| As of Tuesday, August 25th: |
Since the start of the quarter, the Q2 growth rate has risen from -31.1% to -27.4%. (Data provided by Thomson Reuters)
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Travelers, one of the largest U.S. home, auto and commercial insurers, said on Thursday that second-quarter earnings fell about 20 percent on lower investment income and underwriting profit.
While higher pricing helped Travelers' net policy sales kept pace with a year earlier, the company lost money on private equity and hedge fund investments, and earned less on others.
Net income declined to $740 million, or $1.27 a share, from $942 million, or $1.54 per share, a year earlier. Operating income, which excludes realized gains and losses, was $1.25 a share, missing analysts' expectations of $1.27, according to Reuters Estimates.
Travelers shares [TRV
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] were up 24 cents, or 0.6 percent, at $42.88 in morning New York Stock Exchange trading.
The company's results suffered because of a 12 percent drop in net investment income to $547 million. Also, profit at Travelers' underwriting business fell 39 percent to $206 million after taxes.
Based on its earnings over the first six months of the year and on stock buyback plans, Travelers raised its full-year operating earnings forecast to a range of $4.80 to $5.05 a share from an earlier outlook of $4.55 to $4.95.
The forecast does not account for any further decline in the value of the company's fund investments. Travelers said it had as much as $100 million in exposure to failed U.S. banks, but did not expect losses to reach that level.
Weakened Rivals
"We continue to have success in the marketplace, day in and day out," Chief Executive Jay Fishman said on a call with investors on Thursday morning.
The company sees a pipeline of "attractive" business opportunities, he added, as the credit crisis has weakened others in the sector. In the second quarter, net written policies totaled $5.6 billion, on par with last year, as Travelers charged more for coverage.
"Rate change was positive in the quarter across each of our three business segments, offsetting lower coverage demands from existing policyholders due to the economic downturn," Fishman said.
But he was wary about saying those rate increases would continue in the third quarter and beyond. Insurers have battled with declining policy rates for several years, finding it tough to shake off soft market conditions that took root in 2006.
Travelers, which has moved its principal executive offices from St. Paul, Minnesota to New York, was added to the Dow Jones industrial average last month.
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Data is a real-time snapshot *Data is delayed at least 15 minutes