By Angela Chen
Travelers Cos. reported a modest level of catastrophe claims and
higher premiums written helped push its fourth-quarter results
ahead of Wall Street expectations.
New York-based Travelers sells an array of policies to small,
midsize and large companies, and is a well-known name in car and
home insurance sold to individuals. One of the country's largest
property-casualty insurers, Travelers often sets the tone for
industry earnings that will be announced by peers in the coming
weeks.
Analysts watch closely how it is maneuvering through a
competitive price environment while low interest rates continue to
put pressure on insurers' big investment portfolios.
Travelers' operating profit, a key metric which excludes
realized capital gains or losses in its investment portfolio,
increased to $1.02 billion, or $3.07 a share, from $981 million, or
$2.68 a share, a year earlier.
Analysts had expected $2.54 a share in operating earnings.
On the basis of generally accepted accounting principles, the
company posted a profit of $1.04 billion, or $3.11 a share, up from
$988 million, or $2.70 a share a year earlier.
Revenue grew to $6.78 billion.
The company faced a tough year-over-year comparison because the
year-earlier quarterly operating profit reflected especially strong
investment income and unusually low catastrophe claims, and
analysts weren't expecting so many favorable developments to
repeat. But the company beat the estimates handily and topped the
year-earlier results, as well.
Per-share earnings got a lift from the Travelers' commitment to
returning excess capital to shareholders through share buybacks.
The company said it returned $1.18 billion to shareholders in the
quarter, including $1 billion in buybacks. That is about flat from
the year-earlier quarter.
Net written premiums increased 5% to $23.91 billion.
The pretax impact of catastrophes declined slightly $41 million
in the period, from $53 million in the year-ago period. Many
insurers' fourth-quarter results are being helped by a quiet 2014
hurricane season in the North Atlantic.
The company's combined ratio was 85%--meaning it spent 85 cents
on claims and expenses for every dollar it collected in
premiums--an improvement from 87.7% a year earlier.
Net investment income decreased 9.3% to $637 million
pre-tax.
Shares of Travelers, active premarket, are up about 24% in the
past 12 months through Wednesday's close.
Write to Angela Chen at angela.chen@dowjones.com
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