Insurance bellwether Travelers beats profit estimates on stronger underwriting

By Manya Saini

Jan 21 (Reuters) - Property ⁠and casualty ⁠insurance giant ‍Travelers trounced Wall Street estimates for fourth-quarter profit on Wednesday, propelled by stronger underwriting performance and higher investment returns.

Insurance spending has stayed ‍resilient despite cutbacks elsewhere, as businesses and individuals continue to seek ​coverage against financial risks, natural disasters and other potential losses.

Analysts say demand has held up ​so far despite an industrywide rise in auto and property insurance pricing.

Travelers' net written premiums rose 1% in the fourth quarter to $10.86 billion.

"Earnings were boosted by low cat losses and ​favorable reserve development, but would have been well above expectations regardless, helped by robust business insurance and personal lines margins," analysts at J.P.Morgan said in ​a note.

The company posted catastrophe losses of $95 million on a pre-tax basis in the reported quarter, primarily due ‌to winter storms in multiple states.

Catastrophe losses remain a major swing factor for U.S. insurers, typically driven by major weather ​events, with the timing and severity of these ⁠events significantly affecting results.

Shares of the insurer were last up 0.4% in morning trading as CEO Alan Schnitzer said he ‌was "highly confident" about the outlook for Travelers in 2026 and beyond.

Travelers is reducing its exposure to large property accounts where catastrophe risk is not matched by pricing, sticking to ‌strict underwriting discipline in an environment where some competitors are still chasing volumes.

Its underlying combined ratio ‌improved 1.8 percentage points to 82.2%. A ratio below 100 indicates that the insurer collected more in premiums than it paid out in claims and expenses.

Meanwhile, net investment income, typically ‍earned off investments in low-risk assets, rose 10% after tax to $867 million.

Core income came in at $11.13 per share in the ⁠three months ended December 31, beating an expectation of $8.85 per share, according to estimates compiled by LSEG.

"We believe TRV's results validate our positive outlook for the P&C business generally in the fourth quarter," analysts at Raymond James said.

(Reporting by Manya Saini in Bengaluru; Editing by Pooja Desai)

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