Travelers P/C Q3 Net Income Rises 28 Percent

October 17, 2003

Travelers Property Casualty Corp. today reported a 28 percent increase in net income for the third quarter to $426.1 million, or $0.42 per share diluted ($0.43 basic), from $332.3 million or $0.33 per share, basic and diluted, in the prior year quarter.

Record Quarter For Operating Income

— Achieved record operating income of $442.7 million resulting from record operating income for Commercial Lines and continued strong profitability for Personal Lines. These results were achieved despite net catastrophe losses of $83.0 million, principally from Hurricane Isabel. The consolidated combined ratio improved 2.5 points to 95.4%.

— Maintained a high level of profitability with a return on equity of 17.3% (excluding FAS 115).
— Recorded a consolidated underwriting gain, before catastrophes and prior year reserve development, of $190.4 million, an 83% increase over the prior year quarter.

— Grew consolidated net written premiums by 10% to $3.376 billion, or by 14% excluding Northland and Associates, through continued renewal price increases, historically high customer retention levels and new business growth in targeted markets.

— Acquired renewal rights for up to approximately $1.6 billion in annual premium volume for certain product lines of Royal & SunAlliance and Atlantic Mutual and began the conversion and integration process.

— Prepaid $450 million of short-term debt, lowering the debt-to-total-capital ratio to 20.3%, and repurchased 2.6 million TAP.A shares for $40.0 million.

“Our record operating results this quarter, in the face of much higher levels of catastrophe losses, clearly demonstrate the earnings power of our company,” said Robert Lipp, chairman and CEO. “Strong underwriting results in both Commercial Lines and Personal Lines once again drove our earnings growth and are reflected in our 17.3 percent return on equity for the current quarter. Net written premiums continue to benefit from renewal price increases, higher levels of new business in targeted markets and historically high customer retention rates.

“We are well underway with the integration of the business acquired through the renewal rights transactions with both Royal & SunAlliance and Atlantic Mutual,” said Lipp. “These transactions will allow us to grow our premium volume even further while leveraging our expense platform to achieve even greater efficiency, and they will allow us to add talented, experienced insurance professionals to our staff.

“Given the high level of catastrophe losses we experienced this quarter, we have narrowed our estimate of full year net and operating income to the range of $1.65 billion to $1.70 billion.”

This estimate is based on various assumptions for the remainder of the year, including a normal level of catastrophe losses, no further net charges for prior year reserve development, no asbestos incurrals, no significant change in loss trends, continuation of current interest rates and equity market conditions, and no significant net realized investment gains or losses.

Topics Profit Loss Property Casualty

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