Summary
The Travelers Companies, Inc. reported net income of $896 million, or $2.33 per diluted share, for the first quarter of 2013. This represents an 11% increase in net income and a 15% increase in diluted earnings per share compared to the same period in 2012. The improved performance was primarily driven by higher underwriting margins, particularly in the Business Insurance and Personal Insurance segments, and a reduction in catastrophe losses. Net earned premiums remained stable at $5.52 billion, with slight increases in Business Insurance offset by decreases in Personal Insurance. Investment income saw a notable decline of 9% to $670 million, primarily due to lower yields on fixed maturity and non-fixed maturity investments.
Financial Highlights
29 data pointsBeta
Financial Statements
Beta
| Revenue | $6.33B |
| Operating Income | $887.00M |
| Interest Expense | $92.00M |
| Net Income | $896.00M |
| EPS (Basic) | $2.36 |
| EPS (Diluted) | $2.33 |
| Shares Outstanding (Basic) | 377.70M |
| Shares Outstanding (Diluted) | 381.90M |
Key Highlights
- 1Net income increased by 11% to $896 million ($2.33 diluted EPS), demonstrating strong profitability in the quarter.
- 2The GAAP combined ratio improved significantly to 88.5% from 92.2% in the prior year, indicating improved underwriting discipline and loss management.
- 3Catastrophe losses were reduced to $99 million from $168 million in the prior year, contributing positively to underwriting results.
- 4Net favorable prior year reserve development decreased to $231 million from $304 million, suggesting a normalization of reserve releases.
- 5Net investment income declined by 9% to $670 million, reflecting lower yields in the prevailing interest rate environment.
- 6The company continued its capital return strategy by repurchasing $300 million of common stock and increasing its quarterly dividend.
Frequently Asked Questions
The primary driver for the increase in net income was higher underwriting margins, particularly in the Business Insurance and Personal Insurance segments. This was further supported by a significant reduction in catastrophe losses compared to the first quarter of 2012.
Net investment income decreased by 9% to $670 million. This decline was primarily due to lower reinvestment yields on fixed maturity investments and reduced results from non-fixed maturity investments like real estate partnerships and private equity limited partnerships. The average pretax yield on the total investment portfolio was 3.8% in Q1 2013, down from 4.3% in Q1 2012.
The company expects retention levels to remain strong and anticipates achieving price increases on renewal business that generally exceed loss cost trends. For Business Insurance, underlying underwriting margins are expected to be higher than 2012. Financial, Professional & International Insurance expects modestly higher underlying underwriting margins, while Personal Insurance anticipates margins to be broadly consistent with 2012, with improvements expected in Agency Automobile but a modest decline in Agency Homeowners and Other. The company continues to focus on improving underwriting margins through rate increases and expense reductions.
Travelers continued its commitment to returning capital to shareholders. During the quarter, the company repurchased $300 million of its common stock and announced an increase in its regular quarterly dividend by 9% to $0.50 per share. The company's debt-to-total capital ratio, excluding unrealized investment gains, was 20.5%, which is within its target range.