10-QPeriod: Q2 FY2018

TRAVELERS COMPANIES, INC. Quarterly Report for Q2 Ended Jun 30, 2018

Filed July 19, 2018For Securities:TRV

Summary

The Travelers Companies, Inc. (TRV) reported its second-quarter and first-half 2018 financial results. For the quarter ended June 30, 2018, net income was $524 million, or $1.92 per diluted share, a decrease from the prior year's quarter. This decline was primarily attributed to higher catastrophe losses and lower net realized investment gains. However, the company saw an increase in net earned premiums across all segments, indicating underlying business growth. For the first six months of 2018, net income was $1.19 billion, or $4.35 per diluted share, largely in line with the previous year, with a slight decrease in net income offset by the impact of share repurchases. The company benefited from a lower effective tax rate due to the Tax Cuts and Jobs Act of 2017. Travelers maintained a strong capital position with total investments of $71.16 billion and total assets of $103.52 billion, while continuing its capital return strategy through dividends and share repurchases.

Financial Highlights

33 data points
Beta

Revenue

$7.48B

Net Income

$524.00M

7.0% Net Margin

EPS (Diluted)

$1.92

Total Assets

$103.52B

Cash & Equivalents

$415.00M

Free Cash Flow

$1.14B

Financial Statements
Beta
Revenue$7.48B
SG&A Expenses$1.11B
Interest Expense$90.00M
Net Income$524.00M
EPS (Basic)$1.93
EPS (Diluted)$1.92
Shares Outstanding (Basic)268.70M
Shares Outstanding (Diluted)271.10M

Key Highlights

  • 1Net income for the second quarter of 2018 was $524 million, down from $595 million in the prior year's quarter, impacted by higher catastrophe losses.
  • 2Diluted earnings per share for Q2 2018 were $1.92, a decrease from $2.11 in Q2 2017.
  • 3Total revenues increased to $7.477 billion in Q2 2018 from $7.184 billion in Q2 2017.
  • 4Earned premiums increased by 5% in Q2 2018 to $6.70 billion, with growth observed across all business segments.
  • 5The company reported net favorable prior year reserve development of $186 million pre-tax in Q2 2018.
  • 6Shareholders' equity stood at $22.62 billion at June 30, 2018, and the company repurchased $350 million of common stock during the quarter.
  • 7The combined ratio for Q2 2018 was 98.1%, an increase from 96.7% in the prior year, driven by higher catastrophe losses.

Frequently Asked Questions

In the second quarter of 2018, Travelers reported a net income of $524 million, or $1.92 per diluted share, which was lower than the $595 million net income, or $2.11 per diluted share, reported in the second quarter of 2017. This decrease was primarily due to higher catastrophe losses and lower net realized investment gains.

Total revenues increased to $7.477 billion in the second quarter of 2018 from $7.184 billion in the prior year. The primary driver for this growth was an increase in earned premiums, which rose by 5% to $6.70 billion, with positive contributions from all business segments: Business Insurance, Bond & Specialty Insurance, and Personal Insurance.

The combined ratio for the second quarter of 2018 was 98.1%, an increase from 96.7% in the same period of 2017. This deterioration was mainly driven by higher catastrophe losses, which increased by $85 million pre-tax compared to the prior year quarter, and a decrease in net favorable prior year reserve development.

Travelers maintained a strong capital position with total assets of $103.52 billion and total investments of $71.16 billion as of June 30, 2018. Shareholders' equity was $22.62 billion. The company continued to return capital to shareholders through $207 million in dividends paid during the quarter and $350 million in common share repurchases, with $3.86 billion of repurchase authorization remaining.