Travelers Beats Estimates in Fishman's Last Report as CEOby
Insurer's policy sales increase 2.6%, led by gains in auto
Combined ratio improves to 86.9 from 90 a year earlier
Travelers Cos. gained in New York trading after Jay Fishman beat analysts’ estimates in his last report as chief executive officer.
The insurer jumped 2.1 percent to $108.57 at 9:53 a.m., the second-biggest gain the 30-company Dow Jones Industrial Average.
Net income climbed to $928 million, or $2.97 a share, from $919 million, or $2.69, a year earlier, as sales growth and better underwriting margins countered a decline in investment income, the New York-based company said in a statement Tuesday. Operating profit, which excludes some investment results, was $2.93 a share, beating the $2.26 average estimate of 25 analysts surveyed by Bloomberg.
“This quarter’s results looked pretty good, in our opinion, with Travelers not being exposed to outsized catastrophe losses as some of its competitors have already preannounced,” Charles Sebaski, an analyst at BMO Capital Markets, said in a note to investors. “These solid results have allowed the company to maintain its strong capital-return strategy.”
Fishman, who is fighting amyotrophic lateral sclerosis, or ALS, is stepping down as CEO in December after leading the company since its formation in 2004. He is turning over responsibility to Alan Schnitzer, who runs the segment that serves business and international clients.
Policy sales rose 2.6 percent to a record $6.19 billion, compared with $6.03 billion a year earlier, with gains in personal auto insurance. That compares with year-over-year increases of less than 1 percent in each of the two prior quarters.
The insurer posted a combined ratio of 86.9, meaning it retained 13.1 cents of each premium dollar after claims and expenses. That improved from a ratio of 90 in last year’s third quarter.
The gain from reserves improved to $199 million pretax from $113 million a year earlier. Insurers regularly reassess the money they’ve set aside for future claims and can reduce or increase the amount based on their expectation of losses. Costs for catastrophes were $85 million before tax, compared with $83 million a year earlier.
Insurers such as XL Group Plc and Validus Holdings Ltd., which rely more than Travelers on business beyond North America, have announced that third-quarter results will be hurt by claims from disasters such as an earthquake in Chile and the explosion at the port of Tianjin, China.
Travelers said it repurchased $750 million of its stock in the quarter.