(Analyst comments were added in paragraphs 9 and 10, stock updates in paragraph 2)
April 16 (Reuters) – Insurance leader Traveler’s first-quarter profit exceeded analysts’ expectations on Wednesday as strong underwriting gains helped bring disaster losses driven by LA’s wildfires to more than $2 billion.
Stocks rose 4%, with shares extending recovery after tariff-related market turmoil drove last week’s three-month lows.
The results reveal the consequences of one of the most expensive natural disasters in California’s history, which claimed several lives and destroyed property, with an estimated economic loss fixed $250 billion to $250 billion.
The disaster losses for travelers who deducted reinsurance hit a record $2.27 billion in the quarter ended March 31, up from $712 million in the same period last year.
However, revenue from pre-tax underwriting revenue rose 32% to $1.58 billion as demand for insurance coverage remained resilient.
“Although California wildfires have suffered devastating, we are pleased to report a substantial profit for the quarter,” said CEO Alan Schnitzer.
The company reported core profit of $443 million, or $1.91 per share, compared with $1.1 billion last year or $4.69 per share. Earnings per share were also helped by stock buybacks.
According to estimates compiled by LSEG, analysts expect profit per share to be 78 cents.
“Travelers are enjoying the headwinds in their business.”
However, the company’s shares “are inferred favorable industry conditions by the quarterly overvaluation (AS) market in the future.”
Insurers have been hit by natural disasters in recent years, especially as events related to extreme weather have become more frequent. Some people, including travelers, try to reduce exposure to high-risk areas.
The industry often complains about California’s strict regulation, which requires them to seek nods from state regulators before raising the prices of most policies.
Insurers say this limits the flexibility to adjust prices based on the risks they take. At the same time, frequent wildfires have made the state a “uninsurable” market, some say.
“The regulatory policy of disconnecting pricing and actual risk clauses has taken insurers out of the market, reducing competition and limiting consumer choice,” Schnitzer wrote in a LinkedIn post last month.
Nevertheless, critics believe that strict controls must be taken to prevent spending from being at the highest state (including taxes, insurance and other bills) at the highest state.
Insurance companies also face potential damage from tariffs, which could expand the cost of building materials and auto parts and increase repair costs. Policy providers will have to absorb additional fees or pass it on to consumers through higher premiums.
Travelers’ stock has fallen 5.6% since President Donald Trump announced full tariffs on April 2. (Reported by Niket Nishant in Bangalore; Editor of Shailesh Kuber)
