Travelers Profit Soars to $864M in Q3

The Travelers Companies Inc. reported $864 million net profit for the third quarter — up 159 percent from the same period a year ago when the insurer posted a $333 million profit.

Travelers’ latest earnings, posted on Oct. 18, were boosted by lower catastrophe (CAT) losses as well as continued premium rate increases and higher underlying underwriting results.

Net written premiums for the quarter came in at $5.697 billion, essentially unchanged from $5.672 billion reported one year ago.

The CAT losses for the quarter were $59 million after-tax – a significant drop from the $394 million CAT losses after-tax reported during the prior-year quarter – despite some industry-wide concerns for events such as Hurricane Isaac this past August.

The GAAP combined ratio for the quarter was 90.3 percent, improving from 104.5 percent one year ago. This improvement of 14.2 points in the combined ratio was mostly due to lower CAT losses (9.2 points) and higher underlying underwriting margins (4.9 points), the insurer said.

CAT losses in the third quarter were primarily driven by increases in estimated losses related to wind and hail storms that took place in the second quarter 2012.

Net investment income rose to $722 million – up from $690 million a year ago – thanks to strong returns from non-fixed asset investments.

The company said renewal rate gains continued across all segments and that retention rates remained strong across each segment and were generally consistent with recent quarters. But Travelers said new business volumes were lower than the prior-year quarter in all segments – largely as a result of the company’s pricing strategy.