The Travelers Companies reported a 25 percent drop in second-quarter net income that management blamed on weather-related issues, lower investment returns and the continuing competitive market.
The insurer reported net income of $942 million for the quarter, compared to $1.25 billion a year ago. Travelers said it realized an underwriting gain of $338 million despite suffering catastrophe losses of $231 million. In the second quarter of 2007, the company experienced $26 million in catastrophe losses and reported an underwriting gain of $449 million.
In a conference call, Joseph P. Lacher Jr., executive vice president, personal insurance and select accounts for Travelers, noted that this quarter was one of the worst in a while with respect to weather activity. He noted that Travelers still turned an underwriting profit despite the significant effects of the weather.
The company's combined ratio dropped slightly from 87.8 in the second quarter of 2007 to 89.3 this past quarter.
Net investment income for the quarter declined to $624 million compared to $758 million a year ago. Jay Fishman, Travelers chairman and chief executive officer, said in the conference call that net investment income fell due to short rates declining more than expected. He also said, "Returns on non-fixed income investments, while positive, remain significantly lower than last year."
Mr. Fishman said in a statement that the company experienced "solid underwriting performance," and he added, "Our diversified, high quality investment portfolio continued to deliver impressive results, although at a lower level than in the prior year quarter."
He also acknowledged the competitive marketplace, but said that the market has been consistent with expectations.
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