* Fourth-quarter operating earnings $2.68/share vs est $2.16
* Revenue up 4 pct to $6.74 bln
* After-tax catastrophe losses $37 mln vs $689 mln a year earlier
* Shares fall as much as 3 pct (Adds details, analyst comment and updates share movement)
By Aman Shah
Jan 21 U.S. insurer Travelers Cos Inc's slowing pace of price hikes raised concerns about its margins and overshadowed a three-fold rise in quarterly profit, sending its shares down as much as 3 percent.
Travelers has been struggling with weakness in its personal lines business, which accounts for a third of the its insurance premiums and includes agency auto and homeowners policies.
In a presentation on the company's website, Travelers said the auto unit's renewal rate change, or the estimated change in average premium charged on policies that renew, was 6.9 percent, its slowest in six quarters.
In its core business insurance sector, renewal pricing dropped to 5.9 percent from 7.0 percent in the third quarter.
The company, led by industry veteran Jay Fishman, has aggressively hiked insurance prices to offset uncertain weather conditions and low interest rates affecting its fixed-income investments.
The fall in shares on Tuesday marked their biggest intra-day percentage decline in two years. Shares of peers Chubb Corp , Hartford Financial and American International Group were trading down 1 percent.
"I think investors are wondering about the avenues of margin expansion from here for 2014 and the stock's premium valuation," Macquarie Equities Research analyst Amit Kumar said in an email to Reuters.
The company's shares trade at 10.5 times forward earnings -- an 18 percent premium to its historical 10-year average, according to Thomson Reuters StarMine.
As one of the first insurers to report results, Travelers is often seen as a bellwether for the insurance industry's ability to raise rates.
But increasing competition has resulted in the company writing fewer policies in the past few quarters, forcing it to cut rates, especially in auto insurance.
Fewer catastrophes helped the company post a net underwriting gain of $435 million for the fourth quarter, compared with a loss of $232 million a year earlier.
After-tax catastrophe losses were $37 million, compared with $689 million a year earlier. Last year's results were largely affected by losses from super storm Sandy that struck Northeast United States.
The company's net income rose to $988 million, or $2.70 per share, for the quarter ended Dec. 31, from $304 million, or 78 cents per share, a year earlier.
Operating earnings were $2.68 per share, significantly beating the average analyst estimate of $2.16 per share, according to Thomson Reuters I/B/E/S.
Travelers' earnings often differ substantially from analysts' average estimate as the company does not give forecasts.
The company's $1 billion deal to buy Dominion General Insurance, which closed on Nov. 1, helped boost written premiums by 5 percent in the fourth quarter.
Combined ratio, the percentage of premium revenue an insurer has to pay out in claims, fell to 87.7 percent in the quarter from 105.4 percent.
A combined ratio of under 100 indicates an underwriting profit.
Shares of Travelers, a component of the Dow Jones industrial average, were down 1.7 percent at $85.00 in mid-day trading on the New York Stock Exchange. They have gained 14 percent in the past year. (Editing by Sriraj Kalluvila and Saumyadeb Chakrabarty)