Travelers Companies Stock Drops 3.8 Percent On Disappointing 4th Quarter
Travelers Companies, the lone insurance firm on the blue-chip Dow Jones stock index, issued its fourth-quarter results Tuesday, posting a decline in profits due to lower investment income and a smaller reserve benefit, capping off the company's worst-earning year since 2004. Shares of the company fell 3.8 percent on the news, making it easily the Dow's worst performer in Tuesday's session. It was the stock's biggest one-day fall since October.
In the three months ended December 30th, the insurer said it earned $618 million, or $1.51 per share, down 31 percent from a year ago when it earned $894 million, or $1.95 a share. Operating profits, meanwhile, which excludes some investment results, totaled $1.48 on a per share basis, missing by 4 cents the average estimate from economists in a recent Bloomberg survey.
Led by Chairman and CEO Jay Fisherman, Travelers has had to increase the rates it charges customers as near-zero interest rates have impacted investment income from the company's bond portfolio and losses from major storms in 2011 prompted the company to look into whether its models understate risk in the US. For the full year, Travelers posted net income of $1.43 billion, the lowest yearly earnings for the company since 2004, when it merged with St. Paul Companies. The figure represents a decline of better than 50 percent from its 2010 earnings of $3.22 billion.
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