* Q2 oper earnings $1.93/shr vs. est $2.07
* Catastrophe losses rise 28 pct to $436 mln
* Revenue rises 2 pct to $6.79 bln
* Shares fall as much as 5 pct (Adds CEO quote, analysts' comments, conference call details, court ruling)
By Amrutha Gayathri
July 22 (Reuters) - Property and casualty insurer Travelers Cos Inc reported a steeper-than-expected fall in quarterly operating profit, hurt by bigger catastrophe losses and a slowing pace of premium rate increases.
The company, led by industry veteran Jay Fishman, has aggressively raised insurance prices in the past several quarters to offset low interest rates affecting its fixed-income investments.
However, the industry's ability to raise premiums is slowing after several quarters of steady rate increases, analysts said.
"We haven't witnessed large catastrophe losses which would deplete the industry capital position and necessitate large rate increases," Macquarie Securities analyst Amit Kumar said.
Travelers' shares were down 4.1 percent at $91.37 in afternoon trading on Tuesday, making it the top loser on Dow Jones Industrial Average. Up to Monday's close, the stock had risen 10.75 percent since it last reported results in April.
But Fishman did not rule out the possibility of premium rate increases in certain businesses.
"There remains opportunity to further improve the product portfolio... by achieving additional rate increases for those accounts that continue to experience unusual weather volatility," Fishman said in a statement.
Separately, a federal appeals court on Tuesday ruled Travelers should pay more than $500 million to satisfy asbestos-related claims stemming from its coverage of policyholder Johns-Manville Corp, reversing a lower court ruling.
Travelers' catastrophe losses in the latest quarter rose to $436 million from $340 million a year earlier.
Severe storms pounded parts of the central United States in early June, producing baseball-sized hail. There were also several tornado touchdowns and other dangerous wind storms.
Net income fell to $683 million, or $1.95 per share, in the second quarter ended June 30, from $925 million, or $2.41 per share, a year earlier.
Operating earnings of $1.93 per share missed the average estimate of $2.07, according to Thomson Reuters I/B/E/S.
Travelers' earnings often differ substantially from Wall Street estimates as the company does not provide forecasts.
Net investment income rose 8 percent to $695 million.
As one of the first insurers to report results, the company's results are seen as a bellwether for the industry.
The company's combined ratio, the percentage of premium revenue an insurer has to pay out in claims, rose to 95.1 percent in the quarter from 94.3 percent. A combined ratio of under 100 indicates an underwriting profit. (Reporting by Amrutha Gayathri; Editing by Ted Kerr and Don Sebastian)