10-QPeriod: Q3 FY2009

TRAVELERS COMPANIES, INC. Quarterly Report for Q3 Ended Sep 30, 2009

Filed October 22, 2009For Securities:TRV

Summary

Travelers Companies, Inc. reported a strong third quarter of 2009, with net income of $935 million ($1.65 per diluted share), a significant increase from $214 million ($0.36 per diluted share) in the same period of 2008. This improvement was primarily driven by a substantial reduction in catastrophe losses, which fell from $1.04 billion in Q3 2008 to $158 million in Q3 2009. Net investment income also saw an increase, contributing positively to the results. The company maintained a solid financial position, with total assets of $112.62 billion and shareholders' equity of $28.16 billion. Travelers continued its share repurchase program, buying back approximately $1.00 billion of its common stock during the quarter and announcing an additional $6 billion authorization in October 2009, signaling confidence in its financial strength and commitment to shareholder returns. The GAAP combined ratio improved to 89.7% from 104.7% in the prior year's quarter, indicating improved underwriting profitability.

Financial Highlights

27 data points
Beta

Revenue

$6.33B

Net Income

$935.00M

14.8% Net Margin

EPS (Diluted)

$1.65

Total Assets

$112.62B

Cash & Equivalents

$286.00M

Free Cash Flow

$1.42B

Financial Statements
Beta
Revenue$6.33B
Interest Expense$98.00M
Net Income$935.00M
EPS (Basic)$1.66
EPS (Diluted)$1.65
Shares Outstanding (Basic)558.40M
Shares Outstanding (Diluted)564.10M

Key Highlights

  • 1Net income surged to $935 million ($1.65/share) in Q3 2009, a significant increase from $214 million ($0.36/share) in Q3 2008.
  • 2Catastrophe losses decreased dramatically from $1.04 billion in Q3 2008 to $158 million in Q3 2009.
  • 3The GAAP combined ratio improved to 89.7% from 104.7% year-over-year, reflecting better underwriting performance.
  • 4Earned premiums remained relatively stable, decreasing slightly by less than 1% to $5.42 billion in Q3 2009 compared to $5.45 billion in Q3 2008.
  • 5Net investment income increased to $763 million from $716 million in the prior year's quarter.
  • 6The company repurchased approximately $1.00 billion of its common stock in Q3 2009 and announced a new $6 billion repurchase authorization.
  • 7Shareholders' equity grew to $28.16 billion, with book value per share at $51.24.

Frequently Asked Questions

The primary driver was a substantial reduction in catastrophe losses, which decreased from $1.04 billion in the third quarter of 2008 to $158 million in the third quarter of 2009. Additionally, an increase in net investment income and net realized investment gains (compared to losses in the prior year) also contributed to the improved profitability.

The investment portfolio showed positive signs. Net investment income increased to $763 million from $716 million in the prior year's quarter, boosted by improved returns from non-fixed maturity investments. The fixed maturity portfolio's amortized cost was $62.21 billion, and the overall investment portfolio ended the quarter with a net unrealized gain of $3.14 billion.

Travelers repurchased approximately $1.00 billion of its common stock during the third quarter of 2009 and announced an additional $6 billion share repurchase authorization in October 2009. This demonstrates the company's confidence in its financial position and its commitment to returning capital to shareholders.

The company's underwriting performance has improved, as indicated by the GAAP combined ratio, which decreased to 89.7% in the third quarter of 2009 from 104.7% in the same period of 2008. This improvement was driven by lower catastrophe losses and a reduction in the loss and loss adjustment expense ratio.