Insurer St. Paul Traveler’s Companies, Inc. said its profit fell 9 percent in the second quarter, but still beat analysts’ expectations.
The company also disclosed a $42 million charge “for an additional legal provision related to investigations of various business practices by certain governmental agencies.”
St. Paul Travelers said it earned $970 million, or $1.36 a share, down from almost $1.07 billion, or $1.52 a share during last year’s quarter, which included a $138 million gain on the sale of Nuveen Investments Inc. Revenue increased 3.6 percent to $6.25 billion, up from almost $6.04 billion during the same period last year.
Analysts surveyed by Thomson Financial were expecting $1.29 per share on revenue of $6.2 billion.
The company said premiums grew 8 percent. Chairman and Chief Executive Jay Fishman said the company was putting in “significant” premium increases for insuring coastal property in the Southeastern U.S. St. Paul Travelers is one of the largest commercial insurers in the Gulf Coast region, and it suffered $1.47 billion in catastrophe claims last year, much of it from hurricanes.
He said pricing in the rest of the country was stable.
Higher interest rates and strong operating cash flows drove the company’s investment income to $874 million before taxes, up 13 percent from the same period last year.
St. Paul Travelers raised its earnings guidance for the year to $4.90 to $5.10 per share, up from $4.70 to $5 a share announced in May. It said the new guidance assumes pre-tax catastrophe losses of $385 million for the rest of 2006 and no change in its reserve for settling claims from last year, which included major insurance losses for hurricanes.
Analysts had expected St. Paul Travelers to earn $5.13 a share on revenue of $23.2 billion for the full year.