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Travelers 'fine tunes' investment outlook

US insurer The Travelers Cos Inc has said that a “fine tuning” of its projected investment income should see operating earnings at the lower end of previous forecasts this year.

In April, the company raised its full-year operating earnings projection to a range of $5.55 to $5.85 a share.

The guidance assumes pre-tax catastrophe losses of $525mn for the year and no additional prior-year reserve development, the company said.

Speaking on a conference call last week, the firm’s chief financial officer Jay Benet told investors that the company had managed to largely skirt investments that have caused others to make large writedowns.

Benet said Travelers had “negligible exposure” to sub-prime mortgage-backed securities and none for collateralised debt obligations or asset-backed securities.

Travelers CEO Jay Fishman said the company is keeping its “eyes wide open” for potential investment opportunities, if an acquisition had the potential to improve the “shareholder value equation”.

“We know the risks, the balance sheet risk, the people risk, the culture risk of acquisitions,” said Fishman.

Travelers has been linked with a possible purchase of Royal Bank of Scotland’s insurance business, but Fishman would not comment.

Fishman said Travelers' insurance business was holding up, amid market conditions he described as “softening” but not “soft”.

He added that retention of customers at its commercial accounts business was strong and said that while pricing was “deteriorating” the rates Travelers was able to charge to renew commercial policies was higher than for some peers.

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