The Travelers Companies Inc. (TRV, Financial) filed Quarterly Report for the period ended 2009-09-30.
St. Paul Travelers is a leading provider of commercial property-liability insurance and asset management services. Under the Travelers brand the company is also a leading underwriter of homeowners and auto insurance through independent agents. The Travelers Companies Inc. has a market cap of $27.38 billion; its shares were traded at around $48.02 with a P/E ratio of 10.2 and P/S ratio of 1.1. The dividend yield of The Travelers Companies Inc. stocks is 2.5%. The Travelers Companies Inc. had an annual average earning growth of 55% over the past 5 years.
Net income in the third quarter of 2009 totaled $935 million, $721 million higher than net income of $214 million in the same period of 2008, primarily driven by a decline in the cost of catastrophes. In addition, the increase in net income in the third quarter of 2009 reflected net realized investment gains (versus net realized investment losses in the third quarter of 2008) and an increase in net investment income, partially offset by reduced underwriting margins related to pricing and loss cost trends and a decline in fee income. The cost of catastrophes (net of reinsurance) in the third quarter of 2009 totaled $158 million, compared with $1.04 billion in the same period of 2008, which also included hurricane-related assessments and reinstatement premiums. Net favorable prior year reserve development totaled $309 million in the third quarter of 2009, compared with $334 million in the same period of 2008.
Net income of $2.34 billion in the first nine months of 2009 was 10% higher than the comparable 2008 net income of $2.12 billion. This increase was driven by the decline in the cost of catastrophes, partially offset by declines in net favorable prior year reserve development, net investment income, underwriting margins and fee income. The cost of catastrophes in the first nine months of 2009 totaled $441 million, compared with $1.49 billion in the same period of 2008. Net favorable prior year reserve development totaled $828 million in the first nine months of 2009, compared with $1.26 billion in the same period of 2008. Net income in the first and second quarters of 2009 benefited from $87 million of reductions in the estimate of property windpool assessments related to Hurricane Ike that had been recorded as a component of the cost of catastrophes in general and administrative expenses in the third quarter of 2008. Net income in the first nine months of 2009 also included a net benefit of $88 million due to the favorable resolution of various prior year federal and state tax matters.
Earned premiums in the third quarter of 2009 totaled $5.42 billion, a decrease of $27 million, or less than 1%, from the same 2008 period. In the first nine months of 2009, earned premiums of $16.08 billion were $70 million, or less than 1%, lower than the same 2008 period. Earned premiums in the third quarter and first nine months of 2008 were each reduced by $8 million of reinstatement premiums related to catastrophe losses incurred. Reinstatement premiums represent additional premiums payable to reinsurers to maintain coverage limits for certain excess-of-loss reinsurance treaties. In the Business Insurance segment, earned premiums in the third quarter and first nine months of 2009 declined 2% and 1% from the same periods of 2008, respectively, despite strong business retention levels, primarily reflecting the impact of the economic downturn, including premium refunds and mid-term policy cancellations resulting from lower levels of economic activity in the preceding twelve months. In the Financial, Professional & International Insurance segment, earned premiums in the third quarter of 2009 were level with the same period of 2008, and earned premiums in the first nine months of 2009 declined 3% compared with same period of 2008 due to the unfavorable impact of foreign currency exchange rates. Adjusting for the impact of exchange rates, earned premiums in this segment in the third quarter and first nine months of 2009 increased 3% and 1% over the same periods of 2008, respectively. In the Personal Insurance segment, earned premium growth of 2% over the third quarter and first nine months of 2008 reflected continued strong business retention rates and continued renewal premium increases.
Net investment income of $763 million in the third quarter of 2009 was $47 million, or 7%, higher than in the same period of 2008 despite lower short-term interest rates, driven by a return to positive overall yields in the non-fixed maturity investment portfolio. Included in non-fixed maturity investments are private equity partnerships, hedge funds and real estate partnerships that are accounted for under the equity method of accounting. Non-fixed maturity investments produced net investment income of $63 million in the third quarter of 2009, compared with negative net investment income of $37 million in the same period of 2008. Net investment income of $708 million generated by the fixed maturity investment portfolio in the third quarter of 2009 declined from $763 million in the same period of 2008, driven by a decline in short-term interest rates and a lower average level of long-term fixed maturity invested assets.
