Insurer Travelers’ Profit Beats Estimates on Investment Gains, Fewer Claims

Property and casualty insurer Travelers Cos Inc reported a jump in quarterly profit that beat analysts’ estimates on Thursday, helped by an increase in returns from investments and lower catastrophe claims.

Travelers reported a core income of $1.26 billion, or $4.91 per share, in the fourth quarter ended Dec. 31, compared with $867 million, or $3.32 per share, a year earlier.

Analysts had expected a profit of $3.18 per share on average, according to Refinitiv data.

New York-based Travelers, seen as a bellwether for the insurance sector as it typically reports before its industry peers, said net written premiums rose 3% to $7.27 billion for the reported quarter.

The insurer’s strong quarter caps off a year of the COVID-19 pandemic, which has had a far less impact on property casualty insurers than many investors expected, mainly because of pandemic-related exclusions in their contracts.

Travelers posted $31 million in pre-tax COVID losses for the quarter. It is adding communicable disease exclusions to some policies as workplaces reopen, and being cautious in its approach to potential future workers’ compensation losses, executives said during a call with analysts.

Underwriting gains rose to $955 million from $513 million a year earlier, while pre-tax net investment income rose 10% to $677 million, helped by gains in its non-fixed income investment portfolio.

The company reported a combined ratio of 86.7%, compared with 92.4% a year earlier. A ratio below 100% means the insurer earned more in premiums than it paid out in claims.

Travelers reported catastrophe loss net of reinsurance of $29 million in the quarter, compared with $85 million a year earlier. Full-year losses jumped to $1.6 billion, impacted mainly by tornados, storms, hurricanes and civil unrest in the United States. Shares of Travelers, a Dow component, were up 3.3% on Thursday.