ST. PAUL (dpa-AFX) - Property casualty insurer Travelers Companies, Inc. (TRV) reported Tuesday a sharp decline in second-quarter profit, reflecting higher catastrophe losses, and lower one-time gains. Operating earnings missed analysts' estimates. The company also announced a quarterly dividend.
In pre-market activity, Travelers shares were losing $3.26 or 3.42 percent, and trading at $92.
For the second quarter, net income declined 26 percent to $683 million from $925 million a year ago. Earnings per share declined 19 percent to $1.95 from $2.41 last year.
Operating income in the current quarter was $673 million, down 18 percent from $816 million last year. Operating earnings per share fell 9 percent to $1.93 from $2.13 a year ago. On average, 27 analysts polled by Thomson Reuters expected earnings per share of $2.07 for the quarter. Analysts' estimates typically exclude one-time items.
The latest results included Catastrophe losses of $284 million or $0.82 per share, higher than last year. Also, the company's net realized investment gains were $10 million this quarter, lower than $109 million last year. The prior year quarter included an $87 million realized gain related to a short position in U.S. Treasury futures contracts, and $122 million from favorable tax and legal settlements.
The negative impacts in the latest quarter were partially offset by higher underlying underwriting gains, that exclude prior year reserve development and catastrophe losses, the company said.
Total revenues for the quarter was $6.79 billion, 2 percent higher than $6.67 billion a year earlier, with quarterly net written premiums rising 6 percent year-on-year to $6.16 billion from $5.82 billion. Sixteen analysts estimated revenues of $6.16 billion for the quarter.
The company attributed the growth in net written premiums mainly to the acquisition of Dominion of Canada in November 2013.
In the quarter, combined ratio edged up 0.8 percentage points to 95.1 percent due to higher catastrophe losses, while underlying combined ratio dropped 0.8 percentage points to 90.9 percent.
Further, the board declared a quarterly dividend of $0.55 per share, payable on September 30, to shareholders of record as of the close of business on September 10.
Jay Fishman, chairman and chief executive officer, said, 'The comparison of these results to last year's second quarter was meaningfully impacted by the significant increase in catastrophe losses in the current quarter as well as the inclusion of significant favorable tax and legal settlements in the prior year quarter... Net investment income was comparable to the prior year quarter, notwithstanding the impact of the low interest rate environment, as we continued to generate strong returns from our non-fixed income portfolio.'
The company added that it will continue to execute on long-held financial strategy of building and sustaining meaningful competitive advantages, delivering superior profitability and returns, and returning excess capital to shareholders.
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