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Travelers Q1 Profit Rises, Tops Estimates

Travelers Q1 Profit Rises, Tops Estimates
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4/23/2013 8:50 AM ET

Property casualty insurance provider Travelers Companies, Inc. (TRV: Quote) reported Tuesday a higher profit for its first quarter, significantly above Wall Street estimates, mainly benefited by higher underlying underwriting margins as well as lower catastrophe losses, and improved net written premiums. The company also announced higher dividend.

In pre-market activity, Travelers shares are currently trading at $87.42, up $2.84 or 3.36 percent.

Chairman and Chief Executive Officer Jay Fishman said, "We are pleased to report our highest quarterly operating income per diluted share since Travelers' initial public offering in 2002. ...Our high quality investment portfolio continued to perform well, with returns modestly declining in line with our expectations given continued low interest rates."

In its first quarter, Travelers' net income increased 11 percent to $896 million from $806 million in the prior year quarter. Earnings per share grew 15 percent to $2.33 from $2.02 a year ago.

Operating income for the quarter, which excluded investment gains, improved 11 percent to $887 million from last year's $801 million, and operating earnings per share climbed 15 percent to $2.31 from $2.01 in the previous year. On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $2.02 per share for the quarter. Analysts' estimates typically exclude special items.

The company noted that it experienced continued improvement in underlying underwriting margins in all segments. Catastrophe losses in the latest quarter were due to tornadoes and hail storms in the Southeastern United States.

In the quarter, underwriting gain reflected a combined ratio of 88.5 percent, compared to 92.2 percent in the prior year quarter.

Total revenues for the quarter edged down 1 percent to $6.33 billion from last year's $6.39 billion. Within total revenues, net investment income decreased mainly due to lower real estate partnership and private equity returns.

Net written premiums, however, increased 2 percent to $5.597 billion from $5.50 billion a year ago. Twelve analysts had consensus revenue estimate of $5.61 billion for the quarter.

According to the company, new business volumes in Business Insurance increased from the prior year, but decreased in Financial, Professional & International Insurance and Personal Insurance.

Segment-wise, business insurance net written premiums increased 5 percent primarily due to continued increases in renewal premium change. Financial, Professional & International Insurance net written premiums grew 7 percent mainly on Bond & Financial Products.

Meanwhile, personal insurance net written premiums decreased 6 percent primarily due to lower new business volumes, largely as a result of the company's pricing strategy, increasing deductibles and other profitability improvement initiatives.

Further, the company said its Board of Directors declared a regular quarterly dividend of $0.50 per share, 9 percent higher than last year, payable June 28 to shareholders of record as of the close of business June 10.

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by RTT Staff Writer

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