 8.2% of market share in 2014, according to an October report by rating agency A.M. Best Co. Inc.

Total revenue increased less than 1% to $6.69 billion for the quarter, while the combined ratio increased to 92.3% from 88.9% in the prior-year quarter.

Mr. Schnitzer said that despite an “active quarter from catastrophe perspective, it's a great start to the year.”