Travelers profits up in Q1: Free to view

Travelers profits up in Q1: Free to view

Travelers has reported improved first quarter results, with profits climbing by 17% from Q1 2013.

The company also reported improved earnings for the quarter, with the insurer reporting net income of $1.05bn, equal to $2.95 per share, compared with $896m reported in the first quarter of 2013, equal to $2.33 per share.

Travelers announced that the improvement in results was because of chief executive Jay Fishman’s efforts to raise insurance rates selectively in order to boost profitability, in response to storm claims pressuring the company’s returns. Fishman has also been cutting costs to help increase the company’s return on equity, which climbed to about 17% in the first quarter, from 14% in Q1 2013.

Travelers also reported that renewal rates were above loss trends in all business segments. The increase in revenues helped the company weather the impact of catastrophes in the first quarter.

Travelers experienced costs of $149m associated with catastrophes in the quarter, compared with $99m in the previous year.

This was largely because of severe winter weather in the United States; Broker Aon has reported total industry losses of $2.6bn as of March 31.

Travelers has been attempting to diversify beyond its core business of US commercial coverage; it expanded its international presence last year through the purchase of The Dominion of Canada General Insurance Company from E-L Financial Corporation for $1.1bn.

Fishman said during a conference call on Tuesday that the company would look to increase its presence in the Latin American market following its decision to increase its ownership stake in Brazilian surety firm J. Malucelli to 49.5% in 2012.

Morgan Stanley estimates that Travelers can deliver an 11%-plus ROE as underwriting margin gains offset lower fixed-income investment returns.

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