Travelers profit beats on higher premiums, lower costs

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

The insurer, 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, CEO 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 expenses 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.

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 has slipped 1.2% in the same period.