The Travelers’ 2008 Q3 hurricane, investment losses worth more than US$700 million

The Travelers Companies Inc. (NYSE:TRV) has estimated its 2008 Q3 after-tax losses to be approximately US$690 million, net of reinsurance, for catastrophe losses related to Hurricanes Ike, Gustav and Dolly.The company said its loss estimates for Hurricane Ike reflected catastrophe losses in eight states, including Travelers’ estimated share of assessments from the Texas Windstorm Insurance Association.Citing “the recent financial market disruption,” the company also reported its initial estimates of net realized investment losses for 2008 Q3.”The company expects to record net realized investment losses, including impairments, of approximately [US]$115 million after-tax ($170 million pre-tax) in the third quarter of 2008,” the company reported. “This includes impairments of [US]$44 million after-tax ($67 million pre-tax) with respect to securities issued by Lehman Brothers Holdings Inc. and its subsidiaries.”Travelers noted that as of Sept. 30, 2008, it was not a party to any credit default swaps and the company had approximately US$15 million of loans outstanding under its securities lending program, “for which the company believes it has no exposure to loss.”Travelers said it expected to report net favorable prior-year reserve development of approximately US$210 million after-tax ($330 million pre-tax) in the third quarter of 2008. “The net favorable prior year reserve development is driven by better than expected loss experience, primarily in the commercial multi-peril and general liability product lines,” the company said in a release. “It also includes a [US]$46-million, after-tax (US$70 million pre-tax) increase to asbestos reserves. The company completed its annual in-depth asbestos claim review in the third quarter of 2008.”