UPDATE 4-Travelers Cos profit jumps, tops Wall Street view

* Q3 oper EPS $1.61; Street view $1.31

* Raises FY earnings outlook

* Approves 10 pct dividend increase

* Authorizes $6 bln share buyback

* Shares rise 6 pct, lead Dow higher (Adds details, byline; updates share rise)

By Lilla Zuill

NEW YORK, Oct 22 (Reuters) - Travelers Cos Inc (TRV.N), the No. 1 publicly traded U.S. property-casualty insurer, said quarterly profit more than quadrupled, easily beating expectations, as a dearth of costly catastrophes left the company with strong underwriting gains.

The New York-based insurer raised its full-year earnings forecast, approved a 10 percent dividend increase, and authorized a $6 billion share buyback.

The company's stock rose more than 6 percent in morning trading on the New York Stock Exchange and was the biggest gainer in the Dow Jones industrial average .DJI, rising to a new 52-week high of $51.02.

Travelers' third-quarter net income was $935 million, or $1.65 a share, compared with $214 million, or 36 cents a share, a year earlier.

It was helped by a $524 million underwriting gain. In the year-earlier quarter, the company had an underwriting loss, driven by $1 billion in catastrophe claims after hurricanes Dolly, Gustav and Ike hammered the U.S. Southeast coast.

The absence of costly U.S. catastrophes in the latest quarter was a shot in the arm for Travelers. "It certainly was an important component," said Paul Newsome, an analyst in Chicago with Sandler O'Neill. "And they also had reserve releases this quarter, and they had improvement in investment income."

Excluding investment gains and losses, Travelers posted an operating profit of $1.61 a share. On that basis, analysts on average had forecast $1.31, according to Thomson Reuters I/B/E/S.

Travelers recorded a $309 million release in reserves set aside in prior years for potential losses. And net investment income was more than 6 percent higher at $763 million.

These factors helped offset a 3 percent decline in net written premiums to $5.3 billion.

Chief Executive Jay Fishman attributed the contraction in policy sales to "declining economic activity in recent quarters."

BUMP IN VALUE

The company's book value, a key investor measure, rose 8 percent to $51.24 per share during the quarter, helped by share buybacks, shareholder dividends and improvement in the valuation of investments held in the company's own portfolio.

It raised the quarterly dividend to 33 cents a share from 30 cents.

For the full year, Travelers boosted its operating earnings forecast to a range of $5.30 to $5.50 a share; its previous forecast was $4.80 to $5.05. Analysts on average expect $5.28.

In the fourth quarter, Travelers expects to report an after-tax gain of $103 million from its sales of Verisk Analytics Inc (VRSK.O) stock in Verisk's recent initial public offering.

Shares of the insurer, added to the Dow Jones industrial average in June, have risen nearly 40 percent in the past year. The Standard & Poor's insurance index .GSPINSC, which includes Travelers, has risen about 25 percent over the same period. (Reporting by Lilla Zuill; additional reporting by Sakthi Prasad in Bangalore; Editing by Derek Caney and John Wallace)