Travelers Insurance reported first-quarter net income increased 8 percent to $1.09 billion, or $1.56 per share, compared with $1.01 billion, or $1.41 per share in the same period last year.
Net earned premiums for the quarter for the St. Paul, Minn.-based company, formerly known as St. Paul Travelers, rose 6 percent to $5.3 billion, primarily driven by strong retention rates, lower ceded premiums and growth in new business volume, the company said in an earnings statement.
Bear Stearns analyst David Small said the company beat his estimate by 6 cents and consensus by 10 cents per share.
Mr. Small noted that the carrier continues to post surprisingly strong top-line growth.
"Even in this quarter, as other market participants such as brokers and underwriters lamented about the rate of softening, Travelers was able to post net written premium growth of 7.8 percent compared with negative growth of 2.8 percent at Chubb, arguably one of Travelers closest peers," he commented.
Investors must now look to see whether such growth is based on improved products and distribution or aggressive pricing, he advised.
"Interestingly, on renewal business, Travelers seems to be holding the line on price better than its peers," Mr. Small wrote.
That would indicate from other market observations that the overall spread between new and current business is expanding, he added.
In addition, Travelers is appearing to be holding the line on auto pricing, in contrast to complaints previously from competitors, Mr. Small said.
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