Insurance giant Travelers delivers profit beat on underwriting boost

By Manya Saini and Niket Nishant

(Reuters) -Property and casualty insurer Travelers (NYSE:TRV ) trounced Wall Street estimates for fourth-quarter profit as strength in its underwriting business cushioned a blow from outsized catastrophe losses, sending its shares up nearly 5% on Wednesday.

The insurance bellwether also forecast a hit from the wildfires in California, one of the most destructive natural disasters in the state's history.

"We think it'll have an impact on our first-quarter earnings. It is going to be a big event for the industry," CEO Alan Schnitzer said, adding it was too soon to provide specifics.

The blaze is expected to become the costliest wildfire in U.S. history for insurers, with analysts estimating losses as high as $20 billion.

ROBUST DEMAND

Individuals and companies are increasing their spending on insurance coverage, enabling insurers to attract and retain clients even as premiums for policies such as auto and property get pricier.

Travelers posted a 7% rise in quarterly net written premiums to $10.74 billion and marked a full-year record of $43.36 billion, underscoring the resilience of its business model amid volatile weather conditions and fluctuating financial markets.

Core income increased to $2.13 billion, or $9.15 per share, in the three months ended Dec. 31. That compares with $1.63 billion, or $7.01 per share, a year earlier.

Analysts on average had expected a quarterly profit of $6.63 per share, according to data compiled by LSEG.

Net investment income - earned off an insurer's investment portfolios - came in at $955 million pre-tax, up 23%.



The industry is grappling with a challenging landscape as severe weather events such as hurricanes, wildfires and other natural disasters erode underwriting margins, even as premium rates climb to offset escalating risks.

Catastrophe losses, net of reinsurance, rose to $175 million for Travelers from $125 million a year earlier, due to Hurricane Milton and Hurricane Helene.

Source: Investing.com