The Travelers Companies
) reported earnings of $2.22 per share in the third quarter of
2012, outshining the Zacks Consensus Estimate of $1.61 per share.
Results surged 181% from 79 cents earned in the year-ago quarter.
Operating income in the reported quarter was $867 million,
improving 161% year over year.
HARTFORD FIN SV (HIG): Free Stock Analysis
TRAVELERS COS (TRV): Free Stock Analysis
BERKLEY (WR) CP (WRB): Free Stock Analysis
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Lower catastrophe losses and sturdy underwriting results fueled
Including net realized investment losses of $3 million or 1 cent,
the company reported net income of $864 million or $2.21 per
share, comparing favorably with net income of $333 million or 80
cents a share. The year-ago quarter included net realized
investment gains of $1 million.
Net written premiums during the quarter were $5.7 billion, almost
flat with the year-ago level.
Net investment income increased 4.6% year over year to $722
million during the quarter, largely attributable to better
performance at non-fixed income portfolio.
Travelers posted underwriting gain of $327 million, rebounding
from a loss of $185 million in the year-ago quarter. Combined
ratio improved 1420 basis points year over year to 90.3% in the
reported quarter. The improvement stemmed from lower catastrophe
losses and higher underwriting margins.
Total revenue in the quarter under review was $6.5 billion,
increasing 2% year over year, driven by the augmentation in
premiums earned and net investment income. Revenue surpassed the
Zacks Consensus Estimate of $6.3 billion.
Net written premium increased 5% year over year to $2.96 billion
in the quarter, largely driven by increases in renewal rate
The combined ratio improved 1210 basis points year over year to
103%, mainly due to elevation in underwriting margins and
decrease in catastrophe losses.
Operating income augmented to $543 million in the third quarter
of 2012 from $294 million in the year-ago quarter, attributable
to improvement in underwriting results driven by better
underwriting margins and lower catastrophe losses.
Financial, Professional & International
Net written premium in the quarter under review declined 10% year
over year to $729 million.
The combined ratio deteriorated 400 basis points year over year
to 80.2% in third quarter 2012, attributable to lower net
favorable prior year reserve development, partially offset by
higher underlying underwriting margins.
Operating income descended 14.7% year over year to $180 million,
attributable to lower underwriting gain.
Net written premium skidded 2% year over year to $2 billion,
primarily due to lower new business volumes in Automobile.
The combined ratio improved 2530 basis points year over year to
89.7% in the third quarter of 2012, largely driven by lower
catastrophe losses and higher net favorable prior year reserve
Operating income of $206 million reversed the loss of $108
million in the year-ago quarter largely due to lower catastrophe
losses and higher net favorable prior year reserve development.
Dividend and Share Repurchase
Travelers spent $350 million to buyback 5.4 million shares in the
quarter. The company also paid $179 million in dividends.
Additionally, the board approved a quarterly dividend of 46
cents, to be paid on December 31, to the shareholders of record
as of December 10.
Travelers' continuous share buyback strategy has a positive
impact on earnings per share and also bolsters shareholder value.
Based on a high retention rate, pricing gains, positive renewal
rate changes, favorable prior-year reserve development, prudent
underwriting practices and a strong capital position, Travelers
is poised to perform better going forward. It also scores
strongly with the credit rating agencies.
We have a Neutral recommendation on The Travelers Companies. The
quantitative Zacks # 2 Rank (short-term Buy rating) for the
company indicates upward boost on the shares over the near term.
Hartford Financial Services Group Inc.
), which competes with Travelers, is scheduled to release its
third quarter results on November 1 after the bell while
W.R. Berkley Corporation
) is scheduled to release its third quarter results on October 22
after the bell.