* Operating profit of $2.22 a share beats Wall St view of $1.61
* Catastrophe losses fall sharply
* Shares up nearly 4 percent after setting record high
By Ben Berkowitz
Oct 18 (Reuters) - Travelers Cos Inc posted a record quarterly operating profit as prices rose and losses from natural disasters fell sharply, the property insurance company said on Thursday.
Travelers was able to increase rates in all business lines and also retain customers, a strong sign for the rest of the industry. The company has been a bellwether of insurers' ability to raise pricing after years of weakness.
Shares of Travelers rose as much as 4.6 percent to set an all-time high.
The Dow Jones industrial average component reported a third-quarter net profit of $867 million, or $2.21 per share, compared with $333 million, or 79 cents per share, a year earlier.
Excluding net realized investment gains and losses, Travelers earned $2.22 per share, a record operating profit for any quarter in the company's history. Analysts polled by Thomson Reuters I/B/E/S had expected $1.61.
Because Travelers does not give forecasts, the company's quarterly results often differ widely from analysts' estimates. Still, the latest quarter brought the largest positive surprise in at least two years.
Analysts said the results were strong across the board and pointed to further gains in coming quarters.
"Even with a much higher-than-consensus estimate for 2013, we would expect our estimate to go higher," analyst Larry Greenberg of Janney Capital Markets unit Langen McAlenney said in a note to clients.
Travelers said catastrophe losses in the third quarter were $59 million after taxes, compared with $394 million a year earlier. The third quarter is historically a difficult one for property insurers, but relatively limited hurricane damage this year helped results.
In a slide presentation for analysts, the company noted that customer retention in its homeowner and auto insurance businesses had been steady compared with the second quarter, even as the rate at which it raised premiums rose.
The trends were similar in business insurance, where rates have been increasing steadily in recent quarters and retention has picked up after a dip late last year.
Travelers also said it had taken a $108 million after-tax increase to its asbestos reserves, in line with past years. The company has some of the industry's largest liabilities stemming from the cancer-causing mineral.
The company's shares were up 3.8 percent at $74.06 in morning trading after rising to nearly $74.70 earlier in the session.
At Wednesday's close, the stock was up about 21 percent for the year, roughly matching gains in the broader S&P insurance index.