Travelers Q1 Results Miss View; Boosts Dividend, Share Buyback

(RTTNews) - Property casualty insurance provider Travelers Companies, Inc. (TRV) on Tuesday reported a 21 percent decline in profit for the first quarter from last year, reflecting lower net investment income and underwriting gains. Both revenue and earnings per share for the quarter missed analysts' expectations.

In addition, the company's board of directors approved an 11 percent increase in the quarterly cash dividend and authorized an additional $5 billion of share repurchases.

The New York-based company reported net income for the first quarter of $833 million or $2.55 per share, down from $1.05 billion or $2.95 per share in the prior-year quarter. Excluding certain items, operating income for the quarter was $827 million or $2.53 per share, compared to $1.05 billion or $2.95 per share in the prior year.

On average, 25 analysts polled by Thomson Reuters expected the company to report earnings of $2.54 per share for the quarter. Analysts' estimates typically exclude one-time items.

The company attributed the decline in operating income and net income to lower net investment income, a benefit from a change in state assessment law in the prior year, and lower net favorable prior year development.

Total revenues for the quarter declined 1 percent to $6.63 billion from $6.71 billion in the same quarter last year. Net written premiums edged up less than 1 percent to $5.90 billion. Analysts' consensus revenue estimate for the quarter was $6.04 billion.

The increase in net written premiums reflects positive renewal premium changes in all segments as well as higher retention and new business volumes in Business and International Insurance and Personal Insurance.

The company reported an underwriting gain of $620 million for the quarter, lower than $791 million a year ago. The underlying underwriting gain in the prior-year quarter benefited from a $49 million after-tax reduction in the estimated liability for state assessments to be paid by the company related to workers' compensation premiums due to a change in state law.

Combined ratio increased 3.2 points from last year to 88.9 percent, reflecting a higher underlying combined ratio, lower net favorable prior year reserve development and higher catastrophe losses.

Net investment income for the quarter declined to $592 million from $736 million in the year-ago quarter, primarily due to lower private equity and fixed income returns.

The company's board declared a quarterly dividend of $0.61 per share, an increase of 11 percent. This dividend is payable on June 30, 2015, to shareholders of record as of the close of business on June 10, 2015.

The $5 billion of share repurchases authorized by the board is in addition to the $884 million that remained from previous authorizations as of March 31, 2015.

TRV closed Monday's trading at $106.14. In Tuesday's pre-market activity, the stock is down $1.39 or 1.31 percent to $104.75.