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Travelers Q1 Profit Tops View, Hikes Dividend


Property insurer Travelers Companies, Inc. (TRV) on Thursday reported a decline in profit for the first quarter from last year, when results included a gain from the resolution of tax matters.

However, operating earnings per share increased from last year and beat analysts' estimates, while revenues also were up. The company hiked its quarterly dividend by 12 percent.

Travelers has been among the most active insurers in raising prices in recent months. In the Business Insurance segment, the company recorded renewal price gains of 8 percent, up from 6 percent in the preceding fourth quarter.

The company also recorded rate increases in other business lines, including 4 percent in auto and 10 percent in homeowners policies.

Jay Fishman, chairman and chief executive officer of Travelers said, "We are very pleased with our strong results this quarter, as we reported net and operating income in excess of $800 million and return on equity and operating return on equity of 13.1% and 14.7%, respectively."

Underwriting gain on an after-tax basis in the latest quarter was $248 million, compared to $249 million last year, which included a $100 million benefit from the resolution of tax matters.

The underwriting gain reflects a combined ratio of 92.2 percent, an improvement from 94.7 percent in the prior year quarter.

The improvement in the combined ratio was partly driven by a $67 million pre-tax increase in net favorable prior year reserve development and an $18 million pre-tax decrease in catastrophe losses to $168 million.

Travelers' net income for the first quarter declined to $806 million from $839 million in the prior-year quarter. However, on a per share basis, earnings rose to $2.02 from $1.92 in the year-ago period on lower number of shares outstanding.

Excluding net realized investment gains, operating income was $801 million or $2.01 per share, compared to operating income of $826 million or $1.89 per share in the prior-year quarter.

On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $1.52 per share for the quarter. Analysts' estimates typically exclude special items.

Net and operating income in the prior-year quarter included a benefit of $104 million from the resolution of prior year tax matters.

Total revenues for the latest quarter rose 2 percent to $6.39 billion from $6.28 billion in the same period last year. Net written premiums increased to $5.50 billion from $5.44 billion in the year-ago quarter.

Analysts had a consensus revenue estimate of $5.71 billion.

The company's board of directors declared a regular quarterly dividend of $0.46 per common share. The dividend, which is $0.05 higher than the last regular quarterly dividend, is payable June 29 to shareholders of record as of the close of business June 8.

In Thursday's session, TRV is trading at $61.78, up $2.31 or 3.88 percent on a volume of 588,201 shares.

by RTTNews Staff Writer

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