Travelers Weathers Q2 Catastrophe Losses; Combined Ratio at 89%

July 23, 2008

The Travelers Companies, Inc. reported net income of $942 million for the quarter ended June 30, 2008, compared to $1.254 billion for the quarter ended June 30, 2007.

Operating income in the current quarter was $918 million compared to $1.167 billion in the prior year quarter.

The second quarter combined ratio was 89 percent.

Catastrophe losses for the quarter topped $230 million.

“Looking forward, we will remain attentive to changes in general economic conditions, particularly to a potential increase in inflation trends. We have been acting prudently in our pricing and risk selection and will continue to do so,” said Jay Fishman, chairman and chief executive officer.

Current quarter highlights include:

Net written premiums of $5.629 billion, a 1 percent decline from the prior year quarter.

Strong underwriting results in all segments, despite the high frequency and severity of weather events, with GAAP combined ratios in Business Insurance of 87.1 percent; Financial, Professional & International Insurance of 80.4 percent; and Personal Insurance of 97.3 percent. Consolidated GAAP combined ratio of 89.3 percent.

Net favorable prior year reserve development of $340 million after-tax ($526 million pre-tax) in the current quarter, compared to $83 million after-tax ($125 million pre-tax) in the prior year quarter.

Catastrophe losses of $231 million after-tax ($356 million pre-tax) in the current quarter, compared to $26 million after-tax ($40 million pre-tax) in the prior year quarter.

Net investment income of $624 million after-tax ($778 million pre-tax) in the current quarter, compared to $758 million after-tax ($990 million pre-tax) in the prior year quarter. Net investment income declined primarily due to smaller gains in the non-fixed income portfolio and lower short-term interest rates.

Return on equity and operating return on equity of 14.4 percent and 14.3 percent, respectively.

Book value per share of $43.56, a 1 percent increase from March 31, 2008 and a 14 percent increase from June 30, 2007, after repurchasing 15.3 million common shares for a total cost of $750 million in the current quarter and 66.8 million common shares for a total cost of $3.350 billion during the preceding twelve months under the company’s share repurchase authorization.

Adjusted book value per share (excluding FAS 115) of $43.45, a 3 percent increase from March 31, 2008 and a 12 percent increase from June 30, 2007, after share repurchases.

Source: Travelers

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