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Earnings

U.S. insurer Travelers profit beats on higher premiums, lower costs

(Reuters) - Property and casualty insurer Travelers Companies Inc TRV.N beat third-quarter profit expectations on Tuesday, helped by higher premiums, lower costs and an increase in returns from non-fixed income investments.

FILE PHOTO: The logo of Dow Jones Industrial Average stock market index listed company Travelers Companies Inc (TRV) is seen in Los Angeles, California, United States, April 27, 2016. REUTERS/Lucy Nicholson

The New York-based company, seen as a bellwether for the insurance sector as it typically reports before its industry peers, said net written premiums rose 3% to $7.77 billion in the quarter.

Core income stood at $3.12 per share, above analysts’ average estimate of $3.03 per share, according to Refinitiv. Total revenue rose 3%.

Overall profit more than doubled to $827 million, or $3.23 per share, in the quarter ended Sept. 30, thanks also to a one-time gain of about $403 million from Pacific Gas & Electric’s emergence from bankruptcy.

The gain, which stemmed from payments Travelers made for claims on wildfires in California in 2017 and 2018, had been flagged last quarter at an anticipated $400 million.

The profit rise was despite catastrophe losses that were well above the 10-year average for the third quarter, Chief Executive Officer Alan Schnitzer said.

However, the quarter saw lower revenue from fixed income investments and the need to bolster reserves for asbestos claims to $295 million.

Travelers reported pretax catastrophe losses of $397 million, mainly from severe storms in several regions of the United States and wildfires.

It reported an increase in revenue from non-fixed income investments, which include private equity, whose results are reported with a one-quarter time lag.

Claims and claim adjustment expense fell to $4.89 billion from $5.23 billion.

The company reported a combined ratio of 94.9% compared with 101.5% a year earlier. A ratio below 100% means the insurer earns more in premiums than it pays out in claims.

Shares of Travelers, a Dow component, was up 1% in light trade on Tuesday. They have fallen 18.3% so far this year, while the blue-chip index .DJI has slipped 1.2% in the same period.

Reporting by Noor Zainab Hussain in Bengaluru and Alwyn Scott in New York; Editing by Arun Koyyur

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