The Travelers Companies, Inc. (NYSE:TRV)
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5 Years : From May 2008 to May 2013
DOW JONES NEWSWIRES
Travelers Cos.' (TRV) second-quarter income fell 21% on lower revenue and higher claims costs.
But the commercial and personal insurance provider still raised its full-year earnings outlook, to $4.80 to $5.05 a share from its earlier outlook of $4.55 to $4.95 a share.
Chairman and Chief Executive Jay Fishman said the company's performance reflected "solid underwriting and fixed-income investment results, as well as the continued impact of very low short-term investment yields" and a small loss on its alternative investment portfolio.
As the insurance sector has been roiled by its exposure to the troubled stock and debt markets, Travelers has emerged as a company that, despite also suffering from its investment and catastrophe losses, is seen as one that can take advantage of its rivals' weaknesses.
The company may face a challenge, as other insurers do, from lower employee counts at customers. That would reduce premiums for workers' compensation coverage, or shuttered factories, which could mean less property coverage. Still, analysts have said Travelers could benefit from a flight to quality, as customers seek out insurers that have maintained a good credit rating.
Travelers - the second-largest U.S. commercial insurer behind American International Group Inc. (AIG) in terms of market share as measured by premiums - posted income of $740 million, or $1.27 a share, down from $942 million, or $1.54 a share, a year earlier. Operating income, which excludes net realized investment gains and losses, fell to $1.25 from $1.50.
Revenue decreased 2.1% to $6.16 billion.
Analysts polled by Thomson Reuters expected earnings of $1.28 and revenue of $6.17 billion.
The combined ratio, the percentage of each dollar the company collects in premiums that it pays out on losses or expenses, rose to 93.2% from 89.3% excluding items such as catastrophes.
Net premiums written were flat at $5.61 billion. Return on equity, a key measure of profitability, slid to 11.1% from 14.4%.
Travelers has replaced former parent Citigroup Inc. (C), from which it sum off in 2002, on the Dow Jones Industrial Average, as Citi's substantial restructuring will leave the government with about a 34% stake.
Travelers' shares closed Wednesday at $42.63 and haven't traded premarket.
-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353; firstname.lastname@example.org