St. Paul Travelers 3Q Profit Down 20%
NU Online News Service, Oct. 29, 1:45 p.m. EDT?The St. Paul Travelers Companies Inc. reported net income of $340 million for the third quarter, a 20 percent fall from the $426 million profit reported during the same period last year.[@@]
The company's financial results for the third quarter were hurt by declining commercial premiums as well as hurricane losses.
In the personal lines segment, The St. Paul Travelers reported operating income of $127 million, improving from $88 million for the prior-year quarter.
Third-quarter net written premiums for personal lines rose by $216 million from one year ago, helped by strong organic growth and new business premiums from the Royal & SunAlliance renewal rights transaction. The company also cited strong retention and continuing increases in premium rates for auto, homeowners and other lines of business for the robust growth of in personal lines.
However, in the commercial lines segment, the company posted operating income of $260 million, declining from $328 million posted during the year-ago period, which did not include results from The St. Paul part of the merged entity. Combined net written premiums for the commercial lines segment fell by $387 million to $2.07 billion compared to one year ago.
The company said the commercial lines' lackluster performance was caused by lower new business as well as the impact of the previously higher premium flow in 2003 associated with the Kemper renewal rights transaction and the planned nonrenewal of certain commercial property risks.
The specialty lines segment also posted lower operating income of $2 million for the third quarter, down from $51 million during the year-ago period, which also did not include the results of The St. Paul. Combined net written premiums for this segment fell by $103 million to $1.408 billion when compared to one year ago.
Overall, the company suffered $402 million of after-tax hurricane-related CAT losses for the quarter. In comparison, The St. Paul Travelers had much smaller CAT losses during the year-ago period–$83 million for the 2003 third quarter.
The company noted that excluding catastrophe losses, operating income for the third quarter was $774 million, better than the $525 million posted one year ago.
The St. Paul Travelers reported that the GAAP combined ratio for the quarter was 103.8 percent, which included 11.6 points for catastrophe losses. The combined ratio one year ago was 94.7.
The overall revenue for the third quarter was $6.26 billion, up from $3.74 billion one year ago, while the overall net written premiums came in at $5.05 billion?a 5 percent drop from the prior-year quarter on a comparable, pro forma combined basis for The St. Paul and Travelers Property & Casualty.
Investment income rose to $514 million for the third quarter, up 5 percent from the year-ago period.
"Our personal segment operations continue to show strong top and bottom line growth as we move forward with our pricing segmentation initiatives," The St. Paul Travelers Chief Executive Jay Fishman said. "Within specialty, we are continuing to grow in areas such as technology, public sector and ocean marine, and are being more selective in areas that are not meeting our return hurdles, such as construction and personal lines at Lloyd's."
The St. Paul Travelers, created when St. Paul acquired Travelers Property & Casualty, offers personal and commercial liability and casualty, property, workers' compensation, auto, marine, and other coverage in North America and the U.K.
The St. Paul Travelers is the second largest business insurer in the United States, behind AIG.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.