U.S. insurer Travelers profit beats on higher premiums, investment returns

The company posted underwriting gains of $324 million for the quarter, compared with an underwriting loss of $280 million a year earlier. Its pre-tax net investment income more than tripled to $818 million, as higher returns on its non-fixed income investments countered weakness in the mainstay fixed-income assets that have struggled due to record-low interest rates.

Property and casualty insurer Travelers Cos Inc beat second-quarter profit expectations on Tuesday, helped by higher premiums, lower catastrophe losses, and a surge in returns from investments. The New York-based company, seen as the bellwether for the insurance sector as it typically reports before its peers, said net written premiums jumped 11% to $8.14 billion.

Its core income came in at $879 million, or $3.45 per share, for the three months ended June 30, while analysts had expected a figure of $2.39 per share, according to Refinitiv IBES data. In the year-ago period, the insurer had reported a loss of $50 million, or 20 cents per share, due to severe storms and claims related to civil unrest.

The reopening of the economy with rapid COVID-19 vaccinations has provided some respite to insurers, helping Travelers retain customers and expand its auto and homeowners-focused businesses. The company posted underwriting gains of $324 million for the quarter, compared with an underwriting loss of $280 million a year earlier.

Its pre-tax net investment income more than tripled to $818 million, as higher returns on its non-fixed income investments countered weakness in the mainstay fixed-income assets that have struggled due to record-low interest rates. The company reported a combined ratio of 95.3%, compared with 103.7% a year earlier. A ratio below 100% means the insurer earned more in premiums than it paid out in claims.

Total revenues rose 17% to $8.69 billion, and the company said it bought back $401 million worth of shares in the quarter.

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