US p/c group Travelers Cos has posted Q1 net income of $647m, marking a decline of 2.3%, as record disaster-related claims erased improved investment results. The New York-based group's underwriting income for the period fell to $155m from $465m, as catastrophe related losses, net of reinsurance, jumped to $471m from $83m. The increase in cat losses was largely tied to winter storms in the eastern US and the Chilean earthquake, making it "an unusually significant catastrophe quarter for Travelers", said chairman and chief executive Jay Fishman. "We were faced with an exceptional number of claims". He told analysts in a conference call that "renewal rate gains remain positive in each of our business segments, retention was strong, and new business in total remained on par with last year's quarter". With the jump in cat losses, Travelers' combined ratio rose to 96.4% from 90.6%, as net earned premiums fell 1.3% to $5.23bn. The rise in cat losses offset a 39% increase in investment income to $753m and a swing to realized investment gains of $25m from year-earlier losses of $214m. Despite the unexpected jump in Q1 cat losses, Travelers is sticking with its previous projection for full-year 2010 earnings to be in a range of $5.20 to $5.55 a share. It raised its quarterly dividend by 9¢ to 36¢ a share. Meanwhile, Travelers said that it had received 52 claims from customers relating to faulty drywall manufactured in China, none of them "significant" in terms of potential payment. It said that it had no direct liability exposure to the companies that manufactured the drywall; it had one general liability policy on a major public residential contractor.