Travelers (TRV) Q3 earnings report

Travelers Insurance offices in New York City.

Adam Jeffery | CNBC

Travelers Companies‘ third-quarter profit beat Wall Street expectations as higher underwriting gains and investment income more than offset steep catastrophe losses, sending shares of the insurer up nearly 7%.

Individuals and businesses are spending more on insurance, allowing insurers to attract and retain clients despite higher prices for some policies such as auto and property.

Core income of Travelers, often seen as a sector bellwether as it typically reports results before peers, jumped nearly three-fold to $1.22 billion, or $5.24 per share, in the three months ended Sept. 30. Analysts polled by LSEG had forecast a profit of $3.55 per share.

Net written premiums rose 8% as all its units grew. Underwriting gains climbed to $685 million compared with a loss of $136 million a year earlier, while net investment income rose nearly 18%, thanks to strong fixed income returns and growth in fixed maturity investments.

A steady U.S. economy and bets of more interest-rate cuts have helped fuel activity across U.S. equity markets. The euphoria has also spread to other asset classes, bolstering gains across investment portfolios.

Catastrophe losses, net of reinsurance, rose to $939 million for Travelers from $850 million a year earlier, due to the impact of Hurricane Helene and severe wind and hail storms in the United States.

The losses refer to a significant financial hit that insurers incur due to large-scale natural or man-made disasters.

The United States grappled with multiple major hurricanes in 2024, including Hurricane Debby that struck Florida in August, Francine that made landfall in Louisiana in September, and more recently, Helene and Milton that hit Florida.

Travelers’ underlying combined ratio improved to 85.6%, compared with 90.6% a year earlier. A ratio below 100% means the insurer earned more in premiums than it paid in claims.

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