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Higher investment income, asbestos settlement boost Travelers Q4'16 results

Travelers Cos. Inc. reported fourth-quarter 2016 operating income of $919 million, or $3.20 per share, up from $886 million, or $2.90 per share, in the year-ago quarter.

The S&P Capital IQ consensus normalized EPS estimate for the quarter was $2.81.

Net income for the quarter increased to $943 million, or $3.28 per share, from $866 million, or $2.83 per share, in the prior-year quarter.

The company attributed the increases in operating income and net income to the benefit from the settlement of a reinsurance dispute over asbestos liability and higher net investment income. The increases were partially offset by a lower underwriting gain driven by higher catastrophe losses and higher loss estimates for personal auto bodily injury liability coverages, the company said.

Net investment income for the quarter rose to $627 million from $541 million in the prior-year period, driven by higher returns in the company's non-fixed income portfolio.

The combined ratio for the quarter deteriorated to 90.0% from 86.6% in the year-ago period. The company said the increase in the ratio was due to higher catastrophe losses, a higher underlying combined ratio and lower net favorable prior year reserve development.

Book value per share was $83.05 at Dec. 31, 2016, versus $79.75 at Dec. 31, 2015. Adjusted book value per share was $80.44 at Dec. 31, 2016, compared with $75.39 at Dec. 31, 2015.

During the fourth quarter, the company repurchased 6.6 million shares at an average price of $113.53 per share for a total cost of $751 million.

For the full year 2016, Travelers reported operating income of $2.97 billion, or $10.12 per share, down from $3.44 billion, or $10.87 per share, in 2015. Net income for the year fell to $3.01 billion, or $10.28 per share, from $3.44 billion, or $10.88 per share in 2015.

The S&P Capital IQ consensus normalized EPS estimate for 2016 was $9.69.