The Travelers Cos. beat analysts' expectations in reporting quarterly earnings Thursday, explaining that it continues to raise prices following a long period of falling rates and competition in the property-casualty industry.
Travelers reported quarterly net income of $806 million, or $2.02 per share, compared with $839 million, or $1.92 per share, during the same period in 2011. The greater per-share gains despite a lower quarterly net income is a result of stock repurchases last year and during the quarter.
Prices were higher for Travelers customers who renewed policies by 8 percent on the Business Insurance segment, 4 percent in auto insurance sold through agents and 10 percent in homeowners insurance sold through agents.
"We are extremely pleased with the pricing gains that our field underwriters have generated while maintaining strong and stable retention rates," said Travelers Chairman and CEO Jay Fishman.
Insurers paid huge sums last year for winter storms and tornadoes, among other severe weather. Prices on commercial insurance — coverage of property damage and liability paid by businesses — declined for 30 straight financial quarters in aggregate across the industry between the end of 2003 and the middle of last year. The industry turnaround, when prices started to increase in aggregate, was during the third quarter of 2011.
"Given that low investment yields and unusual weather patterns have continued, we remain committed to actively, but selectively, seeking price increases and improved terms and conditions in order to continue to improve returns," Fishman said.
Operating income was $801 million, or $2.03 per share, compared with $825 million, or $1.91 per share. Analysts expected an average per share gain of $1.52 per share, according to those polled by Thomson Reuters.
The company's revenue from premiums was $5.5 billion for the quarter, up 1 percent from $5.4 billion during the same period last year.
Travelers repurchased 6 million shares of common stock during the quarter. The board declared a dividend of 46 cents per share, which is 5 cents higher than the last regular dividend, and is payable June 29.
"We believe the company possesses a strong underwriting culture, the technical skills to overcome challenges, and look for respectable returns and multiple expansion to enhance shareholder returns. We continue to rate shares 'Buy'," said Larry Greenberg, an analyst at Langen McAlenney in Hartford.
The company's shares were selling for $61.92 around 3 p.m. Thurdsay on the New York Stock Exchange, up $2.45 or 4 percent.
The New York-based insurer has major operations in Connecticut, employing about 7,000 people in the state.