It’s no surprise that 2008 was a challenging year for most property/casualty insurers. Between hurricanes and an economic dive, insurers have struggled to maintain good standing with the rating agencies that evaluate their financial health.
So if
Today, the commercial and property insurer boosted its quarterly dividend 10%, and authorized an additional $6 billion share repurchase program. The reason: improved stability in capital markets. The company also raised its full-year earnings outlook. Overall, Travelers said net income more than quadrupled to $935 million, or $1.65 per share, from $214 million, or 36 cents per share, a year ago.
According to the
"We should see significantly improved results,'' Bob Hartwig, president of the Insurance Information Institute, a New York-based industry group, told the Associated Press. "The improvement in investment environment and reduction in catastrophe losses are a welcome turn of events.''
Hurricane Ike created $12.5 billion in insured losses, making it the third-most expensive hurricane in U.S. history, according to Insurance Information Institute data. For Travelers, hurricane-related losses had driven Travelers' third-quarter 2008 profit down 82%.
Most insurers in the P&C and life lines of business saw huge losses as the financial crisis hit last year. Some of their losses came from the soured investments in mortgage-backed securities, and some losses came from the stock market dive. Last year, Travelers had $116 million in investment losses in its third quarter.
But analysts point to the
Under increasing pressure to hold solid capital positions in the marketplace, both P&C and life insurers are vulnerable to rating agency downgrades.
The long tail of life insurance business gives carriers a boost from long-term investment income, but last year’s economic downslide caused some life insurers to watch profits turn into losses. So the July-September recovery has proven to provide some relief for these carriers as well. For example,
