Travelers' profit jumps on investment gains, underwriting strength

Travelers Companies' first-quarter profit rose 13%, driven by higher investment income and strong underwriting that offset a hit from a jump in catastrophe losses, the insurance bellwether said on Wednesday.
 

Insurers are reaping the benefits of firming hopes of a soft landing, and wage growth in a still-tight labor market that has ensured job security.
 

Individuals and businesses are reviving spending on their insurance policies, allowing insurers to attract and retain clients despite higher prices in some cases.
 

Renewal premium - the estimated average premium on renewing policies - was 10.6% higher in the reported quarter from a year earlier in the business insurance unit, Travelers' biggest, while growth in personal insurance was driven by higher prices, the company said.
 

Underwriting gains jumped 57% to $577 million, while net investment income rose about 28% to $846 million, thanks to a string of interest rate hikes by the U.S. Federal Reserve to curb inflation, the company said.
 

Catastrophe losses, net of reinsurance, were up at $712 million from $535 million a year earlier, due to severe wind and hail storms in the central and eastern regions of the United States.
 

Global insured losses from natural catastrophes in the first quarter were estimated to be $20 billion, heavily driven by storm activity in the United States, according to a report by reinsurance broker Gallagher Re.
 

The company's core income rose to $1.1 billion, or $4.69 per share, for the three months ended March 31, compared with $970 million, or $4.11 per share, a year earlier.
 

Its underlying combined ratio also improved to 87.7%, compared with 90.6% a year earlier. A ratio below 100% means the insurer earned more in premiums than it paid out in claims.
 

Travelers' shares have gained 17% this year compared with a near 19% jump in the S&P 500 Property & Casualty Insurance Index.