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Travelers Cos.' (TRV) first-quarter net income fell 32% as the commercial and personal insurance provider realized a larger amount of investment losses.

As the insurance sector has been roiled by its exposure to the troubled stock and debt markets, Travelers has emerged as a company that, despite also suffering from investment and catastrophe losses, is seen as one that can take advantage of its rivals' weaknesses.

In a Thursday research note, FBR Capital Markets analyst Bijan Moazami said its $2.6 billion in holding company liquidity puts Travelers in a good position to potentially acquire Hartford Financial Services' (HIG) property/casualty operations, which reportedly are up for sale. Travelers "has the ability to complete M&A transactions that other insurers cannot even consider," Moazami wrote.

Travelers, the second-largest U.S. commercial insurer behind American International Group Inc. (AIG), posted net income of $662 million, or $1.11 a share, down from $967 million, or $1.54 a share a year earlier. The company reported a net realized investment loss of 23 cents from a loss of 6 cents a year ago, and $54 million in first-quarter catastrophe losses compared with $62 million in such losses a year ago. Excluding items, earnings fell to $1.34 from $1.60.

Revenue decreased 8% to $5.74 billion.

Analysts surveyed by Thomson Reuters expected earnings of $1.31 and revenue of $6.13 billion.

The combined ratio, the percentage of each dollar the company collects in premiums that it pays out on losses or expenses, rose to 90.6% from 87.6% excluding items such as catastrophes.

Net premiums written rose 2.9% to $5.2 billion. Return on equity, an important measure of profitability, slid to 10.2% from 14.4%.

During the insurer's earnings call Thursday, Jay S. Fishman, Travelers' chief executive, echoed comments made by other insurers, saying that customers are continuing to shop their insurance business to better rated companies in a "flight to quality," that has continued from the last couple of quarters. Travelers is becoming "more successful at converting" these shoppers to customers, Fishman said.

The company affirmed January's full-year view for earnings of $4.50 to $4.90 a share, which was well below analysts' estimates at the time. Analysts recently expected $5.39 a share.

Travelers' shares recently fell $1.32, or 3.2%, to $41.20.

-By Lavonne Kuykendall, Dow Jones Newswires; 312-750-4141; lavonne.kuykendall@dowjones.com

-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; kerry.grace@dowjones.com