Travelers Group earnings rise 29% Smith Barney unit's 45% profit gain leads 3rd-quarter surge

October 14, 1997|By BLOOMBERG NEWS

NEW YORK -- Travelers Group Inc. said yesterday that third-quarter operating earnings climbed 29 percent, led by profit at its Smith Barney Inc. brokerage and in its property and casualty insurance business.

Profit excluding gains from investment sales rose to a record $740.8 million, or $1.12 a share, from $576.1 million, or 86 cents, a year earlier.

The latest earnings beat the expected $1.01-a-share forecast in an IBES International survey. Travelers shares gained 81.25 cents to close at $75.3125 on the New York Stock Exchange.

Investment gains of $82 million brought net income for the three months ended Sept. 30 to $822.8 million, or $1.24 a share, from $591.8 million, or 88 cents a share, a year ago.

"It looks like an excellent quarter to me," said Carlton Eck, a money manager at Aeltus Investment Management Inc., a Hartford, Conn.-based company that invests $35 billion and held 4.8 million Travelers shares as of June 30. "They got good results out of their property-casualty company and, obviously, very strong results from Smith Barney."

"Every part of the company did better than people thought it would," said Travelers' Chairman and Chief Executive, Sanford I. Weill, in an interview.

"Smith Barney had the best quarter by far that it's ever had. We're excited."

Travelers' earnings were boosted by a 45 percent increase in profit at its Smith Barney Inc. brokerage, now in the process of merging with Salomon Inc. Earnings from consumer finance advanced 21 percent, as Travelers' life insurance and retirement savings profits grew by 17 percent. The Primerica Financial Services unit saw a 25 percent earnings gain, while Travelers' property and casualty subsidiary said profit rose 18 percent.

Smith Barney's earnings climbed to $302.5 million in the quarter.

Its commission revenue increased to a high of $676.8 million as revenue per salesperson grew 28 percent to an annual $428,000. The company provides retail services through 10,300 "financial consultants" in 434 U.S. offices.

Profit at Baltimore-based Commercial Credit Co., the company's consumer-lending unit, increased 21 percent to $65.4 million, Travelers said. Its July 31 purchase of Security Pacific "did not have a material impact" on the latest quarter. The $1.6 billion transaction gave Commercial credit 225 additional branches.

Travelers Property Casualty Co. said it earned $290.0 million, or 83 cents a share, up 18 percent from $246.1 million, or 62 cents, a year ago. The property and casualty insurer benefited from mild weather that lowered catastrophe losses, the company said.

Pub Date: 10/14/97

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