Surprisingly high premium growth marked St. Paul Travelers' second-quarter financials, according to one investment bank.
Nonetheless, the carrier's $970 million profits represented a decline from the prior year period's $1.069 billion due to a one-time gain of $138 million in the 2005 second quarter.
"Overall, it was a good quarter characterized by surprisingly high premium growth in commercial and specialty lines," wrote Morgan Stanley analyst William Wilt.
The company also reported net record premiums written of $5.7 billion, up 8 percent from the prior year period.
Company chairman Jay Fishman noted that strong retention rates and attractive margins continued. "We see attractive new business opportunities, although with retentions high on an industry basis, the flow in the marketplace is somewhat limited," he said.
The combined ratios in the commercial, specialty and personal segments were 90.4, 88.6 and 90.1, respectively.
Mr. Wilt said that premium growth in commercial and specialty segments proved to be the biggest surprise. "Is it good growth?" he wrote. "E&S [excess and surplus] writers have commented this quarter about increasingly expansive standard lines companies."
More evidence of a catastrophe reinsurance crunch could be seen in the carrier increasing its deductible to $1 billion from $750 million, while portions of its program went unplaced. "The takeaway is St. Paul Travelers is exposed to both frequency and severity of storms this season," he wrote.
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