10-QPeriod: Q2 FY2017

TRAVELERS COMPANIES, INC. Quarterly Report for Q2 Ended Jun 30, 2017

Filed July 20, 2017For Securities:TRV

Summary

The Travelers Companies, Inc. reported its financial results for the quarterly period ended June 30, 2017. Net income for the quarter was $595 million, or $2.11 per diluted share. This represents a decrease compared to the same period in the prior year, primarily due to higher catastrophe losses and lower net favorable prior year reserve development, partially offset by higher net investment income and net realized investment gains. Premiums increased across all segments, with Personal Insurance showing notable growth. The company maintained a conservative investment philosophy, with a significant portion of its portfolio in high-quality fixed maturities. Management highlighted the company's strong capital position and continued commitment to returning capital to shareholders through dividends and share repurchases. The company also announced an agreement to acquire Simply Business in the UK, which is expected to close in the third quarter of 2017.

Financial Highlights

33 data points
Beta

Revenue

$7.18B

Net Income

$595.00M

8.3% Net Margin

EPS (Diluted)

$2.11

Total Assets

$102.67B

Cash & Equivalents

$328.00M

Free Cash Flow

$906.00M

Financial Statements
Beta
Revenue$7.18B
SG&A Expenses$1.04B
Interest Expense$92.00M
Net Income$595.00M
EPS (Basic)$2.13
EPS (Diluted)$2.11
Shares Outstanding (Basic)277.50M
Shares Outstanding (Diluted)280.00M

Key Highlights

  • 1Net income for Q2 2017 was $595 million, a decrease from $664 million in Q2 2016, reflecting higher catastrophe losses and reduced prior year reserve development.
  • 2Diluted earnings per share decreased by 6% to $2.11 in Q2 2017 compared to $2.24 in Q2 2016, partially due to share repurchases.
  • 3Total revenues increased to $7.18 billion in Q2 2017 from $6.79 billion in Q2 2016, driven by a 5% increase in earned premiums.
  • 4The combined ratio worsened to 96.7% in Q2 2017 from 93.1% in Q2 2016, primarily impacted by higher catastrophe losses and reduced favorable reserve development.
  • 5Personal Insurance segment saw significant growth in earned premiums, increasing by 10% year-over-year.
  • 6The company repurchased 3.8 million shares for $475 million during the quarter and has $5.23 billion of repurchase capacity remaining.
  • 7The company announced an agreement to acquire Simply Business, a UK digital insurance provider, for approximately $490 million.

Frequently Asked Questions

The primary reasons for the decrease in net income were higher catastrophe losses ($403 million in Q2 2017 vs. $333 million in Q2 2016) and lower net favorable prior year reserve development ($203 million in Q2 2017 vs. $288 million in Q2 2016). These factors were partially offset by higher net investment income and net realized investment gains.

Earned premiums increased across all segments. Business Insurance saw a 2% increase, Bond & Specialty Insurance a 3% increase, and Personal Insurance experienced a strong 10% increase in earned premiums year-over-year for the second quarter.

The company continues to be committed to returning capital to shareholders. In the second quarter of 2017, it repurchased 3.8 million shares for $475 million and had $5.23 billion of repurchase capacity remaining. The company expects that the combination of dividends and share repurchases will likely not exceed net income over time.

Travelers announced an agreement to acquire Simply Business, a UK-based digital provider of small business insurance, for approximately $490 million. The transaction was expected to close in the third quarter of 2017.