1998 2nd Quarter Report
TRAVELERS PROPERTY CASUALTY REPORTS RECORD SECOND QUARTER OPERATING EARNINGS OF $306.3 MILLION UP 9% DESPITE HIGHER CATASTROPHE LOSSES |
EPS Up 11% To $0.78 From $0.70
HARTFORD, Conn., July 20, 1998 -- Travelers Property Casualty Corp. (NYSE: TAP) reported operating earnings of $306.3 million, or $0.78 per share, for the quarter ended June 30, 1998, up 9% from $280.4 million, or $0.70 per share in 1997 on both a basic and diluted basis. Catastrophe losses during the current quarter lowered per share earnings by $0.06 versus $0.01 in the 1997 quarter. Net income was $312.5 million, or $0.80 per share (basic and diluted) compared to $276.0 million, or $0.69 per share (basic and diluted) in 1997. Net income includes $6.2 million of realized investment gains compared to $4.4 million of realized investment losses for the 1998 and 1997 quarters, respectively. Per share results are based on 392.4 million (basic) and 392.9 million (diluted) weighted average shares outstanding in the current quarter compared to 398.4 million (basic) and 398.5 million (diluted) in the 1997 quarter.
"We had a solid quarter, particularly in view of increased losses from catastrophes and other weather-related events," said Robert I. Lipp, Chairman and Chief Executive Officer. "Earnings benefited from strong net investment income, expense control and growth in Personal Lines."
Net written premiums for the quarter were $1.995 billion compared to $1.886 billion in the corresponding 1997 period. The statutory combined ratio for the quarter was 102.7%, an improvement over the prior year's 103.0%. The improvement is principally due to lower operating expense levels, partially offset by higher weather-related losses in the current year's period.
Net investment income for the quarter continued strong at $375.5 million, after tax, compared to $354.2 million in the 1997 quarter.
"For Commercial Lines, production was off slightly from a year ago reflecting our continued disciplined approach to underwriting in the current competitive market," said Mr. Lipp. "Personal Lines net written premiums grew by 17% reflecting a strong showing by all distribution channels.
"Also during the quarter, we began to explore several domestic and international opportunities presented by our pending merger with Citicorp. For example, in late June, we launched a pilot program to cross-market auto insurance to Citibank credit card holders."
Net written premiums for the six-month period were $4.013 billion compared to $3.788 billion in 1997, excluding one-time adjustments of $211.1 million in 1997.
Commercial Lines:
Quarter -- Operating earnings were $227.9 million, up 9% from $209.3 million
Six Months -- Operating earnings were $452.5 million, up 12% from $402.8 million
Operating earnings reached $227.9 million compared to $209.3 million in the 1997 quarter. This quarter's results reflect strong net investment income and continued expense savings. Catastrophe losses were $10.4 million, after taxes and reinsurance, compared to insignificant losses last year.
The statutory combined ratio for the quarter was 109.8% compared to 109.7% in the 1997 quarter. Total net written premiums for the quarter were $1.121 billion compared to $1.141 billion last year. The decrease is driven by lower premiums from involuntary workers' compensation pools and conservative underwriting in a difficult pricing environment.
Net written premiums were $2.333 billion for the six months compared to $2.337 billion in 1997, excluding a one-time $142.4 million adjustment that increased 1997 net written premiums.
Personal Lines:
Quarter -- Operating earnings grew 6% to $107.7 million, up from $101.3 million
Six Months -- Operating earnings reached $215.7 million, up 3% from $208.8 million
Personal Lines second quarter performance was strong attributable to increased production, strong net investment income and continued favorable prior-year reserve development. The earnings increase was partially offset by a higher level of catastrophe losses, which totaled $13.1 million, after taxes and reinsurance, compared to $4.5 million a year ago. The statutory combined ratio for the quarter was 92.9% compared to 92.8% in the 1997 quarter.
Net written premiums increased 17% over the second quarter 1997, despite an increasingly competitive rate environment for auto insurance. Total net written premiums were $873.9 million for the quarter compared to $744.9 million in 1997.
For the six months, net written premiums were $1.680 billion compared to $1.451 billion for 1997, excluding a $68.7 million adjustment resulting from a reinsurance transaction.
| Corporate and Other: | Operating expense for the quarter of $29.3 million compared to $30.2 million in the 1997 quarter |
The primary component of Corporate and Other operating expense for the quarter was interest expense of $26.2 million.
Travelers Property Casualty (NYSE: TAP) is a leading provider of a broad range of insurance products and services for commercial markets, including workers' compensation, property, liability, specialty and fidelity and surety bonds. The company is also a leading provider of homeowners and auto insurance for consumers. Travelers Property Casualty is a member of Travelers Group (NYSE: TRV), a diversified financial services company.
| CONTACTS: | Media: Keith Anderson 860/954-6390 |
Investors: Bill Pike 212/816-8874 |
Linda Tegnestam 212/816-8675 |
