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Travelers Reports Fourth Quarter Net Income Of $304 Million Or $0.78 Per Diluted Share After Catastrophe Losses Of $689 Million After-tax, Including Storm Sandy, Or $1.78 Per Diluted Share

Stocks in this article: TRV

The Travelers Companies, Inc. (NYSE: TRV):

  • Fourth quarter operating income of $278 million or $0.72 per diluted share.
  • Substantial improvement in underlying underwriting margin.
  • Strong net investment income attributable to alternative investment returns.
  • Written rate gains strong in all segments, with renewal rate change of approximately 8% in Business Insurance.
  • Book value per share of $67.31, up 8% from year-end 2011.
  • Repurchased 5.4 million shares for $400 million in the quarter and 22.4 million shares for $1.450 billion in the full year.
  • Board of Directors approved quarterly dividend per share of $0.46.

The Travelers Companies, Inc. today reported net income of $304 million, or $0.78 per diluted share, for the quarter ended December 31, 2012, compared to $618 million, or $1.51 per diluted share, in the prior year quarter. Operating income in the current quarter was $278 million, or $0.72 per diluted share, compared to $609 million, or $1.48 per diluted share, in the prior year quarter. The decrease in net and operating income in the current quarter compared to the prior year quarter resulted from the after-tax impact of higher catastrophe losses, partially offset by higher underlying underwriting margins and higher net favorable prior year reserve development. Catastrophe losses in the current quarter were $689 million after-tax ($1.054 billion pre-tax), including losses resulting from Storm Sandy of $669 million after-tax ($1.024 billion pre-tax), compared to $68 million after-tax ($102 million pre-tax) in the prior year quarter.

Consolidated Highlights

 

($ in millions, except for per share amounts, and after-tax, except for premiums & revenues)

 

Three Months Ended December 31,

   

Twelve Months Ended December 31,

2012

 

2011

 

Change

2012

 

2011

 

Change

 
Net written premiums $ 5,385 $ 5,261 2 % $ 22,447 $ 22,187 1 %
                           
 
Total revenues $ 6,477 $ 6,373 2 $ 25,740 $ 25,446 1
 
Operating income $ 278 $ 609 (54 ) $ 2,441 $ 1,390 76
per diluted share $ 0.72 $ 1.48 (51 ) $ 6.21 $ 3.28 89
 
Net income $ 304 $ 618 (51 ) $ 2,473 $ 1,426 73
per diluted share $ 0.78 $ 1.51 (48 ) $ 6.30 $ 3.36 88
 

Diluted weighted average shares outstanding

385.3 407.0 (5 ) 389.8 420.5 (7 )
 
GAAP combined ratio 105.4 % 95.9 % 9.5 pts 97.1 % 105.1 % (8.0 ) pts
 
Operating return on equity 5.0 % 11.1 % (6.1 ) pts 11.0 % 6.1 % 4.9 pts
Return on equity 4.7 % 10.0 % (5.3 ) pts 9.8 % 5.7 % 4.1 pts
 
As of December 31,

2012

2011

Change

Book value per share $ 67.31 $ 62.32 8 %
Adjusted book value per share $ 59.09 $ 55.01 7
See Glossary of Financial Measures for definitions and the statistical supplement for additional financial data.
 

“We are pleased with our fourth quarter results, as well as our full year results, particularly in light of Storm Sandy,” commented Jay Fishman, Chairman and Chief Executive Officer. “Our full year operating income was $2.4 billion, which included $1.2 billion in after-tax catastrophe losses, compared to operating income of $1.4 billion in the prior year, which included $1.7 billion in after-tax catastrophe losses. In addition to the lower level of catastrophe losses, higher underlying underwriting margins contributed significantly to the year over year improvement. The underlying underwriting margins improved in each of our businesses, attributable to improved non-catastrophe weather-related losses and the significant pricing gains we have been realizing. Our high quality investment portfolio continued to perform very well. Finally, in light of the overall economic environment, we remained highly disciplined in managing our expenses but continue to invest strategically in our businesses where appropriate.

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