TRAVELERS COMPANIES, INC. Quarterly Report for Q1 Ended Mar 31, 2016

Summary

Travelers Companies, Inc. (TRV) reported its first quarter 2016 results, showing a net income of $691 million, or $2.30 per diluted share, a decrease from $833 million, or $2.55 per diluted share, in the same period of 2015. This decline was primarily driven by increased catastrophe losses and lower net favorable prior year reserve development, partially offset by a decrease in income tax expense. Earned premiums saw a modest increase of 2% year-over-year to $5.98 billion, supported by growth in the Personal Insurance segment. The company's combined ratio deteriorated to 92.3% from 88.9% in the prior year, mainly due to higher claims and loss adjustment expenses, particularly from catastrophe events. Investment income also decreased by 8% to $544 million, attributed to lower reinvestment rates and hedge fund returns. Despite these headwinds, Travelers continued its capital return program, repurchasing $550 million in shares and increasing its quarterly dividend by 10%. The company maintains a strong capital position with a debt-to-total capital ratio of 20.8%.

Key Highlights

• 1Net income decreased by 17% to $691 million, with diluted EPS falling to $2.30 from $2.55 year-over-year.
• 2Earned premiums grew by 2% to $5.98 billion, driven by the Personal Insurance segment.
• 3The combined ratio worsened to 92.3% from 88.9% due to higher catastrophe losses and increased claims and loss adjustment expenses.
• 4Net investment income declined by 8% to $544 million, primarily due to lower reinvestment rates and reduced hedge fund performance.
• 5The company repurchased $550 million of its common stock and increased its quarterly dividend by 10% to $0.67 per share.
• 6Shareholders' equity stood at $24.17 billion, with a book value per common share of $82.65.
• 7The company maintained a debt-to-total capital ratio of 20.8%, within its target range.

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