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Travelers Group's 2nd-Quarter Earnings Up 5%

July 21, 1998|From Bloomberg News

NEW YORK — Travelers Group Inc. said Monday its second-quarter earnings rose a better-than-expected 5% as gains in insurance and consumer finance offset declines at its Salomon Smith Barney investment banking unit.

Travelers, which plans to merge with Citicorp to form the world's largest financial services company, said earnings from operations increased to $921.6 million, or 77 cents a diluted share, from $877.6 million, or 72 cents, a year ago. That beat the average forecast of 74 cents by six securities analysts in a poll by First Call Corp. Revenue rose 9.9% to $10.1 billion.

Operating earnings at Salomon Smith Barney fell 9.4% to $410.1 million, hurt by losses at its bond arbitrage and commodities trading businesses. Salomon said July 6 it will end its U.S. bond arbitrage, where it bets large amounts of its own capital on bond markets.

Salomon's revenue from trading tumbled 56% to $315.3 million. Commission revenue, one of Salomon's biggest moneymakers, rose 14%.

With financial markets hitting historic highs and acquisitions running at a record pace, Salomon is the only large brokerage so far to post an earnings decline in the second quarter. Bear Stearns Cos. hasn't yet reported.

Travelers' 83.3% interest in Travelers Property Casualty Corp. generated operating earnings of $255.1 million, up 11%.

Operating earnings rose 24% at Travelers Life & Annuity unit, 26% at Primerica Financial Services, a unit that sells term life insurance, and 28% at Travelers' consumer finance division.

On the New York Stock Exchange, Travelers shares rose 94 cents to close at $72.63, and Citicorp shares rose $2.25 to close at $180.88.

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