Travelers profit jumps on underwriting, investment gains

(Reuters) — Travelers Cos. said Friday that its fourth-quarter profit more than doubled, powered by stronger underwriting, higher investment returns and lower catastrophe losses.

Core income of the company, often seen as a bellwether for the sector as it typically reports results before peers, rose to $1.63 billion, or $7.01 per share, from $810 million, or $3.40 per share, in the year-earlier period.

U.S. equity markets rallied strongly toward the end of the year as the Federal Reserve hinted at potential interest rate cuts in 2024, with the benchmark S&P 500 closing up roughly 24% and hovering near its record high. The euphoria spread to other asset classes and fueled robust gains across investment portfolios.

New York-based Travelers said net investment income jumped to $778 million, from $625 million in the year-earlier period.

“We are also pleased to have delivered full-year core income of $3.1 billion … notwithstanding elevated industrywide catastrophe losses and an operating environment for our personal insurance business that, while improving, was difficult during the year,” CEO Alan Schnitzer said in a statement.

Travelers reported a combined ratio of 85.8%, compared with 94.5% a year earlier. A ratio below 100% means the insurer earned more in premiums than it paid out in claims.

Net written premiums grew 13%. The insurer’s catastrophe losses net of reinsurance fell to $125 million, from $459 million in the year-earlier period.

Reinsurance broker Gallagher Re pegged global insured losses from natural catastrophes in 2023 at $123 billion, with $116 billion due to weather and climate events.