(Reuters) - Travelers Corp (TRV.N) is girding for “significant” losses from Hurricane Michael, which caused destruction in Florida and six other U.S. states this month, Chief Financial Officer Daniel Frey said on Thursday.
Travelers, one of the largest U.S. property and casualty insurers, is still reviewing the losses but expects them to be “manageable,” Frey said in a call with analysts to discuss third-quarter results. They will not preclude the company from restarting a stock buyback program planned for next week, he added.
Shares of the Dow component dipped 0.6 percent to $125.67.
Hurricane Michael occurred in early October, so its losses will affect fourth-quarter results. During the third quarter, Travelers’ profit more than doubled, driven by lower catastrophe losses and an increase in premiums and investment income.
Net premiums written rose 6 percent to $7.06 billion, helped by improved prices coupled with higher levels of retention.
Higher returns from its fixed income and private equity portfolio business helped boost investment income by 20 percent to $547 million.
Net of reinsurance, Travelers’ catastrophe losses plunged 62.3 percent to $264 million in the quarter, and the insurer incurred higher-than-expected losses in September in the aftermath of Hurricane Florence that hit North Carolina, a state where the company has a large presence.
The company’s combined ratio fell to 96.6 percent from 103.2 percent a year earlier. A ratio below 100 percent means the insurer earns more in premiums than it pays out in claims.
Net income rose to $709 million, or $2.62 per share, in the quarter, from $293 million, or $1.05 per share, a year earlier.
Excluding items, the company earned $2.54 per share while analysts expected $2.26, according to Refinitiv data. Total revenue rose 5.4 percent to $7.7 billion.
The insurer incurred a $436 million charge from catastrophe losses in the same period last year due to mounting claims arising from hurricanes Irma, Maria and Harvey, which hit the United States.
Travelers has closed more than 90 percent of homeowners’ claims stemming from Hurricane Florence, Chief Executive Officer Alan Schnitzer said during the call.
The insurer also raised premiums on homeowner policies that were renewed since last year and expects increases during future quarters, said Michael Klein, who heads its personal insurance business.
Reporting by Siddharth Cavale in Bengaluru and Suzanne Barlyn in New York; Editing by James Emmanuel, Lauren Tara LaCapra and Jeffrey Benkoe