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(Reuters) – Property/casualty insurer Travelers Cos. Inc. reported a second-quarter loss on Thursday, hurt by a sharp increase in catastrophe losses and dismal returns on non-fixed income investments in pandemic-hit financial markets.
Travelers reported a net loss of $40 million in the second quarter ended June 30, from a profit of $557 million a year earlier.
New York-based Travelers, often seen as a bellwether for the insurance sector as it typically reports before other peers, said net written premiums fell 1% to $7.35 billion for the quarter.
Chief Executive Officer Alan Schnitzer said the net impact of the COVID-19 outbreak and related economic conditions on the company’s underlying results was modest.
Travelers reported pre-tax catastrophe losses of $854 million in the quarter, compared with losses of $367 million a year earlier, mainly from severe storms in several regions of the United States, as well as incidents related to civil unrest.
It said last week that pre-tax insurance losses directly related to the pandemic amounted to $114 million.
Net investment income fell 380% to $268 million due to lower returns from its fixed income portfolio business, dented by low interest rates.
Insurers’ investments are coming under pressure and the investments they rely on to pay claims are facing major hurdles.
They manage more than $20 trillion in assets globally, but their big government bond holdings are becoming problematic as the threat of recession grows and central banks’ interest rate cuts have sent yields plunging.
The company reported a combined ratio of 103.7%, compared with 98.4% a year earlier. A ratio below 100 percent means the insurer earns more in premiums than it pays out in claims.