HARTFORD, Conn.--(BUSINESS WIRE)--Oct. 16, 2003--
Diluted Net Income Per Share Rose 27% to $0.42
From $0.33 In 2002 Quarter; Net Income For First Nine Months
of 2003 Rose 58% To $1.207 Billion Or $1.20 Per Share
Travelers Property Casualty Corp. (NYSE: TAP.A and TAP.B) today
reported a 28% increase in net income for the third quarter to $426.1
million, or $0.42 per share diluted ($0.43 basic), from $332.3 million
or $0.33 per share, basic and diluted, in the prior year quarter.
Record Quarter For Operating Income
-- Achieved record operating income of $442.7 million resulting
from record operating income for Commercial Lines and
continued strong profitability for Personal Lines. These
results were achieved despite net catastrophe losses of $83.0
million, principally from Hurricane Isabel. The consolidated
combined ratio improved 2.5 points to 95.4%.
-- Maintained a high level of profitability with a return on
equity of 17.3% (excluding FAS 115).
-- Recorded a consolidated underwriting gain, before catastrophes
and prior year reserve development, of $190.4 million, an 83%
increase over the prior year quarter.
-- Grew consolidated net written premiums by 10% to $3.376
billion, or by 14% excluding Northland and Associates, through
continued renewal price increases, historically high customer
retention levels and new business growth in targeted markets.
-- Acquired renewal rights for up to approximately $1.6 billion
in annual premium volume for certain product lines of Royal &
SunAlliance and Atlantic Mutual and began the conversion and
integration process.
-- Prepaid $450 million of short-term debt, lowering the
debt-to-total-capital ratio to 20.3%, and repurchased 2.6
million TAP.A shares for $40.0 million.
"Our record operating results this quarter, in the face of much
higher levels of catastrophe losses, clearly demonstrate the earnings
power of our Company," said Robert I. Lipp, Chairman and Chief
Executive Officer. "Strong underwriting results in both Commercial
Lines and Personal Lines once again drove our earnings growth and are
reflected in our 17.3% return on equity for the current quarter. Net
written premiums continue to benefit from renewal price increases,
higher levels of new business in targeted markets and historically
high customer retention rates.
"We are well underway with the integration of the business
acquired through the renewal rights transactions with both Royal &
SunAlliance and Atlantic Mutual," said Mr. Lipp. "These transactions
will allow us to grow our premium volume even further while leveraging
our expense platform to achieve even greater efficiency, and they will
allow us to add talented, experienced insurance professionals to our
staff.
"Given the high level of catastrophe losses we experienced this
quarter, we have narrowed our estimate of full year net and operating
income to the range of $1.65 billion to $1.70 billion." This estimate
is based on various assumptions for the remainder of the year,
including a normal level of catastrophe losses, no further net charges
for prior year reserve development, no asbestos incurrals, no
significant change in loss trends, continuation of current interest
rates and equity market conditions, and no significant net realized
investment gains or losses.
Third Quarter Consolidated Results
----------------------------------------------------------------------
(for the quarter ended Sept. 30, in
millions, after tax) 2003 2002 Change
------- ------- ------
Consolidated underwriting gain,
before catastrophes and prior year
reserve development $190.4 $103.8 $86.6
Catastrophes (83.0) (11.1) (71.9)
Prior year reserve development -
benefit / (charge):
Asbestos (1) - (31.7) 31.7
All other 9.2 (11.0) 20.2
Accretion of discount (11.7) (7.2) (4.5)
------- ------- ------
Underwriting gain 104.9 42.8 62.1
Net investment income 347.2 331.9 15.3
Other, including interest expense
and minority interest (9.4) (14.6) 5.2
------- ------- ------
Consolidated operating income 442.7 360.1 82.6
Net realized investment losses (16.6) (27.8) 11.2
------- ------- ------
Consolidated net income $426.1 $332.3 $93.8
======= ======= ======
(1) Net of benefit of $159.3 million in 3Q02 related to asbestos
incurrals subject to the Citigroup indemnification agreement.
----------------------------------------------------------------------
Consolidated operating income for the quarter increased 23% to
$442.7 million compared to $360.1 million in the prior year quarter.
