Tags: Travelers | profit | underwriting | Superstorm

Travelers Profit Advances 11% as Underwriting Margins Improve

Tuesday, 23 Apr 2013 07:34 AM

Travelers Cos., the second-largest U.S. commercial insurer, said profit climbed 11 percent in the first quarter as the company made more for every dollar it collected in premiums.

Net income rose to $896 million, or $2.33 a share, from $806 million, or $2.02, a year earlier, New York-based Travelers said today in a statement. Operating profit, which excludes some investment results, was $2.31 a share, beating the $2.02 average estimate of 21 analysts surveyed by Bloomberg.

Chief Executive Officer Jay Fishman, 60, is charging some customers more for coverage and changing policy terms to boost underwriting margins as low bond yields and severe weather pressure earnings. Pricing increases at Travelers and its competitors helped lift the Standard & Poor’s 500 Property & Casualty Insurance Index by 32 percent in the last year.

“The fact that the fundamentals are supportive has made it a pretty attractive group,” Mark Dwelle, an analyst at RBC Capital Markets, said by phone before results were announced.

Travelers has surged 34 percent in the 12 months through yesterday in New York, outpacing the 13 percent advance for the 30-company Dow Jones Industrial Average.

Fishman said this month that he’s focusing on raising insurance rates and serving policyholders rather than lamenting how bond yields and the increased frequency of disasters hurt returns. Superstorm Sandy fueled record claims at the insurer in last year’s fourth quarter, 18 months after U.S. tornadoes erased a quarter of profit.

“We are a no-excuses company in a no-excuses industry,” Fishman wrote in his annual letter to investors posted on Travelers’s website April 9.

Fed Stimulus

The Federal Reserve has held its benchmark lending rate near zero since December 2008 to help stimulate the U.S. economy. The central bank’s policy makers, led by Ben S. Bernanke, decided to press on with $85 billion in monthly bond buying until the labor-market outlook has “improved substantially,” according to the minutes of the committee’s March 19-20 meeting released this month.

The stimulus efforts have expanded the Fed’s balance sheet to more than $3 trillion for the first time and lowered borrowing costs for governments, companies and individuals. Ten- year Treasury yields were at about 1.66 percent today after touching a record low 1.38 percent in July.

American International Group Inc., the largest U.S. commercial insurer, is scheduled to report first-quarter results on May 2.

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Travelers Cos., the second-largest U.S. commercial insurer, said profit climbed 11 percent in the first quarter as the company made more for every dollar it collected in premiums.
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2013-34-23
Tuesday, 23 Apr 2013 07:34 AM
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