Travelers in underwriting profit

Travelers turned an underwriting loss of $288m in 2008’s Q3 results into a profits of $524m, slashing its combined ratio from 104.7% to 89.7%.

Q3 financial highlights (Q3 2008 in brackets)

• Net written premiums $5,340m ($5,481m)
• Underwriting gain/loss $524m (-$288m)
• Operating Income $1,221 ($358m)
• Income before income taxes $1,250m ($188m)
• Net income Net Income $935m ($214m)
• Combined ratio 89.7% (104.7%)

Jay Fishman, chairman and chief executive officer. Said: “These results were driven by underwriting profitability in each of our business segments and increased net investment income, as our non-fixed income portfolio yield improved to a positive level.

“We were once again successful in achieving positive renewal rate changes across all of our business segments, although net written premiums were down modestly, largely attributable to declining economic activity in recent quarters.

“As in previous quarters, we remain cautious about the magnitude of rate gains that are achievable in the near term given general economic conditions.

“Nonetheless, we plan to continue to seek rate gains where needed and we will continue to focus on execution. Solid retention and new business levels continue to underscore our strong position in the marketplace.

Share repurchases

“With improved stability in the capital markets we deployed excess liquidity that we accumulated over the past several quarters. We repurchased $1 billion of common shares in the quarter in contrast to our past practice of reduced share repurchases during the catastrophe season.

“Furthermore, our guidance for 2009 now includes an assumption of $1.5 billion in common share repurchases in the fourth quarter, an increase from our previous assumption, subject to market conditions and other factors.