The St. Paul Travelers Companies Inc. reported first-quarter net income today of $1.006 billion, compared with $212 million for the period in 2005.
But that 500 percent rise was attributed primarily to the fact that net income in the prior-year quarter included a $665 million after-tax loss from discontinued operations.
Analysts said the results were roughly in line with consensus expectations.
Bear Stearns analyst David Small said the gross written premium decline of 8.4 percent in the commercial lines segment indicated the company remained disciplined in a deteriorating pricing environment.
Morgan Stanley analyst William Wilt wrote that the company's 10 percent premium growth in the personal lines sector could be a cause of concern since it stemmed from a new product rollout and a lower than expected reserve release. "Rising severity of claims, as from a new or untested product, might dampen favorable reserve development," Mr. Wilt wrote.
Net and operating income in the current quarter included an after-tax benefit of $32 million for net favorable prior-year reserve development, compared with an after-tax benefit of $36 million in the 2005 quarter. There were no catastrophe losses reported in the current quarter, compared with an after-tax charge of $20 million in the prior-year quarter.
The combined ratio of 88.9 represented a 1.6 point improvement from 2005.
Net investment income of $670 million after-tax was a 15 percent increase from the prior-year quarter.
Jay Fishman, chairman and chief executive officer, said the company's first-quarter numbers represented an 18.1 percent operating return on equity.
The company also approved a 13 percent increase in quarterly dividend to 26 cents per share and authorized a $2 billion share repurchase program, which represents approximately 7 percent of outstanding shares based on yesterday's closing price.
© 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.