Travelers hit by investments

US insurer Travelers announced Q1 net income slashed by almost a third (32%) to $662m after being hit by a 27% drop in investment income.

Financial Highlights (2008 Q1 in brackets)

• Gross written premiums $5,863m ($5,933)
• Net written premiums $5,203m ($5,188m)
• Net earned premiums $5,301 ($5,340)
• Underwriting gain $353m ($401m)
• Net investment income $474m ($650m)
• Operating income $799m ($1,008)
• Net income $662m ($967m)
• Catastrophe losses of $54m ($62m) after-tax and $83m ($95m) pre-tax

Jay Fishman, chairman and chief executive said: “These results reflect a solid underwriting performance, as evidenced by our 90.6% combined ratio. While long-term fixed income returns were stable, total net investment income declined due to lower short-term interest rates and negative returns on our non-fixed income investment portfolio. Notwithstanding current investment market conditions, we remain pleased with the quality of our investment portfolio.

“Our position in the marketplace remains strong and we continue to gain momentum. The benefits from our ongoing investments in technology platforms and product enhancements, as well as the flight to quality that is occurring in our industry, can be seen in our high retention rates and increased business submission flows. Adding to our franchise has been an improving rate trend across each of our business segments which has more than offset the impact of declining coverage needs resulting from general economic conditions. Our financial strength, coupled with our exceptional brand, positions us well for the future.”