Travelers Boosts Reserves Over Leased Vehicles

Travelers Boosts Reserves Over Leased Vehicles

NU Online News Service, April 1, 3:46 p.m. EST?Travelers Property Casualty Corp. said it is taking a $77 million charge in its first quarter to boost reserves due to the declining value of used leased vehicles a subsidiary insures.

The Hartford, Conn.-based insurer said the charge would shore up reserves for a business line at its Gulf Insurance, which insures residual values of leased vehicles.

Travelers said the price of used vehicles fell significantly during the first two months of this year, and that the reserve boost anticipates further reductions in price during the remainder of 2003. "This trend is consistent with recent reductions in the Manheim Used Vehicle Value Index," the company stated.

This reserve-related charge is in addition to a previously disclosed settlement at Gulf for a coverage dispute in a residual value policy, the company said. This previous settlement had resulted in a first-quarter charge of some $68 million.

While these charges will reduce its first-quarter income, Travelers reaffirmed that its full-year net and operating income are still expected to be in the range of $1.7 billion to $1.8 billion.