The principal difference between net and operating income in the
current and prior year quarters is the inclusion in net income of
realized investment gains and losses. Another major difference between
net and operating income is the cumulative effect of changes in
accounting principles, for which there were none in the current or
prior year quarter.
The consolidated underwriting gain component of operating income,
before catastrophes and prior year reserve development, increased
$86.6 million or 83% to $190.4 million, after tax, primarily due to
the favorable rate environment. Weather-related catastrophe losses of
$83.0 million, net of reinsurance and after tax, were up significantly
from $11.1 million in the prior year quarter. The current quarter
includes estimated losses of $73.2 million for Hurricane Isabel. The
previously announced estimate of catastrophe losses for the quarter
was approximately $87 million, which included an estimate of $75
million for Hurricane Isabel. Operating income also reflects a net
benefit from prior year reserve development as compared to a net
charge in the 2002 quarter. See Prior Year Reserve Development below.
Net investment income, after tax, increased $15.3 million to
$347.2 million compared to $331.9 million in the prior year quarter.
This increase resulted from higher returns on alternative investments
and higher average invested assets resulting from strong operating
cash flows, partially offset by lower average yields on fixed income
securities. The after tax investment yield declined 20 basis points
from the prior year quarter to 3.9%, which was level with the second
quarter of 2003.
----------------------------------------------------------------------
(for the quarter ended Sept. 30, in
millions) 2003 2002 Change
--------- --------- ------
Consolidated net written premiums
Commercial Lines
Excluding Northland and Associates $1,883.7 $1,631.4 15 %
Northland and Associates 136.1 208.2 (35)
--------- ---------
Total Commercial Lines 2,019.8 1,839.6 10
Personal Lines 1,355.8 1,218.0 11
--------- ---------
Total $3,375.6 $3,057.6 10 %
========= =========
----------------------------------------------------------------------
Commercial Lines net written premiums, excluding business written
in our Northland and Associates subsidiaries, increased $252.3 million
or 15% due to higher rates, new business growth in targeted markets
and strong retention across all major business lines.
Net written premiums for Northland and Associates, which were
acquired in the fourth quarter of 2001, decreased by $72.1 million or
35% from the prior year quarter. This decrease resulted from certain
businesses being placed in run-off last year.
Personal Lines net written premiums increased $137.8 million or
11% due to higher rates as well as increased business volumes and
strong retention.
----------------------------------------------------------------------
(for the quarter ended Sept. 30) 2003 2002 Change
----- ----- ------
Consolidated GAAP combined ratio,
before catastrophes and prior year
reserve development:
Loss and loss adjustment expense
(LAE) ratio 64.9% 68.5% (3.6)pts
Other underwriting expense ratio 26.3 26.1 0.2
----- ----- ------
91.2 94.6 (3.4)
Catastrophes 4.1 0.6 3.5
Prior year reserve development -
(benefit) / charge:
Asbestos - 1.7 (1.7)
All other (0.5) 0.6 (1.1)
Accretion of discount 0.6 0.4 0.2
----- ----- ------
Consolidated GAAP combined ratio 95.4% 97.9% (2.5)pts
===== ===== ======
----------------------------------------------------------------------
The 3.4 point improvement in the consolidated GAAP combined ratio,
before catastrophes and prior year reserve development, to 91.2%
reflects a 3.6 point improvement in the loss and LAE ratio partially
offset by a slight increase in the underwriting expense ratio. The
improvement in the loss and LAE ratio was primarily due to the
favorable rate environment. The consolidated GAAP combined ratio also
reflects the impact of higher catastrophe losses in the current
quarter and a net benefit from prior year reserve development compared
to a net charge for prior year reserve development in the prior year
quarter.
Prior Year Reserve Development
----------------------------------------------------------------------
(for the quarter ended Sept. 30, in millions,
after tax and reinsurance) 2003 2002 Change
------ ------- ------
Net benefit (charge) resulting from
prior year reserve development
Commercial Lines
Asbestos (1) $ - $(31.7) $31.7
All other (15.6) (9.0) (6.6)
------ ------- ------
Total Commercial Lines (15.6) (40.7) 25.1
Personal Lines 24.8 (2.0) 26.8
------ ------- ------
Total $9.2 $(42.7) $51.9
====== ======= ======
(1) Net of benefit of $159.3 million in 3Q02 related to asbestos
incurrals subject to the Citigroup indemnification agreement.
