Travelers profit up, boosts 2007 forecast

NEW YORK (Reuters) - Travelers Cos. (TRV.N), the top writer of commercial auto and business insurance policies, said on Thursday that second-quarter profit rose 29 percent, helped by higher underwriting gains and net investment income, and raised its 2007 earnings forecast.

Net income rose to $1.25 billion, or $1.86 per share, up from $970 million, or $1.36, a year earlier.

Operating earnings, which analysts use to measure performance because they excludes investments, rose 22 percent to $1.17 billion, or $1.73 per share, from $959 million, or

$1.34.

Analysts on average expected the carrier to earn $1.49 per share, according to Reuters Estimates.

Net written premiums rose 1 percent to $5.71 billion, and underwriting gains rose 44 percent to $449 million. Travelers used 87.8 percent of premiums to pay claims, down from 89.8 percent a year earlier.

Net investment income rose 13 percent to $758 million.

St. Paul, Minnesota-based Travelers raised its forecast for 2007 operating profit per share to a range of $5.80 to $6.05 from $5.60 to $5.85. Analysts on average had forecast $5.84.

The higher forecast assumes $355 million of after-tax catastrophe losses for the year, no changes to reserves for prior years, and a $100 million after-tax benefit from an accounting change, Travelers said.

Travelers shares closed Wednesday at $51.34 on the New York Stock Exchange. They have fallen 4 percent this year, compared with little change in the Standard & Poor's insurance index

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(Reporting by Ed Leefeldt; Additional reporting by Jonathan Stempel)