Tuesday, April 27, 2010
Travelers Take Hit on CAT losses
Net income dropped 2.6% to $647 million for Travelers due to higher catastrophe losses from the winter storms on the U.S. East Coast and the earthquake in Chile. Catastrophe losses of $312 million were five times what the company projected and the largest since the company merged in 2004. Operating profit of $1.22 was below the street estimate of $1.36. Investment income rose 39% from the previous year when the company had to take large write downs. Net earnings per share were $1.25 from $1.11 a year ago due to fewer shares outstanding. Travelers is expected to continue their share buyback program with $3.5-4 billion scheduled for this year alone. Dividends also increased 9% for the sixth straight quarter. Travelers is a solid company but we haven't seen much movement in the price since we bought it last December and has dropped a dollar from our buy-in price. If opportunities arise for a company with more upside I would be supportive of selling.