Travelers Companies Inc (NYSE:TRV) NII grew 9.7%

Travelers Companies Inc (NYSE:TRV) stock fell 0.48% (As on Jan 21, 12:01:41 AM UTC-4, Source: Google Finance) though the company posted better than expected results for the fourth quarter of FY 21. Net written premiums increased 10% year over year to a record $8 billion driven by a continued strong renewal rate change, exposure growth and retention across all the segments. Net investment income increased 9.7% year over year to $743 million, primarily due to an increase in income in the non-fixed income investment portfolio. Catastrophe losses totaled $36 million pre-tax, wider than $29 million pre-tax in the prior-year quarter. Catastrophe losses primarily resulted from tornado activity in Kentucky, windstorms in multiple states and a wildfire in Colorado. Travelers witnessed an underwriting gain of $926 million, down 3% year over year.  The combined ratio deteriorated 130 basis points (bps) year over year to 88 due to lower net favorable prior year reserve development and higher catastrophe losses.

Moreover, Business Insurance net written premiums increased 9% year over year to about $4 billion, benefiting from reflecting strong renewal premium change, retention and higher new business levels. The segment income of $867 million increased 21.6% year over year.  The improvement was driven by higher underlying underwriting gain and higher net investment income. Bond & Specialty Insurance net written premiums rose 13% year over year to $905 million, reflecting strong retention and renewal premium change in management liability and strong production in surety. The segment income of $170 million increased 5.5% year over year, primarily due to a higher underlying underwriting gain, benefiting from higher business volumes. Personal Insurance net written premiums of $3.1 billion increased 10% year over year due to solid performance at Domestic Automobile and Domestic Homeowners and Other. The segment income of $327 million decreased 28.4%, owing to a lower underlying underwriting gain, net unfavorable prior-year reserve development and higher catastrophe losses.

TRV in the fourth quarter of FY 21 has reported the adjusted earnings per share of $5.20, beating the analysts’ estimates for the adjusted earnings per share of $3.86, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 7 percent to $9 billion in the fourth quarter of FY 21, beating the analysts’ estimates for revenue of $8.7 billion. The revenue growth is driven primarily due to higher premiums and net investment income. At the end of the fourth quarter, statutory capital and surplus was $23.9 billion. The debt-to-capital ratio (excluding after-tax net unrealized investment gains included in shareholders’ equity) was 21.6, within the company’s target range of 15-25. Adjusted book value per share was $109.76, up 10% year over year.

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