[per REUTERS]-On Thursday, Travellers Cos. Inc. announced a quarterly profit that was down 98% from the previous year. This was due to strong wind and hailstorms that hit areas of the United States, which drove up the company’s catastrophe losses.
The New York-based company’s core income, which is sometimes considered as a harbinger for the insurance industry since it typically reports before its industry rivals, decreased to $15 million in the second quarter that ended on June 30, from $625 million in the same period a year earlier.
The catastrophe losses of the insurance company, after accounting for reinsurance, increased to $1.48 billion from $746 million a year earlier as a direct result of severe hurricanes that hit regions of the United States.
The Midwest and the South of the United States were struck by powerful storms during the quarter that caused damage to homes and resulted to deaths. These storms added to a string of weather-related occurrences that have negatively impacted the profitability of insurers.
Gallagher Re, a reinsurance broker, has made a preliminary estimate that the insured losses from natural hazards in the first six months of 2023 totaled $52 billion, although it was anticipated that weather and climatic events alone would have caused an insurance cost of $46 billion.
The broker stated in a research that was released on Monday that storms that swept over the United States were responsible for a minimum of $34 billion in insured losses, contributing to 65% of total global first-half losses.
“This quarter we reported strong underlying results and investment returns, as well as net favourable prior year reserve development,” said Alan Schnitzer, CEO of Travellers. “However, these results were essentially offset by a historic level of industry-wide catastrophe losses,” he said.
The combined ratio that the company recorded was 106.5%, which is higher than the 98.3% that it reported the previous year. If the ratio is lower than 100%, it indicates that the insurance made more money from premiums than it did from paying out claims.
It achieved a record 14% gain in terms of its net written premiums.
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