Travelers Operating Profit Falls 24%
20 October 2016 - 11:50PM
Dow Jones News
Travelers Cos. said its third-quarter operating earnings fell
24%, as premium volume hit a record but the company was up against
an unusually strong year-earlier quarter.
Per-share operating earnings, excluding certain items, and net
premiums written beat consensus estimates.
New York-based Travelers is one of the first big
property-casualty insurers to release third-quarter earnings, and
its results are watched closely as a bellwether for others that
follow. Travelers, part of the Dow Jones Industrial Average, is a
leading seller of insurance to U.S. businesses, and sells car and
home insurance to individuals and families.
Net premiums written increased 3.2% to $6.39 billion. Analysts
polled by Thomson Reuters expected net premiums written of $6.37
billion. Travelers' auto-insurance business delivered some of the
company's strongest premium growth, while the business-insurance
unit posted flat net written premiums.
Travelers cited hail storms in the western U.S. and flooding in
the southeast as a factor in results. But it and other
private-sector insurers largely were spared of major catastrophe
damage when Hurricane Hermine landed in Florida but quickly
weakened. The storm left extensive power outages over the Labor Day
weekend on the East Coast but relatively modest claims volume.
Analysts are expected to focus more on any comments during
Travelers' earnings call on Thursday regarding Hurricane Matthew, a
major storm that threatened to hit Florida in early October but
stayed offshore to then make landfall in South Carolina. Its damage
will show up in insurers' fourth-quarter earnings. Matthew caused
flooding and widespread power outages as it moved up the U.S.
Atlantic Coast and took a toll on North Carolina's agricultural
sector.
In the year-earlier period, catastrophe claims were at an
abnormally low level, contributing to the tough comparison
year-over-year.
More broadly, the insurance industry continues to face
challenges from low interest rates, which depress income earned
from investing customers' premium dollars until needed to pay
claims. Travelers said its investment income fell 5.2%, as its
investment team put maturing bonds and new money to work at lower
yields.
For the latest quarter, Travelers reported that its catastrophe
losses, net of reinsurance, reached $89 million, compared with $85
million a year earlier.
For the three months ended Sept. 30, Travelers posted operating
earnings of $701 million, or $2.40 a share, down from $918 million,
or $2.93 a share, a year earlier.
Operating earnings are a widely watched industry benchmark
because they exclude realized capital gains and losses in
companies' big investment portfolios. Analysts expected per-share
operating profit of $2.38.
Over all, Travelers reported a profit of $716 million, or $2.45
a share, down from $928 million, or $2.97 a share, a year
earlier.
Write to Tess Stynes at tess.stynes@wsj.com and Leslie Scism at
leslie.scism@wsj.com
(END) Dow Jones Newswires
October 20, 2016 08:35 ET (12:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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