10-QPeriod: Q1 FY2012

TRAVELERS COMPANIES, INC. Quarterly Report for Q1 Ended Mar 31, 2012

Filed April 19, 2012For Securities:TRV

Summary

The Travelers Companies, Inc. reported solid results for the first quarter of 2012, with net income of $806 million, or $2.02 per diluted share. This represents a slight decrease from the prior year's $839 million, primarily due to lower net investment income and a one-time tax benefit in the prior year. However, the company demonstrated improved underwriting margins, with a GAAP combined ratio of 92.2%, down from 94.7% in Q1 2011. This improvement was driven by lower catastrophe losses and significant net favorable prior year reserve development. Key financial strengths include a robust investment portfolio totaling $73.24 billion, primarily in high-quality fixed maturities. The company maintained a strong capital position, with total equity of $24.87 billion and a debt-to-capital ratio of 21.0%. Travelers also actively returned capital to shareholders through $350 million in share repurchases and $161 million in dividends during the quarter, while maintaining substantial capacity for future repurchases. The company's outlook suggests continued focus on improving underwriting margins through pricing and terms and conditions, with expectations of stable retention and modest renewal price increases.

Financial Highlights

30 data points
Beta

Revenue

$6.39B

Net Income

$806.00M

12.6% Net Margin

EPS (Diluted)

$2.02

Total Assets

$104.87B

Cash & Equivalents

$258.00M

Free Cash Flow

$814.00M

Financial Statements
Beta
Revenue$6.39B
Operating Income$801.00M
Interest Expense$96.00M
Net Income$806.00M
EPS (Basic)$2.04
EPS (Diluted)$2.02
Shares Outstanding (Basic)392.00M
Shares Outstanding (Diluted)395.80M

Key Highlights

  • 1Net income of $806 million for Q1 2012, translating to $2.02 diluted EPS.
  • 2GAAP combined ratio improved to 92.2% from 94.7% in Q1 2011, indicating stronger underwriting performance.
  • 3Earned premiums increased by 3% to $5.52 billion, driven by growth across most segments, particularly Business Insurance and Personal Insurance.
  • 4Significant net favorable prior year reserve development of $304 million contributed positively to underwriting margins.
  • 5Catastrophe losses were managed effectively, totaling $168 million, down from $186 million in the prior year quarter.
  • 6Total investments remained strong at $73.24 billion, with a conservative allocation primarily to fixed maturities.
  • 7Company repurchased $350 million of common stock and declared a dividend, demonstrating a commitment to returning capital to shareholders.

Frequently Asked Questions

Travelers reported net income of $806 million, or $2.04 per basic share and $2.02 per diluted share, for the first quarter ended March 31, 2012.

The company's underwriting performance improved, as evidenced by a GAAP combined ratio of 92.2%, down from 94.7% in the prior year's first quarter. This was driven by lower catastrophe losses ($168 million vs. $186 million) and a substantial increase in net favorable prior year reserve development ($304 million vs. $237 million).

Travelers maintained a large and conservative investment portfolio totaling $73.24 billion as of March 31, 2012. The portfolio was primarily composed of fixed maturities (available for sale) at $64.94 billion and short-term securities at $3.37 billion, reflecting a focus on high-quality, liquid assets.

The company demonstrated a commitment to returning capital to shareholders by repurchasing approximately $350 million of its common stock and paying $161 million in dividends during the first quarter of 2012.