TRAVELERS COMPANIES, INC. Quarterly Report for Q1 Ended Mar 31, 2015

Summary

The Travelers Companies, Inc. (TRV) reported its first-quarter 2015 financial results, indicating a net income of $833 million, or $2.55 per diluted share, a decrease from $1,052 million, or $2.95 per diluted share, in the same period of 2014. This decline was primarily attributed to lower net investment income, reduced underwriting margins (excluding catastrophe losses and prior year reserve development), lower net favorable prior year reserve development, and increased catastrophe losses. Earned premiums saw a modest increase of 1% to $5.89 billion, driven by growth in the Business and International Insurance and Personal Insurance segments. The company also announced an 11% increase in its quarterly dividend to $0.61 per share and a significant expansion of its share repurchase authorization by $5.0 billion. Key financial aspects for investors include the combined ratio, which increased to 88.9% from 85.7% in the prior year, reflecting higher claims and underwriting expenses. Despite a decrease in net investment income, the company maintained a strong capital position with a debt-to-total capital ratio of 20.4% (21.8% excluding net unrealized investment gains). Travelers continued its commitment to returning capital to shareholders through dividends and robust share repurchase programs, signaling confidence in its ongoing performance and financial stability.

Key Highlights

• 1Net income decreased by 21% to $833 million ($2.55/share diluted) in Q1 2015 compared to Q1 2014 ($1,052 million or $2.95/share diluted), impacted by lower investment income and underwriting margins.
• 2Earned premiums slightly increased by 1% to $5.89 billion in Q1 2015, with growth primarily in the Business and International Insurance and Personal Insurance segments.
• 3The combined ratio worsened by 3.2 points to 88.9% in Q1 2015, driven by higher claims and underwriting expenses, including $162 million in catastrophe losses.
• 4Net favorable prior year reserve development decreased to $243 million ($158 million after-tax) in Q1 2015 from $294 million ($191 million after-tax) in Q1 2014.
• 5Shareholders' equity remained strong at $24.85 billion, with a debt-to-total capital ratio of 20.4% (21.8% excluding net unrealized investment gains).
• 6The company increased its quarterly dividend by 11% to $0.61 per share and announced a new $5.0 billion share repurchase authorization, demonstrating a commitment to returning capital to shareholders.
• 7A significant payment of $579 million was made for the settlement of asbestos direct action litigation, impacting cash flows from operations.

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