Travelers Cos Inc
The company also warned of worst-case scenario industry losses on recent tornadoes in the United States.
Travelers shares were down 3.3 percent in early trading, making them the biggest drag on the Dow Jones industrial average <.DJI> and the biggest decliner among S&P insurance shares. <.GSPINSC>
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 a series of once-in-a-century tornados.
Analysts have said buyback programs across the industry were 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.
Analysts polled by Thomson Reuters I/B/E/S had on average expected Travelers to earn $1.29 per share on an operating basis this quarter. Since late April, eight analysts have cut their second-quarter estimates, according to Thomson Reuters data, but all of them still expected a profit.
As of Friday morning, none of the 18 analysts reporting earnings estimates on the company had expected it to lose money this quarter. Travelers has beaten Wall Street's average earnings estimate by at least 20 cents per share for the last three quarters in a row.
The difference this time is the weather. Travelers said Friday that its after-tax catastrophe losses for April and May were likely to be between $1 billion and $1.05 billion.
That is double what the company said it would expect to lose for all catastrophes in an average year, based on its long-term modeling.
As a result, the company 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.
Travelers shares fell $2.04 to $59.04 in morning trading, their lowest level in about seven weeks.
(Reporting by Ben Berkowitz; editing by Gerald E. McCormick, Lisa Von Ahn and John Wallace)