NU Online News Service, May 3, 1:30 p.m. EDT–The St. Paul Travelers Companies quarterly profit fell 64 percent as the insurer took account of a hefty tax charge from selling its stake in asset management firm Nuveen Investments, but operating income from continuing operations rose 49 percent.
The Minnesota.-based company==the second-largest business insurer in the country behind American International Group==said its 2005 first quarter income was $212 million, down from $587 million one year ago.
The carrier said net income was affected by the previously announced $687 million tax charge for its selling of its equity stake in Nuveen Investments Inc., which was partially offset by the carrier's share of Nuveen's quarterly income. The St. Paul Travelers had earlier announced in March it would sell its Nuveen stake to bolster its capital position.
The St. Paul Travelers reported much stronger results on an operating income basis, excluding Nuveen tax charges. It reported $877 million in quarterly income from continuing operations, improving from $587 million.
Overall, The St. Paul Travelers' underwriting gain was $291 million, up 82 percent from $160 million. Overall net written premiums rose to $4.78 billion, up 41 percent from $3.4 billion one year ago. The total quarterly GAAP combined ratio was 90.5 percent, improving 1.4 points from one year ago.
Chief Executive Jay Fishman said all of The St. Paul Travelers insurance units==commercial, specialty and personal==reported higher revenue and operating income, with strong retention levels.
"We are off to an excellent start, with all our business segments generating very strong operating income in the quarter," Mr. Fishman said.
The St. Paul Travelers' commercial segment reported $433 million in operating income and a 94.9 combined ratio, while the specialty segment had $188 million in operating income with a 95.6 combined ratio. The personal lines segment had $285 million operating income with a 78.7 combined ratio.
The carrier also posted $78 million in favorable prior-year-reserve development in its personal lines segment, thanks to continued favorable claim performance in both auto and homeowners and other lines.
Total catastrophe losses came in at $58 million in its specialty and personal lines segments, consisting of $38 million in adverse loss development from 2004 hurricanes and $20 million from floods in the United Kingdom and Texas hailstorms in the first quarter.
The quarterly net investment income was $583 million, up 28 percent from $454 million.
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