In the first nine months of 2009, net investment income of $1.96 billion was $346 million, or 15%, lower than in the same period of 2008. The decline in 2009 was due to negative returns from non-fixed maturity investments, compared with positive returns in 2008, as well as a significant decline in short-term interest rates and a lower average level of long-term fixed maturity invested assets. Non-fixed maturity investments produced negative net investment income of $145 million in the first nine months of 2009, compared with net investment income of $34 million in the same period of 2008. The decline in net investment income from these investments in the first nine months of 2009 reflected the challenging capital market conditions that persisted in the first half of 2009. The amortized cost of the fixed maturity portfolio at September 30, 2009 totaled $62.21 billion, $689 million lower than at the same date in 2008, primarily reflecting the impact of $1.89 billion of common share repurchases during the preceding twelve-month period, the sale of the Companys subsidiary Unionamerica in December 2008 and contributions of $310 million to the Companys pension plan in the preceding twelve-month period. These factors were partially offset by strong operating cash flows during that twelve-month period and the issuance of $500 million of senior notes in the second quarter of 2009. The average pretax investment yield of 4.2% in the third quarter of 2009 increased over the average pretax yield of 3.9% in the same period of 2008, reflecting the increase in non-fixed maturity investment income. The average pretax investment yield of 3.6% for the first nine months of 2009 declined from 4.1% in the same period of 2008, primarily reflecting the negative investment income from non-fixed maturity investments in 2009 and the decline in short-term interest rates.
Read the The complete ReportTRV is in the portfolios of Richard Snow of Snow Capital Management, L.P., HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Irving Kahn of Kahn Brothers & Company Inc., Richard Aster Jr of Meridian Fund, Dodge & Cox, Brian Rogers of T Rowe Price Equity Income Fund, David Dreman of Dreman Value Management, NWQ Managers of NWQ Investment Management Co, John Keeley of Keeley Fund Management, Charles Brandes of Brandes Investment.
St. Paul Travelers is a leading provider of commercial property-liability insurance and asset management services. Under the Travelers brand the company is also a leading underwriter of homeowners and auto insurance through independent agents. The Travelers Companies Inc. has a market cap of $27.38 billion; its shares were traded at around $48.02 with a P/E ratio of 10.2 and P/S ratio of 1.1. The dividend yield of The Travelers Companies Inc. stocks is 2.5%. The Travelers Companies Inc. had an annual average earning growth of 55% over the past 5 years.
Highlight of Business Operations:
· Net income of $935 million, or $1.66 per share basic and $1.65 per share dilutedNet income in the third quarter of 2009 totaled $935 million, $721 million higher than net income of $214 million in the same period of 2008, primarily driven by a decline in the cost of catastrophes. In addition, the increase in net income in the third quarter of 2009 reflected net realized investment gains (versus net realized investment losses in the third quarter of 2008) and an increase in net investment income, partially offset by reduced underwriting margins related to pricing and loss cost trends and a decline in fee income. The cost of catastrophes (net of reinsurance) in the third quarter of 2009 totaled $158 million, compared with $1.04 billion in the same period of 2008, which also included hurricane-related assessments and reinstatement premiums. Net favorable prior year reserve development totaled $309 million in the third quarter of 2009, compared with $334 million in the same period of 2008.
Net income of $2.34 billion in the first nine months of 2009 was 10% higher than the comparable 2008 net income of $2.12 billion. This increase was driven by the decline in the cost of catastrophes, partially offset by declines in net favorable prior year reserve development, net investment income, underwriting margins and fee income. The cost of catastrophes in the first nine months of 2009 totaled $441 million, compared with $1.49 billion in the same period of 2008. Net favorable prior year reserve development totaled $828 million in the first nine months of 2009, compared with $1.26 billion in the same period of 2008. Net income in the first and second quarters of 2009 benefited from $87 million of reductions in the estimate of property windpool assessments related to Hurricane Ike that had been recorded as a component of the cost of catastrophes in general and administrative expenses in the third quarter of 2008. Net income in the first nine months of 2009 also included a net benefit of $88 million due to the favorable resolution of various prior year federal and state tax matters.
