Travelers Companies’ third-quarter profit exceeded Wall Street’s expectations as increased underwriting gains and investment income compensated for significant catastrophe losses. This resulted in a nearly 7% rise in the insurer’s shares.
The company benefited from increased spending on insurance by individuals and businesses, enabling them to attract and retain customers despite higher prices for certain policies such as auto and property insurance.
Travelers, often considered a sector indicator due to its early reporting, saw its core income nearly triple to $1.22 billion, or $5.24 per share, for the quarter ending September 30. Analysts surveyed by LSEG had predicted profits of $3.55 per share.
The company’s net written premiums grew by 8% across all its units. Underwriting gains reached $685 million, a marked improvement from a $136 million loss a year earlier, while net investment income increased by nearly 18%, driven by robust fixed income returns and growth in fixed maturity investments.
A stable U.S. economy and expectations of further interest rate cuts have bolstered activity across U.S. equity markets, spreading optimism to other asset classes and enhancing investment portfolio gains.
Despite this, catastrophe losses, net of reinsurance, increased to $939 million from $850 million the previous year due to the effects of Hurricane Helene and severe wind and hailstorms in the United States. These losses reflect the financial impact insurers face from large-scale disasters.
In 2024, the United States experienced several major hurricanes, including Hurricane Debby in Florida in August, Francine in Louisiana in September, and more recently, Helene and Milton in Florida.
Travelers’ underlying combined ratio improved to 85.6% from 90.6% a year earlier, indicating that the insurer earned more in premiums than it paid out in claims, as a ratio below 100% signifies.
