Travelers' Profit Falls, But Beats Expectations

By Tomi KilgoreMarketsMarketWatch Pulse

Travelers Cos. Inc. reported Thursday third-quarter earnings that fell to $716 million, or $2.45 a share, from $928 million, or $2.97 a share, in the same period a year ago, primarily a result of lower net favorable reserve development and higher weather-related losses. Excluding non-recurring items, operating earnings per share came to $2.40, beating the FactSet consensus of $2.38. Total revenue rose 2% to $6.96 billion, above the FactSet consensus of $6.87 billion, as net written premiums grew 3% to $6.39 billion to top expectations of $6.37 billion. The combined ratio increased six percentage points to 92.9%, above the FactSet consensus of 92.3%, due to a higher underlying combined ratio and lower net favorable prior year reserve development. "We are encouraged that the markets in which we operate continue to remain stable," said Chief Executive Alan Schnitzer. "While returns from our high-quality fixed income portfolio declined in line with our expectations due to the continued low interest rate environment, returns from our non-fixed income portfolio improved from recent quarters and were comparable to the prior year quarter." The insurer's stock, which was still inactive in premarket trade, has gained 3% year to date, while the Dow Jones Industrial Average has tacked on 4.5%.

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