Travelers Companies Inc has set aside a “modest” amount of additional money to cover its possible exposure to child sex-abuse claims, the insurer’s finance chief, Daniel Frey, told analysts during an earnings call on Thursday.
Two analysts asked about Travelers’ exposure to child sex-abuse lawsuits, as Wall Street tries to figure out how much decades-old policies for churches, non-profits and other organizations may cost the insurance industry.
The amount that Travelers set aside was not large enough to detail under disclosure rules, he added.
Travelers beat analysts’ estimates for quarterly profit on Thursday, boosted by a rise in premiums and strong underwriting. On an adjusted basis, the company earned $3.32 per share, beating estimates of $3.29 per share, according to IBES data from Refinitiv. Total revenue rose 3.4% to $8.06 billion.
The sex-abuse claims are being spurred by lawsuits filed in response new statues in a number of U.S. states that waive or eliminate time limits for plaintiffs to sue their alleged abusers and institutions where they worked.
A New York law that went into effect last August giving victims a year to sue, regardless of when the abuse occurred, has already prompted hundreds of lawsuits. Similar laws have since became effective in New Jersey and California.
Insurers are a footnote to the broader scandal that has swept the Catholic church, as well as universities and groups like the Boy Scouts of America.
As claims against such institutions have piled up, defendants have been leaning on insurance policies they bought as far back as the 1940s to offset mounting costs.
In general, those policies covered injuries that might occur at a physical location, without excluding sexual abuse, and did not place limits on when customers could seek reimbursement, lawyers said.
Travelers first acknowledged possible exposure in April 2019, increasing reserves by between $50 million and $100 million after the New York legislation was signed.
Chubb Ltd and Selective Insurance Group Inc have made similar disclosures.
But Travelers has seen activity “pretty steadily” throughout the year, Frey said on Thursday.
Insurers were not thinking about child sex abuse as an “injury” when they wrote the coverage long ago, said Timothy Lytton, a Georgia State University School of Law professor who has performed research on the topic.
“They were thinking about slip and fall, church fires, and grandma falling down cathedral steps,” he said.