For Travelers, Q1 Catastrophe Losses Make Greater Impact Than Coronavirus Costs

April 21, 2020 by Mark Hollmer

The Travelers Companies felt relatively small effects from the coronavirus pandemic in the 2020 first quarter, with catastrophe losses from tornadoes and other storms taking more of a bite.

COVID-19-related net charges for the quarter reached $86 million pre-tax, or $68 million after tax. Pre-tax catastrophe losses, by contrast, landed at $333 million pre-tax in Q1 2020 versus $193 million pre-tax in the 2019 first quarter. Travelers blamed Tennessee tornadoes plus other wind storms and winter storms throughout the U.S. for much of its higher catastrophe costs.

Travelers Chairman and CEO Alan Schnitzer noted that the insurer booked strong underlying results despite catastrophe and early COVID-19 challenges, though he acknowledged that its longer-term pandemic risks remain unclear.

“Although there are many uncertainties surrounding COVID-19’s impact on our global economy and on us, it has been in the most challenging circumstances that the strength of our ‘AA’-rated franchise and the value we provide to all of our stakeholders shine through,” Schnitzer said. “Our balance sheet is extremely strong, our debt-to-capital ratio is comfortably within our target range, our holding company liquidity of $1.6 billion is well above our target level, and we have a very high-quality investment portfolio. We have the talent, technology, risk management processes and procedures, and, importantly, financial strength to manage through these extraordinary times and to continue to deliver meaningful shareholder value over time.”

Travelers stock price traded at $103.11 early afternoon on April 21, up just under 1.4 percent.

Here’s a rundown of Travelers’ Q1 2020 result highlights:

Travelers is among companies that have taken steps to alleviate the coronavirus pandemic impact, including quickening commission payments of more than $100 million to eligible agents and brokers to help address COVID-19-related liquidity worries. Its other actions include the pledging of $5 million to COVID-19 relief efforts for families and communities in North America, the United Kingdom and Ireland. It is also suspending cancellation and nonrenewal of coverage due to nonpayment through May 15 for all of its U.S. customers. As well, more digital tools are coming into play for claims audits and workers compensation.

Source: Travelers