The Travelers Companies Inc., one of the nation's largest commercial insurers, said Tuesday its fourth-quarter profit fell 11 percent on lower premiums and investment income but still beat Wall Street expectations.
However, the company's predicted 2008 profit fell well below analysts' predictions. Shares fell 37 cents to close at $47.63.
For the three months ended Dec. 31, net income slipped to $1.06 billion, or $1.64 per share, from $1.19 billion, or $1.68 per share, a year ago. Excluding items, profit totaled $1.63 per share in the latest quarter, compared with $1.69 per share in the prior-year period.
The results topped the consensus estimate of $1.61 per share from analysts polled by Thomson First Call.
Net investment income dipped to $696 million, from $701 million in the 2006 quarter, because of slightly lower returns in the non-fixed income portion of its portfolio. Net written premiums of $5.4 billion fell 1 percent, but were flat when adjusted for the sales of Afianzadora Insurgentes and Mendota.
The St. Paul-based company said retention rates were strong but renewal price changes were slightly weaker and new business volumes decreased amid competition.
Chairman and CEO Jay Fishman said Travelers will use its financial and operational strength "to write attractive business opportunities while always remaining highly disciplined in our underwriting."
Travelers said its business segment had an operating profit of $729 million for the quarter, up from $703 million during the same period a year ago. That was after $3 million in losses from Southern California wildfires.
Personal insurance had a $201 million operating profit, down from $348 million a year ago on higher weather-related losses and a lack of favorable prior-year development.
Travelers said its board approved an additional $5 billion worth of common stock repurchases, bringing the company's total remaining authorization to about $5.9 billion.
The company forecast 2008 operating profit of $5.40 to $5.75 per share, including catastrophe losses of $340 million, or 55 cents per share. That was well below Wall Street's expectation of $6.24 per share. Travelers also expects low single-digit growth in the size of its investments, and $2.7 billion in share repurchases for the year.
4th quarter FY2007, 12/312007 2006 % chg. Revenue $6,491.0 $6,469.0 +0.3 Income 1,063.0 1,189.0 -10.6 Earn/share 1.64 1.68 -2.4
12 monthsRevenue $26,017.0 $25,090.0 +3.7 Income 4,601.0 4,208.0 +9.3 Earn/share 6.86 5.91 +16.1
Figures in millions except for earnings per share.