----------------------------------------------------------------------
Commercial Lines results in the current quarter include a charge
of $15.6 million, after tax and reinsurance, for prior year reserve
development, primarily related to unallocated loss adjustment
expenses. This charge compares to a $40.7 million charge in the prior
year quarter, which included $31.7 million of asbestos incurrals, net
of the benefit of the Citigroup indemnification agreement. Total net
asbestos paid losses were $50.3 million for the current quarter, a
decrease of $40.7 million over the third quarter of 2002 and a
decrease of $66.2 million from the second quarter of 2003, primarily
due to the timing of payments subject to settlement agreements. Net
asbestos reserves were $3.066 billion as of September 30, 2003.
Offsetting the $15.6 million current quarter Commercial Lines
charge was a benefit of $24.8 million, after tax and reinsurance,
related to favorable prior year reserve development in Personal Lines
homeowners and automobile businesses compared to a net charge of $2.0
million in the prior year quarter, principally due to continuing
reductions in non-catastrophe property claim frequency.
Year to Date Consolidated Results
---------------------------------------------------------------------
(for the nine months ended Sept. 30, in
millions, after tax) 2003 2002 Change
--------- -------- -------
Consolidated underwriting gain,
before catastrophes and prior year
reserve development $522.0 $243.2 $278.8
Catastrophes (198.8) (35.8) (163.0)
Prior year reserve development -
benefit / (charge):
Asbestos (1) - (97.5) 97.5
All other (105.9) (58.3) (47.6)
Accretion of discount (35.6) (21.6) (14.0)
--------- -------- -------
Underwriting gain 181.7 30.0 151.7
Net investment income 1,036.3 1,039.4 (3.1)
Other, including interest expense
and minority interest (6.0) (25.9) 19.9
--------- -------- -------
Consolidated operating income 1,212.0 1,043.5 168.5
Net realized investment losses (4.7) (32.9) 28.2
Restructuring charge - (1.6) 1.6
Cumulative effect of change in
accounting principle - (242.6) 242.6
--------- -------- -------
Consolidated net income $1,207.3 $766.4 $440.9
========= ======== =======
(1) Net of benefit of $159.3 million in 3Q02 related to asbestos
incurrals subject to the Citigroup indemnification agreement.
---------------------------------------------------------------------
For the nine months ended September 30, 2003, net income was
$1.207 billion, or $1.20 per share, basic and diluted, compared to net
income of $766.4 million, or $0.82 per share, basic and diluted, for
the prior year period. Net income for the prior year period included a
cumulative charge of $242.6 million, after tax, resulting from a
change in accounting principle relating to goodwill.
Consolidated operating income for the nine months ended September
30, 2003, was $1.212 billion compared to $1.044 billion. The nine
months consolidated underwriting gain component of operating income,
before catastrophes and prior year reserve development, more than
doubled to $522.0 million from $243.2 million, after tax, primarily
due to the favorable rate environment. This increase reflects solid
underwriting gains in all three quarters.
Weather-related catastrophe losses of $198.8 million, net of
reinsurance and after tax, were up significantly from $35.8 million in
the prior year period. The current nine month losses reflect higher
catastrophe losses in all three quarters, including the impact of
Hurricane Isabel in the current quarter.
Operating income also reflects lower net charges for prior year
reserve development in the current period as compared to the 2002
period. There were no asbestos incurrals in the current year compared
to $97.5 million, after tax and net of the benefit of the Citigroup
indemnification agreement, in the 2002 period. Other charges resulting
from prior year reserve development in the current year primarily
relate to a first quarter 2003 charge by Gulf Insurance, a majority
owned subsidiary, for a line of business that insured the residual
values of leased vehicles and that was placed in run-off in late 2001.
Net investment income, after tax, was down slightly from the prior
year period as a result of the lower interest rate environment.
