Travelers limits buybacks due to storm losses

NEW YORK (Reuters) – Property insurer Travelers Companies Inc said Friday it is slowing down its share buyback program because of more than $1 billion in catastrophe losses during the second quarter.

The global insurance industry has had an unprecedented start to the year. Even without a major hurricane having made landfall, insurers are on track to post their largest catastrophe losses ever, due largely to earthquakes in Japan and New Zealand and tornadoes in the United States.

Analysts have said buyback programs across the industry are at risk, after years of heavy share repurchases that were driven by limited catastrophe losses and few other good options to deploy growing cash piles.

Dow Jones industrial average component Travelers said Friday its after-tax catastrophe losses for April and May were likely to be between $1 billion and $1.05 billion.

As a result, it will buy back less than $250 million in stock in the second quarter. In the first quarter repurchases topped $1.1 billion.

In the second half of the year, Travelers said repurchases would be about $400 million in excess of operating income. As of late January the company’s total authorization for repurchases was $6.5 billion. (Reporting by Ben Berkowitz, editing by Gerald E. McCormick)