Travelers Sees Premium Volumes ‘Negatively’ Impacted in 2Q

The Travelers Companies Inc. (TRV) said it expected premium volumes to be “negatively” impacted in the second quarter and the remainder of the year as a result of the deteriorating economic environment induced by the coronavirus pandemic.

The comments were made as the property and casualty insurer reported a 25% profit decline in the first three months of the year versus the same period last time. Net premiums increased 4% to $7.35 billion during the same period.

Net income in the first quarter dropped to $600 million, or $2.33 per diluted share, from $796 million, or $2.99 in the same period a year earlier.

Core income amounted to $2.62 per share, below analysts’ estimates of $2.85 per share and down from $2.83 year-on-year, mainly due to higher catastrophe losses. The company incurred catastrophe losses of $333 million in the first quarter, up from $193 million a year earlier. The catastrophe losses included the tornado in Tennessee, as well as other wind and winter storms in several U.S. regions.

Beginning in March the global coronavirus pandemic began to impact the insurer’s results. To account for the impact and related economic turmoil its underwriting margins included pre-tax net charges of $86 million.

Wall Street analysts have a Hold consensus rating on Travelers stock based on 7 Holds, 1 Sell and 1 Buy. The $118.22 average price target suggests investors may yield a 16% gain in the shares in coming 12 months. (See Travelers stock analysis on TipRanks).

The insurer’s Board of Directors declared a quarterly dividend of 85 cents per share, representing an increase of 4%. The dividend is payable on June 30, to shareholders of record at the close of business on June 10.

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