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Q3 Results
The St. Paul, Minnesota-based company's third-quarter net income was $935 million or $1.65 per share, compared to $214 million or $0.36 per share in the prior-year quarter.
Operating income was $914 million or $1.61 per share for the third-quarter ended September 30, 2009, compared to $330 million or $0.55 per share in the corresponding quarter of the previous year.
On average, 18 analysts polled by Thomson Reuters expected the company to post earnings of $1.31 per share. Analysts' estimates typically exclude special items.
Total revenue for the latest quarter advanced to $6.33 billion from the previous year's revenue of $6.15 billion, and surpassed the $6.00 billion consensus revenue estimate of seven analysts polled by Thomson Reuters.
Underwriting gain totaled $338 million after tax, compared to underwriting loss of $208 million a year earlier. Net investment income, after tax, rose to $616 million from $587 million in the previous year.
Other Metrics
The company's Business Insurance segment generated quarterly revenue of $3.38 billion, down from $3.45 billion in the year-ago quarter. Financial, Professional & International Insurance unit fetched revenue of $986 million, higher than last year's $982 million. Personal Insurance division, which continued to demonstrate sound fundamentals and sustained earnings power, posted third-quarter revenues of $1.93 billion, up from $1.89 billion in the same quarter of last year.
Gross written premiums dropped to $5.94 billion from $6.13 billion a year ago, and net written premiums totaled $5.34 billion, down 3% from $5.48 billion in the prior-year quarter.
Net realized investment gains in the latest quarter totaled $21 million after tax, compared to net realized investment losses of $116 million after tax in the same quarter of last year.
As of September 30, 2009, net unrealized investment gains, net of tax, amounted to $2.24 billion, compared to net unrealized investment losses, net of tax, of $818 million as at September 30, 2008.
Jay Fishman, Chairman and Chief Executive Officer, said, "We are pleased to report strong third quarter operating income of $914 million and operating return on equity of 14.1%. These results were driven by underwriting profitability in each of our business segments and increased net investment income, as our non-fixed income portfolio yield improved to a positive level."
Year-To-Date Synopsis
For the nine-month period, the company reported net income of $2.34 billion or $4.02 per share, compared to $2.12 billion or $3.47 per share in the year-ago period.
Year-to-date, revenue declined to $18.2 billion from $18.7 billion reported in the comparable period of the previous year.
Future In Focus
Looking ahead, the company now projects full-year 2009 operating earnings to range between $5.30 and $5.50 per share, compared to the previously communicated target range of $4.80 -$5.05 per share. Analysts are looking for earnings of $5.28 per share for the full year.
The company noted that the company's earnings guidance for the full year reflects actual prior year reserve development through the third quarter, but does not assume any additional prior year reserve development, favorable or unfavorable.
Dividend & Buyback
Moreover, the company announced that it has raised its regular quarterly dividend by 10% to $0.33 per share, citing strong earnings performance and cash position and more stable capital markets. This dividend, which is $0.03 higher than the last regular quarterly dividend, is payable on December 31, 2009, to shareholders of record on December 10, 2009.
Travelers Board has also approved an additional $6.0 billion of common share repurchases. "Confidence in our strong balance sheet, ability to execute in the marketplace and our strategy of returning excess capital enable us to continue to create shareholder value," Fishman added.
During the most recent quarter, S&P affirmed Travelers' financial strength ratings of AA- and debt ratings of A- and revised the outlook for these ratings to positive from stable with a one year time horizon for consideration of an upgrade.
Stock Quotes
Travelers Companies shares, which have been trading between $33.07 and $50.77 in the past 52 weeks, closed Wednesday's trading session at $48.02.
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