July 17 (Reuters) – Property and casualty insurance giant Travelers posted a 44% jump in second-quarter core profit on Friday, as the industry bellwether benefited from lower catastrophe losses and strong investment income.
Demand for insurance has remained resilient despite broader spending pressures, as businesses and consumers continue to seek protection against financial, legal and catastrophe-related risks.
Travelers has generally taken a conservative approach to underwriting, regularly raising rates and limiting exposure to riskier businesses to protect profitability, even as competitors seek volumes to fuel growth.
Catastrophe losses, which are a major swing factor in insurers’ results, fell to $518 million on a pre-tax basis from $927 million a year earlier.
Travelers, which primarily invests in high-quality bonds, has also increasingly benefited from its vast investment portfolio. Elevated interest rates allow the company to earn more from reinvesting maturing securities.
Its net investment income jumped 13.6% to $1.07 billion from $942 million a year earlier, while net written premiums came in at $11.53 billion, versus $11.54 billion a year earlier.
“The scale of our earnings and cash flow enable us to invest in differentiating technology, including AI… we remain highly confident in the outlook for Travelers,” CEO Alan Schnitzer said in a statement.
Underlying combined ratio, a key industry metric that indicates underwriting profitability, improved marginally to 84.1% from 84.7%. A ratio below 100 indicates claims and expenses paid out were lower than premiums collected.
Travelers’ overall core net income was $2.16 billion, or $10.04 per share, compared with $1.50 billion, or $6.51 per share, a year ago.
Shares of the company have risen over 16% so far this year, outperforming the benchmark S&P 500 index.
(Reporting by Utkarsh Shetti in Bengaluru; Editing by Leroy Leo)
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