Commercial Lines Achieves Record Operating Income In Third Quarter
---------------------------------------------------------------------
(for the quarter ended Sept. 30, in millions,
after tax) 2003 2002 Change
------- ------- ------
CL underwriting gain, before catastrophes
and prior year reserve development $145.8 $72.7 $73.1
Catastrophes (23.0) - (23.0)
Prior year reserve development -
benefit / (charge):
Asbestos (1) - (31.7) 31.7
All other (15.6) (9.0) (6.6)
Accretion of discount (11.7) (7.2) (4.5)
------- ------- ------
Underwriting gain 95.5 24.8 70.7
Net investment income 281.6 270.7 10.9
Other, including minority interest 2.7 (0.8) 3.5
------- ------- ------
CL operating income $379.8 $294.7 $85.1
======= ======= ======
(1) Net of benefit of $159.3 million in 3Q02 related to asbestos
incurrals subject to the Citigroup indemnification agreement.
---------------------------------------------------------------------
Commercial Lines operating income increased $85.1 million, or 29%,
to $379.8 million. The underwriting gain, before catastrophes and
prior year reserve development, doubled to $145.8 million primarily
due to the favorable rate environment. Catastrophe losses were $23.0
million in the current quarter compared to none in the prior year
quarter. Net investment income increased 4% to $281.6 million compared
to the prior year quarter. See Prior Year Reserve Development above.
---------------------------------------------------------------------
(for the quarter ended Sept. 30, in
millions) 2003 2002 Change
--------- --------- ------
CL net written premiums by market
Core:
National Accounts $243.9 $218.6 12 %
Commercial Accounts:
Excluding Northland and
Associates 756.0 680.1 11
Northland and Associates 136.1 208.2 (35)
--------- ---------
Total Commercial Accounts 892.1 888.3 -
Select Accounts 505.7 453.6 11
--------- ---------
Total Core 1,641.7 1,560.5 5
Total Core excluding Northland and
Associates 1,505.6 1,352.3 11
Specialty:
Bond 216.0 175.4 23
Gulf 162.1 103.7 56
--------- ---------
Total Specialty 378.1 279.1 35
--------- ---------
Total $2,019.8 $1,839.6 10
========= =========
Total excluding Northland and
Associates $1,883.7 $1,631.4 15 %
========= =========
---------------------------------------------------------------------
Commercial Lines net written premiums, excluding Northland and
Associates, increased $252.3 million or 15% due to higher rates, new
business growth in targeted markets and strong retention across all
major lines of business. Commercial Lines net written premiums from
Northland and Associates decreased $72.1 million or 35% as described
above.
Core
-- In National Accounts, which provides loss-sensitive insurance
products to large corporations and fee-based services to
self-insured corporations and state-sponsored workers'
compensation residual market pools, net written premiums of
$243.9 million increased $25.3 million over the prior year
quarter. Written fees rose 30% from $108.1 million in the
prior year quarter to $140.5 million. National Accounts
continued to benefit from rate increases, higher new business
levels and higher business volumes in residual market pools.
-- In Commercial Accounts, which primarily serves mid-sized
businesses, net written premiums, excluding Northland and
Associates, increased 11% to $756.0 million due to higher
rates, new business growth in targeted markets and strong
retention. Renewal price change increases were 9%, as compared
to 25% in the 2002 quarter and 10% in the second quarter of
2003. Net written premiums for Northland and Associates
decreased 35% to $136.1 million as described above.
-- In Select Accounts, which serves small businesses, net written
premiums increased 11% to $505.7 million. The increase was
primarily due to strong retention, growth in new business
premiums and renewal price change increases that averaged 14%
in the current quarter, consistent with the second quarter of
2003 and 4 points lower than the prior year quarter.
Specialty
-- In Bond, which provides surety bonds and executive liability
insurance for small and mid-sized accounts, net written
premiums increased 23% to $216.0 million. This increase
reflects the favorable rate environment and strong new
business, principally in executive liability products.
-- In Gulf, which provides a broad range of management and
professional liability coverages and excess and surplus lines
of insurance, net written premiums increased 56% to $162.1
million due to significant rate increases across all classes
of management liability products. In addition, the comparison
with the prior year quarter benefited from reductions to net
written premiums in the 2002 quarter related to the exiting of
non-core businesses.---------------------------------------------------------------------
(for the quarter ended Sept. 30) 2003 2002 Change
----- ----- ------
CL GAAP combined ratio, before catastrophes
and prior year reserve development:
Loss and LAE ratio 62.3% 67.3% (5.0)pts
Other underwriting expense ratio 27.1 26.6 0.5
----- ----- ------
89.4 93.9 (4.5)
Catastrophes 1.8 - 1.8
Prior year reserve development - (benefit) /
charge:
Asbestos - 2.8 (2.8)
All other 1.2 0.8 0.4
Accretion of discount 0.9 0.6 0.3
----- ----- ------
CL GAAP combined ratio 93.3% 98.1% (4.8)pts
===== ===== ======
---------------------------------------------------------------------
The 4.5 point improvement to 89.4% in the Commercial Lines GAAP
combined ratio, before catastrophes and prior year reserve
development, reflects a 5.0 point improvement in the loss and LAE
ratio partially offset by a slight increase in the underwriting
expense ratio. The improvement in the loss and LAE ratio resulted from
the favorable rate environment while the underwriting expense ratio
included higher contingent commissions that resulted from favorable
underwriting results. Weather-related catastrophes, of which there
were none in the prior year quarter, increased the combined ratio by
1.8 points while prior year reserve development increased the combined
ratio by 1.2 points in the current quarter as compared to 3.6 points
in the prior year quarter. See Prior Year Reserve Development above.
Personal Lines Operating Income $88.2
Million Despite Hurricane Isabel
---------------------------------------------------------------------
(for the quarter ended Sept. 30, in millions,
after tax) 2003 2002 Change
------ ------ ------
PL underwriting gain, before catastrophes
and prior year reserve development $44.6 $31.1 $13.5
Catastrophes (60.0) (11.1) (48.9)
Prior year reserve development - benefit /
(charge) 24.8 (2.0) 26.8
------ ------ ------
Underwriting gain 9.4 18.0 (8.6)
Net investment income 65.5 61.5 4.0
Other 13.3 12.5 0.8
------ ------ ------
PL operating income $88.2 $92.0 $(3.8)
====== ====== ======
---------------------------------------------------------------------
Personal Lines operating income was $88.2 million compared to
$92.0 million in the prior year quarter. The underwriting gain, before
catastrophes and prior year reserve development, increased 43% to
$44.6 million primarily due to the favorable rate environment.
Catastrophe losses of $60.0 million were $48.9 million higher in the
current quarter than in the prior year quarter due principally to
Hurricane Isabel. See Prior Year Reserve Development above.
---------------------------------------------------------------------
(for the quarter ended Sept. 30, in
millions) 2003 2002 Change
--------- --------- ------
PL net written premiums by product line
Automobile $796.3 $741.8 7 %
Homeowners and other 559.5 476.2 17
--------- ---------
Total $1,355.8 $1,218.0 11 %
========= =========
---------------------------------------------------------------------
Net written premiums increased $137.8 million, or 11%, over the
prior year quarter, due to rate increases and higher business volumes
in both the Automobile and the Homeowners and other lines of business.
-- Automobile net written premiums increased 7% to $796.3
million. Renewal price change increases averaged 6%, which was
2 points below the third quarter of 2002 and level with the
second quarter 2003. Retention levels rose 1 point from the
prior year quarter to 81%. Policies in force rose for the
tenth consecutive quarter and grew by 3% from the prior year
quarter.
-- Homeowners and other net written premiums increased 17% to
$559.5 million. Renewal price change increases averaged 11%
compared to 15% in the third quarter 2002 and 10% in the
second quarter 2003. The higher level of renewal price change
increases in the prior year quarter was mostly attributable to
rate increases in Texas. Retention levels rose 1 point from
the prior year quarter to 81%. Policies in force rose for the
fifth consecutive quarter and grew 5% from the prior year
quarter.
-- Production through independent agents, which represented 82%
of net written premiums, was up 11% to $1.110 billion.
Production through other channels, which include affinity and
joint marketing arrangements, was up 10% to $245.5 million.---------------------------------------------------------------------
(for the quarter ended Sept. 30) 2003 2002 Change
----- ----- ------
PL GAAP combined ratio, before catastrophes
and prior year reserve development:
Loss and LAE ratio 69.3% 70.4% (1.1)pts
Other underwriting expense ratio 25.2 25.4 (0.2)
----- ----- ------
94.5 95.8 (1.3)
Catastrophes 7.5 1.5 6.0
Prior year reserve development - (benefit) /
charge (3.1) 0.3 (3.4)
----- ----- ------
PL GAAP combined ratio 98.9% 97.6% 1.3 pts
===== ===== ======
---------------------------------------------------------------------
The 1.3 point improvement to 94.5% in the Personal Lines GAAP
combined ratio, before catastrophes and prior year reserve
development, reflects an improvement in both the loss and LAE ratio
and the underwriting expense ratio. The improvement in the loss and
LAE ratio resulted from the favorable rate environment and continuing
reductions in non-catastrophe property claim frequency. The
improvement in the underwriting expense ratio was primarily due to the
benefits of the favorable rate environment and further expense
leverage. Weather-related catastrophes increased the combined ratio by
7.5 points, as compared to 1.5 points in the prior year quarter, while
favorable prior year reserve development lowered the combined ratio by
3.1 points, as compared to an increase of .3 points in the prior year
quarter.
Interest Expense and Other
The after tax charge of $25.3 million in the quarter for Interest
Expense and Other decreased from $26.6 million in the prior year
quarter primarily due to lower interest expense, partially offset by
shareholder services costs incurred subsequent to the August 20, 2002,
spin off from Citigroup. Interest expense was $23.9 million, after
tax, in the current year quarter, as compared to $25.5 million in the
2002 quarter.
Investment Highlights
After tax net investment income increased 5% to $347.2 million
compared to $331.9 million in the prior year quarter. Net investment
income increased due to the higher level of average invested assets
and higher returns on alternative investments. Partially offsetting
these increases were lower average yields on fixed maturity
securities. The after tax investment yield declined 20 basis points
from the prior year quarter to 3.9%, which was level with the second
quarter.
Net realized investment losses of $23.3 million for the quarter,
before tax and minority interest, or $16.6 million after tax and
minority interest, resulted from net realized investment losses of
$16.1 million principally from the sale of fixed maturity securities,
and from impairments of $7.2 million. Proceeds from these sales were
reinvested in higher interest-bearing securities. For the prior year
quarter, net realized investment losses of $51.3 million, before tax
and minority interest, or $27.8 million after tax and minority
interest, resulted from net realized investment losses of $16.6
million principally from the sale of fixed maturity securities and
from impairments of $34.7 million mostly related to corporate bonds in
the communications sector.
Invested assets, after adjusting for the effects of securities in
process of settlement and securities lending activities, were $36.815
billion, an increase of $2.587 billion over the comparable December
31, 2002, amount. Invested assets benefited from strong operating cash
flows and the higher carrying value of the fixed maturity portfolio
resulting from lower interest rates. Net unrealized investment gains
as of September 30, 2003, were $1.612 billion, or $1.051 billion after
tax and minority interest, compared to $1.115 billion, or $731.6
million after tax and minority interest, as of December 31, 2002.
Financial Supplement: http://www.travelers.com/investor/earnings
Our financial supplement is available at our website by clicking
on the above link. The supplement provides a more in-depth view of our
performance.
Webcast: http://www.travelers.com/investor/
Travelers' management will review the Company's third quarter
results via webcast at 10:00 AM (EDT) today. The listen-only audio
feed will also be available via the telephone, at (800) 640-9765 for
U.S. callers and (847) 413-4837 for international callers. Following
the live event, an audio playback of the webcast will be available
until November 15 and the slide presentation and financial supplement
will be archived at the web site noted above. To listen to the webcast
or the playback, click on the above link.
About Travelers Property Casualty
Travelers Property Casualty Corp. (NYSE: TAP.A and TAP.B) is a
leading provider of a wide range of insurance products. The Company is
the second largest writer of homeowners and auto insurance through
independent agents. Travelers is the third largest commercial lines
insurer, providing a broad range of insurance products including
workers' compensation, integrated disability, property, liability,
specialty lines, surety bonds, inland/ocean marine, and boiler and
machinery. For more information on Travelers products, see
www.travelers.com.
This press release contains certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of
1995. All statements, other than statements of historical facts, may
be forward-looking statements. Specifically, we may have
forward-looking statements about our results of operations, financial
condition and liquidity, the sufficiency of our asbestos reserves,
premium growth from acquired renewal rights and the integration of
those businesses into our business, and our estimate of catastrophe
losses from Hurricane Isabel.
