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(Reuters) — Travelers Cos. Inc. reported a steep decline in quarterly profit on Thursday, but it beat Wall Street estimates even while recording $700 million in catastrophe losses from the destruction caused by Hurricanes Harvey and Irma.
Despite a 59% drop in core earnings, the property/casualty insurer's profit was helped by a decline in income tax expense and record premiums written.
"In a quarter of unprecedented hurricane activity, our strength in underwriting and our investment expertise enabled us to deliver core income of $253 million and core return on equity of 4.5%," CEO Alan Schnitzer said in a statement.
Shares of the company, a Dow component, were up 1.5% at $132 in premarket trade.
The company, often considered a bellwether for the insurance sector, said catastrophe losses rose 700% from a year ago, as Texas suffered from historic rains caused by Harvey and Irma pummeled Florida and several southern states.
As a result, Travelers' combined ratio came in at 103.2% from 92.9% a year ago. A ratio below 100% means an insurer earns more in premiums than it pays out in claims.
The also company warned of significant catastrophe losses in the fourth quarter from the recent wildfires in California.
In the latest quarter, which ended Sept. 30, net income tanked 59% to $293 million.
On a core basis, the company earned 91 cents per share, trumping analysts' expectations of 43 cents a share, according to Thomson Reuters I/B/E/S.
Net written premiums rose 4.2% to a record of $6.7 billion.
American International Group Inc., with whom Travelers competes for the title of the largest U.S. property/casualty insurer, reports third-quarter results on Nov. 2.
Travelers Cos. Inc. reported lower second-quarter profit Thursday as higher-than-average catastrophe losses hit the insurer’s results.