Travelers First-Quarter Net Off 2.3%

NU Online News Service, April 23, 10:40 a.m. EDT

The Travelers Companies Inc. reported first-quarter profits fell 2.3 percent, pushed down by "unusually significant" catastrophe losses of $471 million pretax.

Net income was $647 million, or $1.25 per diluted share, compared to $662 million, or $1.11 per diluted share, for the period in 2009.

Operating income excluding some investment results was $631 million, or $1.22 per diluted share, compared to $799 million, or $1.34 per diluted share, in the prior-year quarter, somewhat below analysts' estimates.

Jay Fishman, Travelers chairman and chief executive officer, said in a statement that the company was pleased with the results in the face of "what was an unusually significant catastrophe quarter for Travelers as well as for the entire industry..."

The cat loss including heavy Northeast rainstorm events was $388 million more than what the company sustained in last year's first quarter.

Mr. Fishman said catastrophe impact was largely offset by favorable prior-year reserve development and other favorable items, and operating income of $1.22 per diluted share was consistent with expectations going into the quarter as well as full-year guidance.

Travelers said it continues to expect full-year 2010 operating income in the range of $5.20 to $5.55 per share.

The company said that for the remainder of the year it is projecting catastrophe losses of $504 million pretax and $238 million after tax, or 67 cents per share for the remainder of the year.

Net written premium was listed as $5.21 billion compared with $5.2 billion for the quarter last year.

Investment income improved to $753 million from $542 million in the 2009 first quarter.

"Our underwriting fundamentals were strong, as evidenced by retention rates continuing at high levels, positive renewal rate changes on premiums and non-weather-related loss trends remaining within expectations. These results, in addition to solid net investment income and our strong capital position, enabled us to repurchase 27 million common shares in the quarter for $1.4 billion," said Mr. Fishman.

He said the firm in response to catastrophes was able to "respond promptly and to efficiently manage the claim process," an area "where we feel we have a competitive advantage."

"The insurance market remains broadly consistent with the expectations we had at the beginning of the year, and available investment returns have remained at relatively low levels. Consequently, our strategy continues to be to seek premium rate gains where needed and to aggressively return excess capital," the CEO said.