Not entirely a shock, but even insurance companies are feeling the negative ripple effects of the coronavirus pandemic.
Insurance giant Travelers (TRV) - Get Report on Tuesday reported first-quarter earnings that rang in significantly below analysts’ forecasts amid an increase in what it called "catastrophic losses" related to natural disasters like tornadoes and snow storms, and also Covid-19.
The New York-based company said it earned $600 million, or $2.33 a share, down from $796 million, or $2.99 a share, a year ago. Adjusted earnings were $2.62 a share. Analysts polled by FactSet had been expecting per-share earnings of $2.85 a share.
Catastrophic events including storms and other natural disasters were partially responsible for the lower year-on-year numbers, though the coronavirus pandemic also had an impact on earnings as the company prepped its books for potential claims going forward.
Specifically, reductions and cancellations on car insurance, home and business insurance and other types of policies and claims not only put a dent in the company's first quarter earnings but will also likely impact future quarters, CEO Alan Schnitzer said in a statement.
The company clocked “catastrophe” losses of $333 million pretax compared to $193 million pretax in the prior-year quarter. That included Covid-19-related net charges of $86 million pretax included in underwriting gain.
On the brighter side, however, its board still approved a 4% increase in the company's quarterly dividend to 85 cents a share - a positive sign to shareholders that it is still making enough in profits to distribute back.
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