Travelers Expands Share Repurchase as Q1 Net income Drops

The Travelers Companies reported a big drop in net income during the 2015 first quarter, and its combined ratio nudged slightly higher. Executives attributed the results, in part, to a drop in net investment income and East Coast winter storm catastrophe losses.

Chairman and CEO Jay Fishman was quick to frame the numbers as solid all the same, emphasizing that they absolutely met prior expectations.

“Nothing happened that we had not contemplated or considered a possibility,” Fishman said during the company’s earnings call on April 21.

Net income came in at $833 million for the quarter, or $2.55 per diluted share. That compares to more than $1 billion, or $2.95 per diluted share, in the 2014 first quarter.

Travelers said its combined ratio hit 88.9. In the 2014 first quarter, however, the combined ratio was 85.7, a 3.2-point difference. The insurer attributed the higher 2015 number, in part to lower net favorable prior year reserve development and higher catastrophe losses.

Net written premiums totaled nearly $5.88 billion during the quarter, about on par with $5.87 billion over the same period last year. Broken down, Travelers saw gains in business and international insurance, and a slight increase in personal insurance net written premiums. Bond and specialty insurance dipped slightly.

Travelers booked $592 million in net investment income during the quarter, versus $736 million in the 2014 first quarter. Why such a drop? Blame lower private equity and fixed income returns, which were affected by such trends as lower valuations for energy-related investments.

Travelers said it had boosted by 11 percent its quarterly dividend, raising it to $0.61 per share. This is the 11^th consecutive year of dividend increases with a compound annual growth rate of close to 10 percent, the company noted.

As well, Travelers’ board said it authorized an additional $5 billion in share repurchases. So far, Travelers said it returned $850 million to shareholders during the quarter, including $672 million in share repurchases.

Source: Travelers