Travelers 4Q profit falls 25 percent

(AP) - Commercial and personal property insurer Travelers Cos. said Tuesday that lower investment income drove fourth-quarter profit down 25 percent.

The St. Paul, Minn.-based company said net income tumbled to $801 million, or $1.35 per share, from $1.06 billion, or $1.64 per share, a year ago.

Excluding items, operating profit totaled $1.58 cents per share - beating analysts' average estimate of $1.46 per share, according to Thomson Reuters.

The lower profit reflected a 37 percent drop in investment income during the quarter to $438 million, from $696 million, a year ago.

The company's non-fixed income portfolio, mainly comprised of private-equity funds, real-estate partnerships and hedge funds, recorded an investment loss of $164 million.

However, earnings did get a boost from $189 million in reserves that Travelers was able to release because claims for prior-year periods were lower than expected.

Net premiums increased slightly to $5.39 billion during the quarter from $5.37 billion a year ago, and net earned premiums remained unchanged at $5.43 billion.

The company's combined ratio for the quarter rose 2.5 points to 85.9 percent. Combined ratio measures the amount of money insurers pay out in claims and expenses compared with how much they receive from writing new business.

A ratio above 100 means the insurer pays out more in claims and expenses than it takes in from writing new premiums.

The insurer also projected 2009 earnings well below analysts' estimates, seeing profit excluding investment losses of $4.50 to $4.90 per share. Analysts estimate $5.59 per share.

For the year, Travelers earned $2.92 billion, or $4.82 per share, down from $4.6 billion, or $6.86 per share, a year ago. Excluding items, operating profit totaled $5.27 per share.

Shares of Travelers closed at $37.58 on Monday. (Copyright 2009 by The Associated Press. All Rights Reserved.)

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