April 23, 2013 / 11:42 AM / 5 years ago

Travelers posts record profit, raises dividend; shares up

(Reuters) - U.S. insurer Travelers Cos Inc’s (TRV.N) quarterly operating profit surpassed market estimates as catastrophe losses declined and the insurer was able to charge higher premiums, sending its shares up 4 percent before the bell.

Travelers shares, which closed at $84.58 on Monday, are set to open above the company’s life-high of $86.60.

The insurer also raised its quarterly dividend to 50 cents per share from 46 cents per share.

Travelers was able to keep rates consistent in all its business lines and retain customers, a strong sign for the rest of the industry. Travelers has been a bellwether of insurers’ ability to raise prices, after years of weakness in the market.

“We continue to be encouraged by the fact that in each of our segments renewal pricing exceeded expected loss cost trends and retentions remained stable,” Chief Executive Jay Fishman said in a statement.

Pre-tax catastrophe losses, net of reinsurance, were $99 million in the quarter, down from $168 million in the year-ago quarter.

Net investment income, on a pre-tax basis, fell about 10 percent to $670 million for the quarter, mainly due to low interest rates.

In a slide presentation for analysts, the company said customer retention and the rate at which it raised premiums in its homeowner and auto insurance businesses were steady compared with previous quarters.

Fishman said the company, a component of the Dow Jones industrial average .DJI, will continue to seek price increases and improved terms and conditions given the continued low interest rates and uncertain weather patterns.

    Net profit rose 11 percent to $896 million, or $2.33 per share, in the first quarter from $806 million, or $2.02 per share, a year earlier.

    On an operating basis, Travelers earned $2.31 per share. Analysts on average were expecting the company to earn $2.02 per share, according to Thomson Reuters I/B/E/S.

    Travelers’ results often differ from analysts’ average expectations as the company does not give a forecast.

    Twenty-two analysts provided operating earnings estimates between $1.77 per share and $2.28 per share for the company, according to Thomson Reuters StarMine data.

    Shares of Travelers, which has a market capitalization of about $32 billion, have risen about 11 percent since the company last reported quarterly results.

    Reporting by Aman Shah in Bangalore; Editing by Sreejiraj Eluvangal and Roshni Menon

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