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Travelers First-Quarter Profit Down on Cat Losses

Source: AP

Posted on 26 Apr 2010

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Travelers Cos. said Friday that costs of insuring against the damage caused by the Chilean earthquake and winter storms in the eastern United States led to a 2 percent decline in its first-quarter profit.

Those catastrophes were "unusually significant" during the first three months for Travelers as well as for the entire industry, the company said.

Even so, Travelers still raised its quarterly dividend 9 percent to 36 cents a share.

The commercial and property insurer, based in New York said its net income dipped to $647 million from $662 million a year ago. Nut earnings per share rose to $1.25 from $1.11 as the company had fewer shares outstanding.

Excluding items, it said operating profit totaled $1.22 cents per share. That is below analysts' average estimate of $1.36 per share, according to a survey by Thomson Reuters.

Travelers posted $6.1 billion in revenue during the first quarter, an increase of 6.7 percent from $5.4 billion a year earlier.

The lower quarterly profit reflected $312 million, or 61 cents per share, in catastrophe losses tied to several severe winter, wind and hail storms in the eastern United States, as well as the Chilean earthquake.

Investment income rose 39 percent to $753 million.

Traveler's net written premiums edged up 1 percent to $5.25 billion in the first three months of the year, helped by the company's personal insurance and professional and international units. Net written premiums decreased in the company's business insurance unit, largely because of economic activity as a whole has been muffled, the company said.

Travelers, like other insurers, continues to seek customers at time when employers have fewer workers and less valuable property to insurer.

The company's combined ratio for the quarter rose 5.8 points to 96.4 percent. Combined ratio measures the amount of money insurers pay out in claims and expenses compared with how much they receive from writing new business. A ratio above 100 means the insurer pays out more in claims and expenses than it takes in from writing new premiums.