The resulting drop in net income was attributed to accounting changes relating to "goodwill and other intangible assets" for a cumulative charge of $242.6 million, after tax.

Travelers reported operating income of $326.6 million for the first quarter of 2002 compared to $348.8 million for the first quarter of 2001.

The company said in a statement that the fall in operating income was due to "an expected decline in net investment income of $24.5 million, after tax, resulting from realized gains taken in 2001, declining interest rates, and a reduction in [investment] funds due to dividend and debt payments to Citigroup." The company also said it had increased reserves for commercial lines in 2001.

During a conference call held yesterday, Travelers executives said they saw very positive "opportunities" for the company and that it was an overall positive report.

They pointed to the hardening of insurance lines, though a few, such as worker's compensation, are viewed as a challenge. Travelers said it has seen price increases ranging from 9 to more than 20 percent.

The first-quarter results, they said, were about what they had expected.

This is the first report since the company went public in March. Travelers remains a part of New York-based Citigroup family of companies.

Citigroup said it plans to reduce its holding of Travelers to 9.9 percent by the end of 2002.