Travelers Companies’ third-quarter profit exceeded Wall Street expectations, driven by increased underwriting gains and investment income, more than compensating for significant catastrophe losses. This resulted in the insurer’s shares increasing by nearly 7%.
The trend of individuals and businesses increasing their spending on insurance has enabled insurers to both attract and retain clients, despite rising prices for certain policies such as auto and property insurance.
Travelers, often considered a bellwether in the sector due to its typical practice of reporting results before its peers, saw a nearly three-fold increase in core income, reaching $1.22 billion, or $5.24 per share, for the three months ending September 30. Analysts surveyed by LSEG had anticipated a profit of $3.55 per share.
Net written premiums experienced an 8% increase with growth across all units. Underwriting gains rose to $685 million, compared to a loss of $136 million in the previous year, while net investment income increased by nearly 18%, bolstered by strong fixed income returns and growth in fixed maturity investments.
A stable U.S. economy and expectations of additional interest-rate cuts have spurred activity in U.S. equity markets. This optimism has also extended to other asset classes, contributing to gains across investment portfolios.
Catastrophe losses, after accounting for reinsurance, increased to $939 million from $850 million a year prior, due to the effects of Hurricane Helene and severe wind and hail storms in the United States.
These losses represent the substantial financial damage that insurers face due to large-scale natural or man-made disasters.
In 2024, the United States dealt with several major hurricanes, including Hurricane Debby in August affecting Florida, Hurricane Francine hitting Louisiana in September, and more recently, Helene and Milton impacting Florida.
The underlying combined ratio for Travelers improved to 85.6%, compared to 90.6% a year earlier. A ratio below 100% indicates that the insurer earned more in premiums than it paid out in claims.
