Travelers Reports $806M Q1 Income; Renewal Rates Are Up
The Travelers Companies Inc. reported $806 million in net profit for the 2012 first quarter. The first-quarter profit was down 4 percent when compared to one year ago, but the result during the year-ago period was boosted by a one-time, $100 million benefit from a favorable resolution of prior-year tax matters.
Also hurting the overall net profit in the latest quarter was the investment income, which fell compared to one year ago.
Net written premiums for the 2012 first quarter were $5.497 billion, up 1 percent from $5.437 billion reported during the year-ago period.
The GAAP combined ratio improved to 92.2 percent, down 2.5 percentage points from 94.7 percent one year ago.
The total underwriting profit for the quarter, after-tax, was $248 million, down slightly from $249 million one year ago. The underwriting profit was aided by the company’s reserve release. The insurer reported $200 million of net favorable prior-year reserve development, after-tax, for the 2012 first quarter – an increase from $155 million reserve release which was reported one year ago.
Catastrophe losses after-tax, net of reinsurance, lessened during the first quarter to $109 million, down from $122 million one year ago.
Net investment income dropped to $593 million, down from $622 million during the year-ago period. The return on equity (ROE) was 13.1 percent, down slightly from 13.3 percent one year ago.
“We are very pleased with our strong results this quarter, as we reported net and operating income in excess of $800 million and return on equity and operating return on equity of 13.1 percent and 14.7 percent, respectively,” said CEO Jay Fishman.
“Our underwriting performance reflected a GAAP combined ratio of 92.2 percent, an improvement of 2.5 points from the prior year quarter and 3.7 points from fourth quarter 2011.”
Renewal Price Gains ‘Very Encouraging’
Fishman also remained bullish on firming insurance rates this year. “Our renewal price gains in the quarter continued to be very encouraging. In business insurance, we achieved renewal price change of 8 percent in the first quarter, an increase from 6 percent in the fourth quarter,” he noted.
“In financial, professional and international insurance, both renewal price change and retention rates increased and in personal insurance, renewal premium change, which includes changes in exposure, increased to 4 percent in Agency Auto and 10 percent in Agency Homeowners and Other. We are extremely pleased with the pricing gains that our field underwriters have generated while maintaining strong and stable retention rates.”