DOW JONES NEWSWIRES
Travelers Cos.' (TRV) fourth-quarter net income fell 24% on
investment losses and lower prices even as the commercial and
personal insurance provider revised its catastrophe losses
downward.
But the company projected 2009 earnings well below analysts'
estimates, seeing profit excluding investment losses of $4.50 to
$4.90 a share. On average, analysts surveyed by Thomson Reuters
expected $5.59 a share.
Travelers, the second-largest U.S. commercial insurer behind
American International Group Inc. (AIG), posted net income of $801
million, or $1.35 a share, down from $1.06 billion, or $1.64 a
share, a year earlier. The latest results include $138 million in
net realized investment losses, compared with prior-year gains of
$6 million.
Excluding that, earnings fell to $1.58 a share from $1.63 a
share while revenue decreased 6.9% to $6.02 billion. Analysts
expected earnings of $1.46 on revenue of $6.36 billion.
Chief Executive Jay Fishman said Travelers believes it is
well-positioned in the "current uncertain economic environment"
because of its strong balance sheet and debt-to-capital ratio.
The combined ratio, the percentage of each dollar the company
collects in premiums it pays out on losses and expenses, rose to
91.8% from 90.5% excluding items such as catastrophes. The ratio
increased on pricing pressures and a small number of large losses
that exceeded expectations.
Net premiums written edged up 0.4% to $5.39 billion. Return on
equity, an important measure of profitability, slid to 12.8% from
16.1%.
As the insurance sector has been roiled by its exposure to the
troubled stock and debt markets, Travelers has emerged as a company
that, despite also suffering from investment and catastrophe
losses, is seen as one that can take advantage of its rivals'
weaknesses. Sandler O'Neill analyst Paul Newsome said recently that
Travelers was his top pick in the industry because of its light
subprime-mortgage exposure relative to its peers and potential to
win over big commercial insurance accounts from weakened AIG.
Travelers' shares closed Monday at $37.58 and were inactive
premarket. The stock is down 17% this month amid the swoon in
financial stocks, making up the entire drop over the past year.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com
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