Catastrophe and asbestos charges caused a 41 percent decline in 2005 fourth-quarter profits for St. Paul Travelers, the company said today.
Fourth-quarter net income was $179 million, down from $303 million in the comparable year-ago period.
Special charges included $860 million pretax to develop an asbestos and environment reserve and $435 million related to catastrophe losses from last year's storms.
Bear Stearns analyst David Small said the catastrophe and asbestos charges marred good underlying trends. Excluding the charges, profits would have been $30 million more than his expectations because "business the company wrote during 2005 proved to be quite profitable."
The company's asbestos charge comes in the wake of an unfavorable court ruling last month and as other companies have reported a more favorable asbestos environment, Mr. Small noted.
The company's combined ratio deteriorated to 111.1 in the quarter from 107.1 in the comparable 2004 period.
For the entire year the company reported more favorable figures.
Company CEO Jay Fishman said despite catastrophes and asbestos, the company posted a 9.6 percent operating return on equity for the year, compared to 5 percent a year earlier.
Net income for the year rose 70 percent to $1.6 billion from $955 million for 2004, while the combined ratio for 2005 improved to 101.3 from 107.7 for 2004.
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