Travelers on Tuesday said its second-quarter profit shot up 85 percent, helped by investment gains as the market rallied, and the insurer recorded lower payouts related to weather-related disasters.
The results topped Wall Street expectations, and shares rose in premarket trading.
The New York company posted net income of $925 million, or $2.41 per share, for the three months ended June 30. That compared with $499 million, or $1.26 per share, a year ago.
Operating income, which strips out investment gains and losses, rose 65 percent to $816 million, or $2.13 per share, from $495, or $1.26 per share last year.
Total revenue edged up to $6.39 billion from $6.36 billion last year.
Analysts, on average, expected operating profit of $1.64 per share on $6 billion revenue, according to FactSet.
With the market hitting record highs during the quarter, Travelers recorded net realized investment gains of $109 million, compared with $4 million in the 2012 second quarter.
Chairman and CEO Jay Fishman credited some of the gains to improved underwriting margins, reflecting higher prices, though he said that the increased rates have led to fewer new policies being written.
Gross written premiums, or the total policies written during the quarter, rose a fraction to $6.25 billion from $6.24 billion a year ago. Net written premiums — the industry term for new policy sales — slipped to $5.82 billion from $5.87 billion last year.
But the company's combined ratio fell to 65.3 percent from 71 percent, as it paid out fewer claims due to disasters. A ratio above 100 means that for every premium dollar taken in, more than a dollar went for losses, expenses, and commissions. A figure below 100 indicates an underwriting profit.
Catastrophe costs fell to $340 million, from $549 million last year. The company handled wind and hail storms in several U.S. regions, as well as flooding in Alberta, Canada this year, but the damage was not as great as that from similar U.S. storms in the early part of 2012.
Shares of The Travelers Cos. Inc. added $1.06, or 1.2 percent, to $86.49 in premarket trading. The stock closed Monday at $85.43, up about 19 percent since the start of the year. Shares have traded between $60.62 and $89 in the past 52 weeks.
© Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.