Travelers Profit Beats as Investment Earnings Rise

Industries Reuters

(Reuters)

Property and casualty insurer Travelers reported a better-than-expected quarterly net profit on Tuesday, helped by a rise in investment earnings.

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A large chunk of insurers' earnings come from investing their customers' premiums until the money is needed to pay claims.

St. Paul, Minnesota-based Travelers said its net income rose 8.9 percent to $943 million, or $3.28 per share, in the fourth quarter ended Dec. 31, from $866 million, or $2.83 per share, a year earlier.

On an operating basis, the company earned $3.20 per share, beating analysts' average estimate of $2.73, according to Thomson Reuters I/B/E/S.

The insurer said its net investment income rose about 16 percent to $627 million in the quarter, helped by higher returns in the non-fixed income portfolio.

Pretax catastrophe losses, net of reinsurance, rose to $137 million from $46 million.

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The underlying combined ratio, the percentage of premium revenue an insurer has to pay out in claims, rose to 92 percent from 90.7 percent.

A ratio below 100 percent means an insurer earns more in premiums than it pays out in claims.

(Reporting by Nikhil Subba in Bengaluru; Editing by Martina D'Couto)