Market Overview

Travelers Exceeds Analysts Predictions as Policy Sales Increase

Travelers Insurance exceeded analysts' estimates despite posting a 4% decrease in net income for the first quarter of 2012 and the company increased premiums and policy sales.

Travelers (NYSE: TRV) had a net income of $806 million in the quarter, $2.02 per share. Operating profit, which excludes some investment results, was $801 million, $2.01 per share, compared to $826 million or $1.89 per share a year earlier. This year's results beat the $1.52 average estimate of analysts surveyed by Bloomberg.

The results were driven by increased policy sales as net written premiums increased 1% to $5.5 billion. Business insurance renewal premiums rose 8% and homeowner's insurance renewal premiums rose 10% from the fourth quarter.

“In homeowners, we have implemented higher deductibles as well as other changes in terms and conditions in a number of states,” said President and Chief Operating Officer Brian MacLean in a press release issued this morning. “Given the potential for continued unusual weather patterns, we are going to continue to take the actions we believe are necessary to improve returns.”

Last year insurers were hit with a variety of unique weather including droughts across the southern portion of the US, Hurricane Irene in the Northeast and tornados in Joplin, Mo. and Tuscaloosa, Ala., all of which drove income down for major insurers.

Catastrophes have cost the New York-based insurer $109 million so far this year compared to $122 million in the first quarter of 2011.

Investment income decreased from $622 million to $593 million because of low investment yields as the Federal Reserve Holds interest rates near historic lows. Travelers and other insurers are looking for higher-yield investments.

The company rose its dividend to 46 cents from 41 cents per share, beating the 43 cent per share estimate of analysts surveyed by Bloomberg.

Posted-In: Earnings News Best of Benzinga

 

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