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US insurer Travelers profit beats on higher premiums, lower costs

[NEW YORK] Property and casualty insurer Travelers Companies beat third-quarter profit expectations on Tuesday, helped by higher premiums, lower costs and an increase in returns from non-fixed income investments.

The New York-based company, seen as a bellwether for the insurance sector as it typically reports before its industry peers, said net written premiums rose 3 per cent to US$7.77 billion in the quarter.

Core income stood at US$3.12 per share, above analysts'average estimate of US$3.03 per share, according to Refinitiv.

Total revenue rose 3 per cent.

Overall profit more than doubled to US$827 million, or US$3.23 per share, in the quarter ended Sept 30, thanks also to a one-time gain of about US$403 million from Pacific Gas & Electric's emergence from bankruptcy.

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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 US$400 million.

The profit rise was despite catastrophe losses that were well above the 10-year average for the third quarter, chief executive officer Alan Schnitzer said.

However, the quarter saw lower revenue from fixed income investments and the need to bolster reserves for asbestos claims to US$295 million.

Travelers reported pretax catastrophe losses of US$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 expense fell to US$4.89 billion from US$5.23 billion.

The company reported a combined ratio of 94.9 per cent compared with 101.5 per cent a year earlier. A ratio below 100 per cent means the insurer earns more in premiums than it pays out in claims.

Shares of Travelers, a Dow component, was up 1 per cent in light trade on Tuesday. They have fallen 18.3 per cent so far this year, while the blue-chip index has slipped 1.2 per cent in the same period.

REUTERS

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