Storm Losses Pummel Travelers' Earnings

The company also stated that at the end of the quarter, it was not party to any credit default swaps and that it had curtailed its securities lending program. It has only $254 million in subprime/Alt-A mortgage-backed securities which represent only 9% of its total investment portfolio. Finally, with only $100 million in outstanding commercial paper, the company feels that the loss of access to this market has minimal effect.

However, it did report $818 million in unrealized investment losses, which do not come through earnings but reduce the amount of shareholders' equity and statutory surplus.

With the property and casualty insurance industry in the midst of a soft market, net written premiums were down from the second quarter to $5.48 billion from $5.63 billion. Retention rates on renewal business remained at or above historical levels while pricing continued to decline in commercial accounts and "other business insurance."

Travelers' renewal pricing started to decline in the second quarter of 2007 for nearly all commercial lines continuing through the second quarter of this year, and now in the third quarter financial products, international and select accounts have leveled off, with only commercial accounts and other business insurance still declining 3% and 4% respectively.

Personal lines -- auto and homeowners insurance -- experienced renewal increases of 3% and 8% respectively, and retention levels remain at 83% and 86% respectively.

Travelers has 51 insurance subsidiaries each with TheStreet.com Financial Strength Ratings in the B (Good) to C (Fair) range.