Earned premiums in the third quarter of 2009 totaled $5.42 billion, a decrease of $27 million, or less than 1%, from the same 2008 period. In the first nine months of 2009, earned premiums of $16.08 billion were $70 million, or less than 1%, lower than the same 2008 period. Earned premiums in the third quarter and first nine months of 2008 were each reduced by $8 million of reinstatement premiums related to catastrophe losses incurred. Reinstatement premiums represent additional premiums payable to reinsurers to maintain coverage limits for certain excess-of-loss reinsurance treaties. In the Business Insurance segment, earned premiums in the third quarter and first nine months of 2009 declined 2% and 1% from the same periods of 2008, respectively, despite strong business retention levels, primarily reflecting the impact of the economic downturn, including premium refunds and mid-term policy cancellations resulting from lower levels of economic activity in the preceding twelve months. In the Financial, Professional & International Insurance segment, earned premiums in the third quarter of 2009 were level with the same period of 2008, and earned premiums in the first nine months of 2009 declined 3% compared with same period of 2008 due to the unfavorable impact of foreign currency exchange rates. Adjusting for the impact of exchange rates, earned premiums in this segment in the third quarter and first nine months of 2009 increased 3% and 1% over the same periods of 2008, respectively. In the Personal Insurance segment, earned premium growth of 2% over the third quarter and first nine months of 2008 reflected continued strong business retention rates and continued renewal premium increases.
Net investment income of $763 million in the third quarter of 2009 was $47 million, or 7%, higher than in the same period of 2008 despite lower short-term interest rates, driven by a return to positive overall yields in the non-fixed maturity investment portfolio. Included in non-fixed maturity investments are private equity partnerships, hedge funds and real estate partnerships that are accounted for under the equity method of accounting. Non-fixed maturity investments produced net investment income of $63 million in the third quarter of 2009, compared with negative net investment income of $37 million in the same period of 2008. Net investment income of $708 million generated by the fixed maturity investment portfolio in the third quarter of 2009 declined from $763 million in the same period of 2008, driven by a decline in short-term interest rates and a lower average level of long-term fixed maturity invested assets.
In the first nine months of 2009, net investment income of $1.96 billion was $346 million, or 15%, lower than in the same period of 2008. The decline in 2009 was due to negative returns from non-fixed maturity investments, compared with positive returns in 2008, as well as a significant decline in short-term interest rates and a lower average level of long-term fixed maturity invested assets. Non-fixed maturity investments produced negative net investment income of $145 million in the first nine months of 2009, compared with net investment income of $34 million in the same period of 2008. The decline in net investment income from these investments in the first nine months of 2009 reflected the challenging capital market conditions that persisted in the first half of 2009. The amortized cost of the fixed maturity portfolio at September 30, 2009 totaled $62.21 billion, $689 million lower than at the same date in 2008, primarily reflecting the impact of $1.89 billion of common share repurchases during the preceding twelve-month period, the sale of the Companys subsidiary Unionamerica in December 2008 and contributions of $310 million to the Companys pension plan in the preceding twelve-month period. These factors were partially offset by strong operating cash flows during that twelve-month period and the issuance of $500 million of senior notes in the second quarter of 2009. The average pretax investment yield of 4.2% in the third quarter of 2009 increased over the average pretax yield of 3.9% in the same period of 2008, reflecting the increase in non-fixed maturity investment income. The average pretax investment yield of 3.6% for the first nine months of 2009 declined from 4.1% in the same period of 2008, primarily reflecting the negative investment income from non-fixed maturity investments in 2009 and the decline in short-term interest rates.
Read the The complete ReportTRV is in the portfolios of Richard Snow of Snow Capital Management, L.P., HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Irving Kahn of Kahn Brothers & Company Inc., Richard Aster Jr of Meridian Fund, Dodge & Cox, Brian Rogers of T Rowe Price Equity Income Fund, David Dreman of Dreman Value Management, NWQ Managers of NWQ Investment Management Co, John Keeley of Keeley Fund Management, Charles Brandes of Brandes Investment.
