This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

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 underwriting results in the current quarter reflected a GAAP combined ratio of 103.5 percent, as compared to 95.8 percent in the prior year quarter. This increase of 7.7 points in the combined ratio resulted from higher catastrophe losses (14.2 points), partially offset by higher underlying underwriting margins (4.2 points) and higher net favorable prior year reserve development (2.3 points). Net favorable prior year reserve development in the current quarter primarily resulted from better than expected loss experience related to 2011 catastrophes as well as lower than expected claim department expenses.

The current quarter underlying GAAP combined ratio was 92.8 percent, as compared to 97.0 percent in the prior year quarter. This improvement of 4.2 points primarily resulted from earned rate increases exceeding loss cost trends.

Business Insurance net written premiums of $2.784 billion in the current quarter increased 6 percent from the prior year quarter primarily driven by continued increases in renewal rate change. Retention rates remained strong, and new business volumes increased slightly from the prior year quarter. Net written premiums also benefited from continued positive exposure change at renewal, as well as a modestly higher level of positive audit premiums compared to the prior year quarter.

Select Accounts

  • Net written premiums of $657 million increased 1 percent from the prior year quarter primarily due to higher renewal premium change.
  • Renewal premium change was positive and driven by continued strong renewal rate change.
  • Retention rates increased from the prior year quarter driven by higher retention rates for larger accounts.
  • New business volumes decreased from the prior year quarter.

Commercial Accounts

  • Net written premiums of $718 million increased 8 percent from the prior year quarter primarily due to higher renewal premium change.
  • Renewal premium change was positive and driven by continued strong renewal rate change.
  • Retention rates remained at a high level and increased from the prior year quarter.
  • New business volumes increased significantly from the prior year quarter.

Other Business Insurance

Includes Industry-Focused Underwriting, Target Risk Underwriting and Specialized Distribution

  • Net written premiums of $1.166 billion increased 6 percent from the prior year quarter primarily due to higher renewal premium change.
  • Renewal premium change was positive and driven by continued strong renewal rate change.
  • Retention rates remained at a high level and increased from the prior year quarter.
  • New business volumes decreased slightly from the prior year quarter.

National Accounts

  • Net written premiums of $244 million increased 18 percent from the prior year quarter due to higher new business volumes and increased renewal premium change driven by payroll exposure growth, as well as favorable prior year audit and retro premium. In addition, growing workers’ compensation residual market pools contributed to our premium growth.

Financial, Professional & International Insurance Segment Financial Results

“In Financial, Professional & International Insurance, we continued to see favorable trends in the underlying combined ratio in both our Management Liability and International businesses,” commented MacLean. “The underlying combined ratio improved by 2.6 points quarter over quarter driven by a 4.3 point improvement in the underlying loss ratio. Net written premiums in the segment increased 2% in the quarter, primarily driven by a 6% increase in net written premiums in the International business. Written rate in the Management Liability business improved to almost 8% in the quarter, driving an overall rate increase of 4% in the segment.”

 
       
($ in millions) Three Months Ended December 31,
2012 2011 2012 2011
Pre-tax

After-tax

 
Underwriting gain $ 88 $ 97 $ 50 $ 63

Underwriting gain includes :

Net favorable prior year reserve development 69 72 46 48
Catastrophes, net of reinsurance (45 ) (17 ) (34 ) (13 )
 
Net investment income 95 102 77 85
 
Other 5 7 4 4
       
Operating income $ 188   $ 206   $ 131   $ 152  
                       
 
GAAP combined ratio 88.3 % 87.3 %
 

Impact on GAAP combined ratio

Net favorable prior year reserve development (9.1 ) pts (9.0 ) pts
Catastrophes, net of reinsurance 5.9 pts 2.2 pts
                                 

Operating income of $131 million after-tax decreased $21 million from the prior year quarter mostly due to a $13 million after-tax decrease in the underwriting gain, reflecting the after-tax impact of higher catastrophe losses that were partially offset by higher underlying underwriting margins.

5 of 11

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs