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Net income includes $43.2 million and $5.2 million in realized investment gains for the 1998 and 1997 periods, respectively. Per share results are based on 392.2 million (basic) and 392.6 million (diluted) average shares outstanding compared to 399.4 million (basic and diluted) for the 1997 period. "Growth in operating income resulted from increased net investment income and continued productivity improvements, which more than offset the effect of the deteriorating rate environment," said Robert I. Lipp, Chairman and Chief Executive Officer. "On the revenue side, excluding realized investment gains, revenues grew 4 percent over the first quarter of 1997 fueled predominantly by growth in Personal Lines." Net written premiums were $2.018 billion, up 6 percent from $1.902 billion in the 1997 period, excluding one-time adjustments in the 1997 quarter of $211.1 million. Net investment income continued strong at $364.8 million, after tax, compared to $347.3 million in the first quarter of 1997. The statutory combined ratio was 101.2 percent compared to 102.5 percent, as adjusted, in the first quarter of 1997. "Commercial Lines continues to face a tough market," said Mr. Lipp. "While we maintained our disciplined approach to underwriting, we have also maintained strong retention rates and have had success in writing new business where it makes sense to do so. We are pleased with the increase in sales to small businesses and increased sales of our claim service-only business. "In Personal Lines, we achieved strong new business growth among all distribution channels and continued to lay the foundation for future market expansion," said Mr. Lipp. "Of particular note are the net written premiums generated by our independent agents, which grew 7 percent, excluding the one-time reinsurance adjustment in 1997. This growth rate is double that of the industry. "Market expansion also continued in the quarter with our entry into the New York non-standard auto market, and we now have over 1,500 licensed producers in California for our recently established subsidiary TravCal. "Looking to the future, the recently announced merger of Travelers Group with Citicorp presents some exciting opportunities for Travelers Property Casualty both in the U.S. and overseas," said Mr. Lipp. "Our personal lines business has established an excellent record of capitalizing on the new marketing and distribution opportunities offered by other Travelers Group companies. Under the new Citigroup, we hope to capitalize on Citicorp's extensive consumer distribution system."
The operating results in this segment reflect strong net investment income, continued expense savings, and no catastrophe losses. In the 1997 quarter, Commercial Lines sustained catastrophe losses, after taxes and reinsurance, of $4.9 million. The statutory combined ratio for the quarter was 106.8 percent compared to 110.5 percent, as adjusted, in 1997. The combined ratio improvement is due, in part, to increased productivity and favorable loss experience. Net written premiums for the quarter were $1.212 billion compared to $1.196 billion in the first quarter of 1997, excluding a one-time adjustment in the 1997 quarter. These results reflect the difficult pricing environment and the company's continued disciplined approach to underwriting and risk management. In this declining price environment, the company is placing particular emphasis on both product and industry specialization, as well as continued attention to expense management, to maintain margins.
Operating results were driven by growth in premium income and strong net investment income, offset by catastrophe losses, after taxes and reinsurance, of $8.6 million compared to no such losses in the 1997 quarter, and investments in service centers and market expansions. The statutory combined ratio for the quarter was 93.2 percent compared to 89.8 percent, as adjusted, in 1997. This increase was primarily due to the increase in catastrophe losses. Net written premiums were $806.0 million, up from $706.2 million in the first quarter of 1997, excluding a one-time adjustment associated with a reinsurance transaction in the 1997 quarter. This 14 percent rise in net written premiums was led by the company's independent agents, which contributed approximately half the increase.
The primary component of Corporate and Other operating expense for the quarter was interest expense of $26.7 million reflecting financing costs associated with the acquisition of Aetna's property casualty business. 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.
Basic earings per share represents net income available to common shareholders divided by the weighted average shares which are actually outstanding. Diluted earnings per share reflects the effect of potentaially dilutive securities, principally stock-based incentive plans.
(1) The 1997 first quarter net written premiums include and increase of $142.4 million due to a change to conform Aetna P&C's and Travelers P&C's methods of recording net written premiums, and an increase of &68.7 million due to an adjustment associated with a reinsurance transaction. The GAAP and statutory combined ratios, as adjusted, exclude these transactions.
(2) Based on 12 month rolling net written premiums.
(3) Before policyholder dividends
(4) For purposes of computing GAAP combined ratios, fee income is allocated as a reduction of losses and loss adjustment expenses and other underwriting expenses. Fee income allocated as a reduction of losses and loss adjustment expenses and other underwriting expenses was $47.2 million and $34.8 million, respectively, in the 1998 first quarter and was #51.5 million and $45.5 million, respectively, in the 1997 first quarter.
(1) The 1997 first quarter net written premiums include an increase of $142.4 million due to a change to conform Aetna P&C's and Travelers P&C's methods of recording net written premiums. The statutory combined ratio, as adjusted, excludes this transaction.
(2) Before policyholder dividends.
(1) The 1997 first quarter net written premiums include an adjustment associated with a reinsurance transaction, which increased homeowners premiums written by idependent agents by $68.7 million. The statutor combined ratio, as adjusted, excludes this transaction.
CONTACT: Media: Keith Anderson, 860-954-6390 or Investors: Bill Pike or Linda Tegnestam, 212-816-8874/8675 both of Travelers |
