Travelers CEO Fishman: Q3 Results ‘Just Terrific’

At the start of The Travelers Cos. 2014 third quarter investor call, Chairman and CEO Jay Fishman virtually gushed about the numbers he and his team were about to discuss.

“As I am sure you read, the results this quarter were just terrific,” Fishman said.

Sometimes those statements amount to hyperbole. But Travelers, one of the biggest property/casualty insurers, booked net income of $919 million during the third quarter, or $2.69 per share, versus $864 million, or $2.30 per share over the same period last year.

Operating income also grew, though more gradually, hitting $893 million, or $2.61 per diluted share for the 2014 third quarter, up from $883 million or $235 million in the 2013 third quarter. Travelers credited everything from higher net investment income to lower catastrophe losses for the gains, though they were partially offset by lower net favorable prior year reserve development and a lower underlying underwriting gain, according to the company.

Looked at another way: Net written premiums and net income are up 6 percent over last year, operating income grew 1 percent, net income per share soared 17 percent and operating income per share spiked 11 percent.

Share repurchases also helped boost per-share gains, Travelers said. However, the combined ratio ticked slightly higher to 90, versus 88.9 in the 2013 third quarter.

Fishman crowed that underwriting performance was strong across all business segments, which also drove higher investment returns. He expressed particularly bullish sentiments, however, about Travelers’ investment arm.

“I am particularly proud of the investment department performance,” Fishman said during the call. “In a challenging environment they maintained discipline and did the right things.”

More broadly, however, Fishman said Travelers’ results “were driven by decisions made years ago translated to successful marketplace strategies.” He added that moving ahead, Travelers would focus primarily on “more of the same – first-rate execution of a data-driven strategy.” He said his team would also focus on “challenging conventional wisdom” when needed in order to identify growth opportunities.

Here are more Travelers Q3 results in detail:

• Total net written premiums reached $6 billion, up from $5.7 billion in the 2013 third quarter.
• Book value per share climbed to $76.42, versus $70.15 last year.
• Net investment income landed at $719 million, a substantial gain from $657 million booked over the same period in 2013.
• Net written premiums grew by 10 percent in Travelers’ Business and International Insurance division, to $3.56 billion, versus almost $3.25 billion a year ago. Bond and Specialty Insurance net written premiums hit $556 million, a 1 percent gain over $553 million in the 2013 first quarter. Personal Insurance premiums came in at $1.9 billion, essentially flat year-over-year, but noteworthy in what remains a soft market segment.

Photo: Joshua Roberts/Bloomberg