Many risks and uncertainties may impact the matters addressed in
these forward-looking statements. Actual results may differ materially
from those expressed or implied. In particular, the sufficiency of our
asbestos reserves, as well as our results of operations, financial
condition and liquidity, to the extent impacted by the sufficiency of
our asbestos reserves, is subject to a number of potential adverse
developments including, among others, adverse developments involving
asbestos claims and related litigation, the willingness of parties,
including the Company, to settle disputes, the impact of aggregate
policy coverage limits, and the impact of bankruptcies of various
asbestos producers and related businesses. In addition, any premium
growth and incremental net income resulting from the renewal rights
transactions depend, among other things, on our ability to renew a
sufficient dollar amount of the policies and otherwise successfully
integrate the business acquired into our organization. This, in turn
is subject to a number of other factors, including, among others, the
willingness of policyholders to renew their policies with us, and the
willingness of their insurance agents and brokers to recommend that
policyholders renew with us. Also, our actual catastrophe losses from
Hurricane Isabel may be more or less than our estimates.
Some of the other factors that could cause actual results to
differ include, but are not limited to, the following: our inability
to obtain price increases due to competition or otherwise; the
performance of the Company's investment portfolios, which could be
adversely impacted by adverse developments in U.S. and global
financial markets, interest rates and rates of inflation; weakening
U.S. and global economic conditions; insufficiency of, or changes in,
loss reserves; the occurrence of catastrophic events, both natural and
man-made, including terrorist acts, with a severity or frequency
exceeding the Company's expectations; exposure to, and adverse
developments involving, environmental claims and related litigation;
adverse changes in loss cost trends, including inflationary pressures
in medical costs and auto and home repair costs; developments relating
to coverage and liability for mold claims; the effects of corporate
bankruptcies on surety bond claims; adverse developments in the cost,
availability and/or ability to collect reinsurance; the ability of the
Company's subsidiaries to pay dividends to the Company; adverse
outcomes in legal proceedings; judicial expansion of policy coverage
and the impact of new theories of liability; the impact of legislative
actions, including federal and state legislation related to asbestos
liability reform; larger than expected assessments for guaranty funds
and mandatory pooling arrangements; a downgrade in the Company's
claims-paying and financial strength ratings; the loss or significant
restriction on the Company's ability to use credit scoring in the
pricing and underwriting of Personal Lines policies; and amendments
to, and changes to the risk-based capital requirements. For more
information about these and other factors that may affect the Company,
please refer to the information under the headings "Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Outlook" and "- Forward-Looking Statements" in the
Travelers Annual Report on Form 10K.
Our forward-looking statements speak only as of the date made, and
we undertake no obligation to update these forward-looking statements.
----------------------------------------------------------------------
Summary of Financial Information Travelers Property Casualty Corp.
(in millions, except per share data)
----------------------------------------------------------------------
At and for the At and for the nine
quarter months
ended September 30, ended September 30,
-------------------- ----------------------
2003 2002 2003 2002
---------------------------------------------------------------------
Operating income $442.7 $360.1 $1,212.0 $1,043.5
Net realized
investment losses (16.6) (27.8) (4.7) (32.9)
Restructuring
charge - - - (1.6)
Cumulative effect of
change in accounting
principle - - - (242.6)
---------------------------------------------------------------------
Net income $426.1 $332.3 $1,207.3 $766.4
---------------------------------------------------------------------
Basic earnings per
share
Operating income $0.44$0.36$1.21$1.12
Net realized
investment losses (0.01) (0.03) (0.01) (0.04)
Cumulative effect of
change in accounting
principle - - - (0.26)
---------------------------------------------------------------------
