Travelers (TRV) is one of the largest writers of commercial U.S. casualty insurance and personal insurance.
2012 was a challenging year, primarily because of the inordinate number of claims and payouts resulting from Superstorm Sandy, with (pre-tax) catastrophic losses at just under $2 billion. And yet, TRV managed to grow revenues for a fourth consecutive year and increase its net income a whopping 73% to $2.473 billion in fiscal 2012 compared to $1.426 billion in 2011, primarily because of higher underwriting margins.
The company’s focus on those margins also produced a 12% increase in net income for the first quarter of 2013, even with a marginal decline in revenues.
And what income investors will really like: TRV boasted $530 million in operating cash flow for Q1 that would’ve covered three quarters of dividends at its current 50-cent payout — a dividend that TRV started paying in 2007 and that has improved more than 50% in the past three years.
Nobody can predict the problems year-to-year weather events might inflict on property and casualty insurers, but make no mistake — in the long haul, the best insurance companies make sure they get theirs. Considering how Travelers weathered Sandy, investors should feel pretty good about TRV’s future.