(Reuters) -Travelers Companies’ profit surged nearly three-fold in the second quarter, the insurance bellwether reported on Thursday, boosted by stronger underwriting and higher investment returns.
Insurance demand has remained strong despite economic uncertainty, as businesses and individuals maintain or increase coverage to protect against financial risks, natural disasters and other potential losses.
Net written premiums, the total value of policies sold after accounting for reinsurance, rose 4% in the second quarter to $11.5 billion.
Catastrophe losses from hurricanes, wildfires and severe storms are a key swing factor for insurers, with the scale and timing of such events often sharply affecting quarterly earnings despite efforts to price in risks and share them through reinsurance.
Travelers posted catastrophe losses of $927 million on a pre-tax basis in the reported quarter, compared with $1.51 billion a year earlier.
Losses were moderate despite some hailstorms, making it one of the better quarters following a spell of elevated weather-related claims across the industry.
The company’s results often serve as a bellwether for the property and casualty insurance sector, reflecting broader industry trends in underwriting, pricing and catastrophe losses.
The underlying combined ratio came in at 84.7% in the quarter. A ratio below 100 indicates that the insurer collected more in premiums than it paid out in claims and expenses.
Travelers posted underlying underwriting income of $1.6 billion on a pre-tax basis, up 35% from a year earlier.
Stronger underwriting reflects the insurer’s ability to price risk accurately and limit losses, helping boost profits even when claims arise.
Meanwhile, net investment income, which comes from investments in bonds, stocks and other low-risk financial assets, rose 6% to $942 million. These returns are a key source of profit for insurers and help cushion the impact from natural disasters and other large claims.
Core income climbed to $1.5 billion, or $6.51 per share, in the three months ended June 30. That compares with $585 million, or $2.51 per share, a year earlier.
(Reporting by Manya Saini and Niket Nishant in Bengaluru; Editing by Pooja Desai)
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