St. Paul, Minn.-based Travelers Companies reported first-quarter net income fell 11 percent to $967 million as investment income dropped 12 percent; however, the firm upped its 2008 operating earnings projections.
The insurer’s net income of $967 million, or $1.54 a share, compared with $1.09 billion, or $1.56 a share in the comparable period last year.
Travelers said it now projects 2008 generated operating income of $5.55 to $5.85 per share, up from a previous range of $5.40 to $5.75 a share.
Despite the net income drop, Jay Fishman, Travelers chairman and chief executive officer, said in a statement that the company is starting the year “with strong financial results, particularly in light of the more challenging investment environment and the continuation of competitive insurance dynamics.”
The insurer’s net income of $967 million, or $1.54 a share, compared with $1.09 billion, or $1.56 a share in the comparable period last year.
Travelers said it now projects 2008 generated operating income of $5.55 to $5.85 per share, up from a previous range of $5.40 to $5.75 a share.
Despite the net income drop, Jay Fishman, Travelers chairman and chief executive officer, said in a statement that the company is starting the year “with strong financial results, particularly in light of the more challenging investment environment and the continuation of competitive insurance dynamics.”
He pointed to operating return-on-equity in excess of 15 percent and a combined ratio below 88.
Mr. Fishman noted “solid top-line performance in all our business segments, with continued strong retentions and renewal price changes consistent with previous quarters.”
Sectors of growth, he said, are “a testament to our disciplined approach to selecting risks thoughtfully and adding value to our agents, brokers and customers.”
Despite the falloff in investment income, he said the company is “very pleased” with its investment portfolio. The fixed income portfolio continued strong. Mr. Fishman said “overall returns were impacted by lower short-term interest rates and much smaller real estate and private equity gains compared to the prior-year quarter.”
The company’s financial strength, he said, positions it “to consider investment portfolio opportunities that may come along as a result of the current investment environment.”
Among its reported highlights, the company cited net written premiums of $5.2 billion, a 1 percent increase from the prior-year quarter, or a 2 percent increase when adjusted for the sales of Afianzadora Insurgentes and Mendota.
Travelers cited combined ratios in business insurance of 86.6; financial, professional and international insurance of 81.4; and personal insurance of 92.2.
The consolidated combined ratio was 87.6.
Net favorable prior-year reserve development was $261 million after-tax ($400 million pre-tax) in the current quarter, compared to $40 million after-tax ($62 million pre-tax) in the prior-year quarter.
Net investment income was $650 million after-tax ($815 million pre-tax), compared to $737 million after-tax ($960 million pre-tax) in the prior year quarter.
Travelers said operating income for business insurance increased by $5 million to $683 million. Operating income for the financial, professional and international segment increased by $52-to-$208 million.
Personal insurance operating income was off by $85-to-$181 million.
Personal insurance results, the company said, were driven down “in part by increased noncatastrophe-related weather losses.”