Travelers Cos. beats earnings estimates

Bloomberg News//October 22, 2013//

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Travelers Cos., the lone property-casualty insurer in the Dow Jones industrial average, posted third-quarter profit that beat estimates as Chief Executive Officer Jay Fishman increased rates for coverage. The company boosted its share buyback plan by $5 billion.

Net income was $864 million, or $2.30 a share, compared with $864 million, or $2.21, a year earlier, the New York-based insurer said Tuesday in a statement. Operating profit, which excludes some investment results, was $2.35 a share, 26 cents higher than the average estimate of 24 analysts surveyed by Bloomberg.

Fishman, 60, began raising prices for coverage and changing some policy terms as low interest rates pressured income from his company’s bond portfolio and natural disasters boosted claims costs in recent quarters. The strategy has helped the insurer expand its margins and contributed to a 51 percent gain in the share price in the two years through Monday.

The share repurchase authorized Tuesday is in addition to the $759 million that remained in previous programs as of Sept. 30. Buybacks were $800 million in the third quarter.

Repurchases helped increase book value per share, a measure of assets minus liabilities, to $68.15 from $66.65 at the end of June. The figure is used by analysts and investors to gauge how much insurers are worth. Travelers gained 0.9 percent to $87.52 at 10:24 a.m. in New York.

The insurer made an underwriting profit of 11.1 cents for every premium dollar it collected in the quarter, compared with 9.7 cents a year earlier. Policy sales were little changed at $5.7 billion, as the company boosted premiums from its business insurance and financial, professional and international segments, while reporting lower results from its personal insurance unit.