Net income $0.43$0.33$1.20$0.82
---------------------------------------------------------------------
Diluted earnings
per share
Operating income $0.44$0.36$1.20$1.12
Net realized
investment losses (0.02) (0.03) - (0.04)
Cumulative effect of
change in accounting
principle - - - (0.26)
---------------------------------------------------------------------
Net income $0.42$0.33$1.20$0.82
---------------------------------------------------------------------
Weighted average
number of common
shares outstanding
(basic) 1,002.1 1,000.0 1,002.3 932.3
Weighted average
number of common
shares outstanding
and common stock
equivalents
(diluted) 1,007.6 1,002.0 1,007.6 933.0
Common shares
outstanding at period
end 1,004.7 1,003.3 1,004.7 1,003.3
Common stock
dividends declared $80.5 $- $201.4 $5,252.5 (1)
---------------------------------------------------------------------
Operating income
(loss) by segment
Commercial Lines $379.8 $294.7 $992.7 $882.8
Personal Lines 88.2 92.0 307.5 233.2
Interest Expense
and Other (25.3) (26.6) (88.2) (72.5)
---------------------------------------------------------------------
$442.7 $360.1 $1,212.0 $1,043.5
---------------------------------------------------------------------
Revenues
Premiums $3,149.2 $2,875.3 $9,228.2 $8,216.6
Net investment
income 457.9 440.7 1,369.7 1,393.3
Fee income 133.7 118.6 403.7 330.1
Net realized
investment losses (23.3) (51.3) (0.7) (58.5)
Recoveries from
former affiliate - 159.3 - 159.3
Other revenues 28.0 21.3 96.3 75.6
---------------------------------------------------------------------
$3,745.5 $3,563.9 $11,097.2 $10,116.4
---------------------------------------------------------------------
Revenues by segment
excluding net realized
investment losses
Commercial Lines (2) $2,426.0 $2,395.1 $7,197.6 $6,615.6
Personal Lines 1,342.6 1,220.5 3,898.4 3,558.7
Interest Expense
and Other 0.2 (0.4) 1.9 0.6
---------------------------------------------------------------------
$3,768.8 $3,615.2 $11,097.9 $10,174.9
---------------------------------------------------------------------
(1) Dividends were primarily paid in the form of notes, which were
substantially prepaid from the $4.1 billion of net proceeds from
the March 2002 initial public offering and the issuance of $892.5
million of convertible notes.
(2) 2002 includes $159.3 million of recoveries from Citigroup related
to asbestos incurrals subject to the Citigroup asbestos agreement.
----------------------------------------------------------------------
Summary of Financial Information Travelers Property Casualty Corp.
(in millions)
----------------------------------------------------------------------
For the quarter For the nine months
ended September 30, ended September 30,
-------------------- --------------------
2003 2002 2003 2002
----------------------------------------------------------------------
Net written premiums
Commercial Lines $2,019.8 $1,839.6 $5,994.3 $5,448.8
Personal Lines 1,355.8 1,218.0 3,817.1 3,429.4
----------------------------------------------------------------------
$3,375.6 $3,057.6 $9,811.4 $8,878.2
----------------------------------------------------------------------
GAAP combined ratios:
Commercial Lines (1)
Loss and loss adjustment
expense ratio 66.2% 71.5% 70.4% 72.5%
Other underwriting
expense ratio 27.1% 26.6% 26.8% 26.6%
----------------------------------------------------------------------
Combined ratio 93.3% 98.1% 97.2% 99.1%
----------------------------------------------------------------------
Personal Lines
Loss and loss adjustment
expense ratio 73.7% 72.2% 72.0% 75.0%
Other underwriting
expense ratio 25.2% 25.4% 25.0% 25.6%
----------------------------------------------------------------------
Combined ratio 98.9% 97.6% 97.0% 100.6%
----------------------------------------------------------------------
Total Company (1)
Loss and loss adjustment
expense ratio 69.1% 71.8% 71.1% 73.4%
Other underwriting
expense ratio 26.3% 26.1% 26.1% 26.2%
----------------------------------------------------------------------
Combined ratio 95.4% 97.9% 97.2% 99.6%
----------------------------------------------------------------------
(1) For purposes of computing GAAP combined ratios, losses recovered
under the Citigroup asbestos agreement are excluded and fee income
is allocated as a reduction of losses and loss adjustment expenses
and other underwriting expenses. Before policyholder dividends.
CONTACT: Travelers Property Casualty Corp.
Media:
Keith Anderson, 860/954-6390
or
Institutional Investors:
Maria Olivo, 860/277-8330
or
Individual Investors:
Marc Parr, 860/277-0779
SOURCE: Travelers Property Casualty Corp.