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Travelers Q2 Earnings Down Nine Percent

Posted on 22 Jul 2010

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Windstorms, hail and flooding in the Midwest racked up catastrophe losses that contributed to a 9 percent decrease in second-quarter net income for The Travelers Cos. compared with last year.

The property-casualty insurer with major operations in Hartford reported operating income down 5.7 percent from $690 million, or $1.39 per diluted share, compared with $732 million, or $1.25 per diluted share, same quarter last year. Net income was $670 million, or $1.35 per diluted share, for the second quarter, down from $740 million, or $1.27 per diluted share, in the second quarter of 2009.

Net written premium revenue was up 1 percent to $5.7 billion in the quarter, compared with $5.6 billion in the same quarter last year. The gain was attributed to increases in personal lines of auto and homeowners insurance, but offset by a decline in business insurance as well as financial, professional and international lines.

"Similar to first quarter 2010, personal insurance results were impacted by multiple severe storms affecting the industry in the current quarter," said president and chief operating officer Brian MacLean. "However, looking beyond such highly unpredictable events, the underlying profitability of the segment continued to improve."

Operating income, adjusted for preferred dividends, declined 13.6 percent for the first six months of the year from $1.53 billion last year to $1.32 billion this year.

Book value per-share increased by 18 percent to $55.67 after Travelers repurchased 106 million common shares for $5.4 billion and paid $682 million in common stock dividends in the year ending June 30, said chairman and CEO Jay Fishman.

"Our strategy of returning excess capital to shareholders continues to have a significant positive impact on both earnings per share as well as return on equity," Fishman said. "Since the initial authorization in 2006, we have returned more than $15 billion in capital through common share repurchases and common dividends and we intend to continue this successful strategy."

Travelers shares were down 58 cents to $49.29 in late morning trading on the New York Stock Exchange. Travelers is one of 30 companies that comprise the Dow Jones Industrial Index, which was up sharply early today.