Key Takeaways

• The Travelers Companies shares surged to a record high Thursday after the insurer reported better-than-expected profits for the third quarter.

• Higher premiums across all segments and increased investment income helped drive strong bottom-line growth, despite an uptick in catastrophe losses.

• Travelers also reported an improvement in its overall combined ratio, a key gauge of profitability for insurance companies.

Shares of The Travelers Companies (TRV) jumped more than 7% to close at a record high $264.82 Thursday, marking one of the top daily performances in the S&P 500 after the insurer reported better-than-expected profits for the third quarter.

Although Travelers reported a year-over-year uptick in catastrophe losses, strong growth in premiums and investment income helped the insurer more than triple its net income year-over-year to $1.26 billion, blowing past analysts' estimates.

Higher Premiums, Investment Gains Help Offset Catastrophe Losses

Travelers reported third-quarter catastrophe losses of $939 million, up from $850 million a year earlier. The steeper losses primarily reflected the impact of Hurricane Helene, which caused devastating damage across several southeastern states at the end of the quarter, as well as severe wind and hail storms in multiple areas.

Despite the adverse impact of these events, Travelers managed to achieve strong bottom-line growth, thanks in part to higher premiums. Net written premiums reached a record level of $11.3 billion, up 8% year-over-year (YOY), with growth in all three of Travelers' reporting segments: business insurance, bond and specialty insurance, and personal insurance.

An increase in investment income also helped Travelers weather the impact of Helene and other natural disasters. The insurer's net investment income jumped 18%.

Travelers' consolidated combined ratio, a measure of an insurer's profitability that is calculated by dividing the sum of losses and related expenses over earned premiums, came in at 93.2%, an improvement of 7.8 percentage points from a year ago. A combined ratio below 100% indicates that an insurance firm is generating an underwriting profit.

With Thursday's gains, Travelers shares have gained about 39% so far in 2024, well ahead of the S&P 500's nearly 23% year-to-date gain.

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