Merged St. Paul Travelers Reports Q1 Results

Merged St. Paul Travelers Reports Q1 Results

NU Online News Service, April 30, 2:00 p.m. EDT? The recently merged St. Paul Travelers Companies Inc. reported its quarterly results as a combined corporation for the first time, posting improved net profit from both Travelers and St. Paul operations.[@@]

However, Travelers operations appear to have stronger overall results in the earnings report, while St. Paul operations recorded declining operating income, year-over-year, even though its net income rose thanks to realized investment gains.

The results do not show consolidated results of the two. The company said it intends to show consolidated results beginning the second quarter of this year.

For the first quarter, Travelers' operations came in at $587 million, a 73 percent rise from $340 million.

Travelers underwriting came in at $160 million, compared to an underwriting loss of $12 million in the first quarter of 2003. Net investment income rose to $454 million, up from $344 million. Consolidated operating income for the quarter was $614 million, up sharply from $339 million. Consolidated net written premiums were reported at $3.47 billion, a 10 percent increase from $3.17 billion in 2003.

On the other side of the merged insurance giant, the St. Paul operations reported $188 million in net income for the quarter, a 4 percent improvement from $181 million last year. The St. Paul's net profit got a boost from $71.7 million of after-tax net realized investment gains.

After-tax operating income, however, declined to $124 million, down 65 percent from $206 million during the corresponding period in 2003.

The St. Paul operations posted net written premiums of $1.81 billion, a 9 percent drop from last year. Commercial lines net written premiums were $631 million, a 7 percent increase. Specialty commercial net written premiums dropped 10 percent to $1.16 billion.

The St. Paul operations took a number of charges during the quarter, $125 million in all: an after-tax charge of $53 million because of a reduction in an estimated reinsurance recovery; and after-tax charges of $23 and $20 million to boost reserves in certain international and reinsurance units previously placed into runoff. There was also an after-tax charge of $29 million tied to a construction contractor in St. Paul's surety operations, and an after-tax charge of $16 million for boosting reserves in several other lines of business.

Travelers commercial lines contributed $2.1 billion, compared with $2.02 billion in the first quarter of 2003, to the consolidated net written premiums. Commercial lines reported $402 million in operating income for the quarter, sharply higher than $261 million reported a year earlier.

Travelers personal lines stood at $1.37 billion, up from $1.15 billion. Personal lines net written premiums got a boost from higher business volumes, in part from a Royal & SunAlliance renewal rights transaction, as well as from continuing rate hikes in personal lines business, the company said. Personal lines operation income for the quarter also improved to $237 million, from $113 million one year ago.

Prior-year reserve development also took a turn for the better at Travelers?with a $28 million charge for the quarter, down from a $106 million charge one year earlier.

The consolidated combined ratio for the quarter for Travelers was 91.9, compared to 99.9 in 2003. St. Paul's combined ratio was 101.9, compared with 97.2 during the year-ago period.