Travelers Q2 Profit Surges 85% On Lower Catastrophe Losses, Better Margins

(RTTNews) - Property-casualty insurer Travelers Companies Inc. (TRV) Tuesday reported a surge in profit for the second quarter, driven by lower catastrophe losses as well as continued improvement in underlying underwriting margins in all segments.

Net income surged to $925 million or $2.41 per share from $499 million or $1.26 per share in the same quarter last year.

Operating income, which excludes net realized investment gains, was $2.13 per share, while it totaled $1.26 per share last year. On average, 25 analysts polled by Thomson Reuters expected the company to report earnings of $1.60 per share for the quarter. Analysts' estimates typically exclude special items.

Net income and operating income benefited $122 million after-tax from favorable tax and legal settlements. Additionally, net income benefited $109 million after-tax from net realized investment gains.

Total revenues grew 5 percent to $6.674 billion. Net written premiums fell 1 percent to $5.824 billion from $5.868 billion in the prior year. Analysts had a consensus revenue estimate of $5.97 billion for the quarter.

Net written premiums from Business Insurance was $3.068 billion, up 1 percent from last year, driven by continued increases in renewal rate change. Retention rates remained strong while new business volumes decreased modestly. Net written premiums also benefited from positive exposure change at renewal.

Financial, Professional & International Insurance net written premiums also rose 1 percent to $849 million. The increase came from Bond & Financial Products reflecting higher volumes in construction surety and renewal rate increases in management liability.

However, net written premiums from Personal Insurance dropped 5 percent to $1.907 billion, primarily due to lower new business volumes in Automobile and Homeowners & Other as a result of the company's pricing strategy, increasing deductibles and other profitability improvement initiatives.

During the quarter, catastrophes, net of reinsurance, was $340 million, compared to $549 million last year. Catastrophe losses resulted from wind and hail storms in several regions of the U.S. as well as flooding in Alberta, Canada.

Combined ratio was 94.3 percent compared to 100.5 percent last year. Return on Equity improved to 14.6 percent from 8 percent.

Further, the Board of Directors declared a quarterly dividend of $0.50 per share, payable September 30 to shareholders of record on September 10.

TRV, which closed at $85.43 on Monday, is adding 1.6 percent in pre-market activity.