(Reuters) - Property and casualty insurer Travelers (NYSE:TRV) Cos Inc reported a record quarterly profit on Thursday as higher returns from its investments cushioned the hit from a rise in catastrophe-related claims.
The New York-based company, a component of the Dow Jones Industrial Average Index, is seen as a bellwether for the insurance sector as it typically reports before its peers.
The insurer said it earned a core income of $1.29 billion, or $5.20 per share, in the fourth quarter ended Dec. 31, compared with $1.26 billion, or $4.91 per share, a year earlier.
Analysts on average had expected a profit of $3.86 per share, according to Refinitiv IBES data.
Travelers' pre-tax net investment income jumped 10% to $743 million, driven by higher returns on its private equity and real estate partnership.
Its net written premiums rose 10% to $7.9 billion.
Travelers said the catastrophe losses it incurred in the quarter mainly stemmed from tornado activity in Kentucky, windstorms in multiple U.S. states and a wildfire in Colorado.
Devastation from tornadoes that slammed parts of the United States in December are expected to push the insurance industry's 2021 bill for weather-related claims well above the predicted $105 billion, industry experts have said.
Travelers reported a combined ratio of 88%, compared with 86.7% a year earlier. A ratio below 100% means the insurer earned more in premiums than it paid out in claims.