By Mackenzie Tatananni
Travelers stock climbed Wednesday after first-quarter earnings handily topped estimates, even as the insurance company incurred a substantial loss due to the California wildfires.
Travelers reported earnings of $1.91 a share in the quarter, surpassing analysts' calls for 79 cents, according to FactSet. Net written premiums of $10.5 billion were just shy of the $10.8 billion Wall Street was anticipating.
CEO Alan Schnitzer lauded the company's "substantial profit" in the quarter despite the deadly wildfires that tore through the Los Angeles area earlier this year. The fires, which claimed the lives of 30 people, were the costliest U.S. disaster to date, with total damage and economic loss estimated at $275 billion.
Travelers said catastrophe losses widened to $2.27 billion from the $712 million reported a year earlier, driven primarily by the fires "as well as severe wind and hail storms in multiple states."
There also is the matter of macro uncertainty, including fears that President Donald Trump's tariffs could nudge insurance premiums higher. Schnitzer brushed off analysts' concerns during the earnings call, asserting that any direct impacts of the levies will be "pretty manageable."
"It's just a fraction of auto and property losses that are physical damage related, and only a fraction of those are materials that would be impacted by the tariffs," Schnitzer said.
The most significant impact, in his view, likely will be to physical damage repair costs, notably for private passenger vehicles. However, the CEO only anticipates a one-time impact amounting to "around a mid-single digit increase" to pay auto severity.
"If recent favorable trends persist, we may be able to absorb whatever the impact is inside our loss picks," Schnitzer added.
Travelers stock jumped 3.7% to $258.85. Shares remain up 7.5% this year and up 25% over the past 12 months. The Dow Jones Industrial Average and S&P 500 fell 0.6% and 1.2%, respectively, on Wednesday.
Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com
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April 16, 2025 10:58 ET (14:58 GMT)
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