Jay Fishman, chief executive officer of Travelers Companies, is cutting share buybacks to amass capital and stepping up pitches to win clients from American International Group Inc.
Travelers, the second-largest U.S. business insurer, lowered its full-year earnings forecast today after an 82 percent third-quarter profit drop. Earnings across the property insurance industry are being squeezed by investment declines and the costliest hurricane season since 2005, and Fishman said he'd "meaningfully reduce'' share repurchases in the fourth quarter.
"It feels, right now, that allowing capital to build a little bit by scaling back our stock repurchases is a thoughtful thing to do," Fishman said in an interview. "The world is a riskier place today than it was a year ago."
Hurricanes Ike and Gustav, which struck the Gulf Coast in September, cost Travelers $651 million after taxes and added to losses from California wildfires, Midwest tornadoes and a sugar-factory explosion in the past year. The St. Paul-based insurer also reported $116 million in investment losses as net income dropped to $214 million.
The bankruptcy of Lehman Brothers Holdings Inc., the largest on record in the nation, and AIG's government bailout roiled credit markets, pushing down the value of insurers' portfolios. The biggest insurers in the United States and Bermuda have reported more than $93 billion in write-downs and unrealized losses tied to subprime loans since the beginning of last year.
Shares of Travelers advanced 69 cents, or 1.9 percent, to close at $37.02 Wednesday.