The Travelers Cos. reported soaring profits for the third-quarter Thursday as the company benefited from its ability to retain customers while raising prices, and it was spared by a relatively calm hurricane season.
Net income for the three-month period ending Sept. 30 was $864 million, or $2.21 per diluted share, compared with $333 million, or 79 cents per diluted share, during the same period in 2011.
"We remain committed to continuing to improve profitability through a strategy of actively, but selectively, seeking price increases and improved terms and conditions, given historically low interest rates and uncertain weather patterns," said Travelers Chairman and CEO Jay Fishman.
Travelers credited the profits to lower losses this year compared with 2011 on weather-related disasters such as hurricanes and tornadoes. After-tax catastrophe losses, which is the amount an insurer pays on natural disasters such as hurricanes and tornadoes, were $59 million for the quarter compared with $394 million during the same period last year.
The New York-based property-casualty insurer also credited its underwriting, which is the process of deciding which risks to insure and for what price.
Operating income was $867 million, or $2.22 per share, compared with $332 million, or 79 cents per share, during the same period last year. Figures for both years exclude net realized investment gains, which accounted for a $3 million loss, or 1 cent per share, during the quarter and a $1 million gain, also 1 cent per share, during the same period a year ago.
Analysts polled by Thomson Reuters were expecting quarterly earnings of $1.61 per share.
The company's revenue increased 2 percent to $6.5 billion for the quarter, up from $6.4 billion during the same period in 2011. Fishman said in September that the company continues to raise prices with an average year-over-year renewal rate increase of 7.7 percent in the third quarter compared with 7.2 percent in the second quarter.
Travelers' Chief Financial Officer, Jay S. Benet, said, "Our $1.5 billion of cash flows from operating activities during the quarter were the highest level since the third quarter of 2007. We repurchased 5.4 million shares for $350 million and dividends were $179 million, bringing the year-to-date total capital returned to shareholders to over $1.5 billion."
Larry Greenberg, an analyst with Langen McAlenney in Hartford, wrote in a research note to investors, "We remain optimistic about the outlook for P-C (property-casualty) pricing and generally positive on property-casualty stocks; Travelers remains one of our preferred 'buy' recommendations in the group."
Travelers is a New York-based property-casualty insurer that employs about 7,000 people in Connecticut.
Shares of the company were up $2.56, or 3.59 percent, to $73.94 at close of market Thursday.