Travelers Reports Record Net Income per Diluted Share of $2.41, Up 91% from Prior Year Quarter
Travelers Reports Record Net Income per Diluted Share of $2.41, Up 91% from Prior Year Quarter
Operating Income per Diluted Share of $2.13, Up 69% from Prior Year Quarter
Return on Equity and Operating Return on Equity of 14.6% and 14.2%, Respectively
Net and operating income of $925 million and $816 million increased from $499 million and $495 million, respectively, in the prior year quarter.
Increase driven by lower catastrophe losses as well as continued improvement in underlying underwriting margins in all segments.
Net and operating income benefited $122 million after-tax from favorable tax and legal settlements. In addition, net income benefited $109 million after-tax from net realized investment gains.
Written rate gains continued to exceed expected loss cost trends in all segments.
Repurchased 3.6 million shares for $300 million in the quarter.
Adjusted book value per share (excludes after-tax net unrealized investment gains) of $62.12, up 5% from year-end 2012. Book value per share of $66.65, down 1% due to the impact of the increase in interest rates on net unrealized investment gains.
NEW YORK--(BUSINESS WIRE)-- The Travelers Companies, Inc. today reported net income of $925 million, or $2.41 per diluted share, for the quarter ended June 30, 2013, compared to $499 million, or $1.26 per diluted share, in the prior year quarter. Operating income in the current quarter was $816 million, or $2.13 per diluted share, compared to $495 million, or $1.26 per diluted share, in the prior year quarter. The increase in net and operating income compared to the prior year quarter primarily resulted from lower catastrophe losses, higher underlying underwriting margins (i.e., excluding net favorable prior year reserve development and catastrophe losses), and favorable tax and legal settlements, partially offset by lower net investment income and lower net favorable prior year reserve development. Net income also benefited from higher net realized investment gains.
Consolidated Highlights
($ in millions, except for per share amounts, and after-tax, except for premiums & revenues) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2013 | 2012 | Change | 2013 | 2012 | Change | ||||||||||||||||||||||
Net written premiums | $ | 5,824 | $ | 5,868 | (1 | ) | % | $ | 11,421 | $ | 11,365 | - | % | ||||||||||||||
Total revenues | $ | 6,674 | $ | 6,359 | 5 | $ | 13,002 | $ | 12,751 | 2 | |||||||||||||||||
Operating income | $ | 816 | $ | 495 | 65 | $ | 1,703 | $ | 1,296 | 31 | |||||||||||||||||
per diluted share | $ | 2.13 | $ | 1.26 | 69 | $ | 4.44 | $ | 3.27 | 36 | |||||||||||||||||
Net income | $ | 925 | $ | 499 | 85 | $ | 1,821 | $ | 1,305 | 40 | |||||||||||||||||
per diluted share | $ | 2.41 | $ | 1.26 | 91 | $ | 4.75 | $ | 3.29 | 44 | |||||||||||||||||
Diluted weighted average shares outstanding | 379.9 | 391.6 | (3 | ) | 380.8 | 393.5 | (3 | ) | |||||||||||||||||||
GAAP combined ratio | 94.3 | % | 100.5 | % | (6.2 | ) | pts | 91.4 | % | 96.3 | % | (4.9 | ) | pts | |||||||||||||
Underlying GAAP combined ratio | 91.7 | % | 94.5 | % | (2.8 | ) | pts | 91.3 | % | 94.6 | % | (3.3 | ) | pts | |||||||||||||
Operating return on equity | 14.2 | % | 9.0 | % | 5.2 | pts | 15.0 | % | 11.8 | % | 3.2 | pts | |||||||||||||||
Return on equity | 14.6 | % | 8.0 | % | 6.6 | pts | 14.4 | % | 10.5 | % | 3.9 | pts | |||||||||||||||
Change from | |||||||||||||||||||||||||||
June 30, | December 31, | June 30, | December 31, | June 30, | |||||||||||||||||||||||
2013 | 2012 | 2012 | 2012 | 2012 | |||||||||||||||||||||||
Book value per share | $ | 66.65 | $ | 67.31 | $ 64.90 | (1 | )% | 3 | % | ||||||||||||||||||
Adjusted book value per share | 62.12 | 59.09 | 57.18 | 5 | 9 | ||||||||||||||||||||||
See Glossary of Financial Measures for definitions and the statistical supplement for additional financial data. | |||||||||||||||||||||||||||
"Results for the quarter were very strong, with net income of $925 million and return on equity of 14.6%," commented Jay Fishman, Chairman and Chief Executive Officer. "Operating return on equity was 14.2% for the quarter and 15.0% on a year-to-date basis, a significant improvement over prior year results primarily due to lower catastrophe losses and continued improvement in our underlying underwriting margins.
"We are very pleased with the pricing levels we achieved, which once again exceeded expected loss cost trends in all segments, while maintaining solid retentions. Across our commercial insurance businesses, our ability to segment, price and select risk positions us well to continue to improve profitability. In Personal Insurance, our strategy of seeking price increases and improved terms and conditions has improved profitability, but it has continued to negatively impact premiums.
"In June, we reached an agreement to acquire The Dominion of Canada General Insurance Company, part of our strategy of making targeted investments in attractive markets outside the United States. The Dominion will significantly improve Travelers' market position and scale in Canada, and we are very enthusiastic about this opportunity.
"Given our focus on improving profitability, the underwriting results over recent quarters are gratifying. However, given the environment of low interest rates and volatile weather patterns, we will continue to seek higher margins. With improved returns as well as our strategy of returning excess capital to shareholders, we remain well positioned to deliver shareholder value," concluded Mr. Fishman.
Consolidated Results
($ in millions and pre-tax, unless noted otherwise) | |||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||
2013 | 2012 | Change | 2013 | 2012 | Change | ||||||||||||||||||||||||||||||||
Underwriting gain (loss): | $ | 281 | $ | (62 | ) | $ | 343 | $ | 883 | $ | 331 | $ | 552 | ||||||||||||||||||||||||
Underwriting gain (loss) includes: | |||||||||||||||||||||||||||||||||||||
Net favorable prior year reserve development | 192 | 221 | (29 | ) | 423 | 525 | (102 | ) | |||||||||||||||||||||||||||||
Catastrophes, net of reinsurance | (340 | ) | (549 | ) | 209 | (439 | ) | (717 | ) | 278 | |||||||||||||||||||||||||||
Net investment income | 687 | 738 | (51 | ) | 1,357 | 1,478 | (121 | ) | |||||||||||||||||||||||||||||
Other, including interest expense | 42 | (72 | ) | 114 | (20 | ) | (138 | ) | 118 | ||||||||||||||||||||||||||||
Operating income before income taxes | 1,010 | 604 | 406 | 2,220 | 1,671 | 549 | |||||||||||||||||||||||||||||||
Income tax expense | 194 | 109 | 85 | 517 | 375 | 142 | |||||||||||||||||||||||||||||||
Operating income | 816 | 495 | 321 | 1,703 | 1,296 | 407 | |||||||||||||||||||||||||||||||
Net realized investment gains after income taxes | 109 | 4 | 105 | 118 | 9 | 109 | |||||||||||||||||||||||||||||||
Net Income | $ | 925 | $ | 499 | $ | 426 | $ | 1,821 | $ | 1,305 | $ | 516 | |||||||||||||||||||||||||
GAAP combined ratio | 94.3 | % | 100.5 | % | (6.2 | ) | pts | 91.4 | % | 96.3 | % | (4.9 | ) | pts | |||||||||||||||||||||||
Impact on GAAP combined ratio | |||||||||||||||||||||||||||||||||||||
