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(Reuters) – Travelers Cos. Inc. on Thursday reported a 98% fall in quarterly profit, as severe wind and hailstorms in parts of the United States pushed up its catastrophe losses.
Core income of the New York-based company, often seen as a bellwether for the insurance sector as it typically reports before industry peers, fell to $15 million in the second quarter that ended June 30, from $625 million a year earlier.
Severe storms in parts of the United States caused the insurer’s catastrophe losses net of reinsurance to jump to $1.48 billion from $746 million a year earlier.
The U.S. Midwest and South were hit by violent storms in the quarter that knocked over houses and led to loss of life, adding to a series of weather-related events that have hurt insurers’ profitability.
Reinsurance broker Gallagher Re preliminarily pegged insured losses from natural hazards in the first six months of 2023 at $52 billion, while weather and climate events alone were expected to have driven an insurance bill of $46 billion.
Storms across the U.S. led to a minimum of $34 billion in insured losses, contributing 65% of all global first-half losses, the broker said in a report on Monday.
“This quarter we reported strong underlying results and investment returns, as well as net favorable prior year reserve development, which were essentially offset by an historic level of industry-wide catastrophe losses,” Travelers CEO Alan Schnitzer said.
The company reported a combined ratio of 106.5%, compared with 98.3% a year earlier. A ratio below 100% means the insurer earned more in premiums than it paid out in claims.
It posted record net written premiums growth of 14%.