U.S. insurer Travelers posts record profit on investment returns

The logo of Dow Jones Industrial Average stock market index component Travelers Companies is seen in Los Angeles, California, United States, April 27, 2016. REUTERS/Lucy Nicholson/File Photo

Jan 20 (Reuters) – Property and casualty insurer Travelers Cos Inc reported a record quarterly profit on Thursday as higher returns from its investments cushioned the hit from a rise in catastrophe-related claims.

The New York-based company, a component of the Dow Jones Industrial Average Index (.DJI), is seen as a bellwether for the insurance sector as it typically reports before its peers.

The insurer said it earned a core income of $1.29 billion, or $5.20 per share, in the fourth quarter ended Dec. 31, compared with $1.26 billion, or $4.91 per share, a year earlier.

Analysts on average had expected a profit of $3.86 per share, according to Refinitiv IBES data.

Travelers’ pre-tax net investment income jumped 10% to $743 million, driven by higher returns on its private equity and real estate partnership.

Its net written premiums rose 10% to $7.9 billion.

Travelers said the catastrophe losses it incurred in the quarter mainly stemmed from tornado activity in Kentucky, windstorms in multiple U.S. states and a wildfire in Colorado.

Devastation from tornadoes that slammed parts of the United States in December are expected to push the insurance industry’s 2021 bill for weather-related claims well above the predicted $105 billion, industry experts have said. read more

Travelers reported a combined ratio of 88%, compared with 86.7% a year earlier. A ratio below 100% means the insurer earned more in premiums than it paid out in claims.

Reporting by Noor Zainab Hussain in Bengaluru; Editing by Aditya Soni

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