The Travelers Companies (NYSE:TRV) announced its first quarter earnings for 2012 on Thursday. The company reported strong results, with net income of $806 million for the quarter.  Total revenues showed a 2% increase from $6.3 billion in Q1 2011 to $6.4 billion in 2012. Travelers’ performance this quarter provides a positive outlook for the rest of the insurance industry, which is still recovering from significant losses due to natural disasters in 2011. Travelers’ primary competitors, AIG (NYSE: AIG), MetLife (NYSE: MET) and Hartford Financial (NYSE: HIG) are scheduled to report earnings over the next two weeks.
We presently have a price estimate of $63 for Travelers, which is slightly above the market price.
Business and Financial Insurance
Travelers’ U.S. business and financial insurance division accounts for a majority (73%) of the Trefis price estimate for the company. Business insurance net written premiums were $3.1 billion, an increase of 3% from last quarter, primarily due to improvements in business activity as well as strong renewal rates and renewal pricing increases.
The company’s renewal rate increase was about 8% in the quarter as the company continues to improve its pricing. While this did result in a decline in retention rates and new volumes, the company expects it to result in an improvement in returns on new accounts.Notes:
- Travelers Reports First Quarter Net and Operating Income per Diluted Share of $2.02 and $2.01, an Increase of 5% and 6%, Respectively, From the Prior Year Quarter, Company Press Release, April 19, 2012 [↩]