TRAVELERS COMPANIES, INC. Quarterly Report for Q2 Ended Jun 30, 2011

Summary

Travelers Companies, Inc. (TRV) reported a net loss of $364 million, or $0.88 per diluted share, for the second quarter of 2011, a significant decline compared to a net income of $670 million, or $1.35 per diluted share, in the same period of 2011. This downturn was primarily driven by an elevated level of catastrophe losses, which totaled $1.67 billion, significantly impacting the combined ratio to 125.0%, compared to 95.2% in the prior year. While premiums showed a modest increase, favorable prior year reserve development decreased substantially, further contributing to the weaker results. The company continued its share repurchase program, indicating confidence in its financial position despite the quarterly loss.

Key Highlights

• 1The company reported a net loss of $364 million for the second quarter of 2011, a stark contrast to the net income of $670 million in the same period of 2011.
• 2Catastrophe losses were exceptionally high at $1.67 billion, significantly deteriorating the GAAP combined ratio to 125.0% from 95.2% in the prior year.
• 3Earned premiums increased by 3% to $5.50 billion for the quarter, signaling underlying business stability.
• 4Net favorable prior year reserve development decreased significantly to $168 million ($111 million after-tax), down from $384 million ($252 million after-tax) in the prior year's quarter.
• 5The company repurchased approximately 3.9 million shares for $237 million in the quarter, demonstrating ongoing commitment to returning capital to shareholders.
• 6Book value per common share increased by 7% to $59.62 compared to June 30, 2010, reflecting a healthy balance sheet despite the quarterly loss.
• 7The Personal Insurance segment experienced a substantial operating loss of $471 million, heavily influenced by catastrophe losses.

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