Shares of Travelers Companies Inc. surged into record territory Friday, after the property casualty insurer said lower catastrophe losses and higher underwriting gains helped produce record profits.
Catastrophes costs, net of insurance, improved to $125 million from $459 million in the same period a year ago, while underwriting gains improved to $1.38 billion from $449 million.
That helped improve the combined ratio, a measure of profitability for insurers that expresses expenses and incurred losses relative to premiums earned — the lower the ratio the better — to 85.8% from 94.5%, well below the FactSet consensus of 94.1%.
The stock
TRV,
leapt 5.6% toward a seventh straight gain in premarket trading, and a sixth straight record close. It was also headed for a sixth straight weekly gain, the longest such streak since the seven-week stretch that ended May 24, 2019.
The implied price gain for the stock ahead of the open would add about 73 points to the price of the Dow Jones Industrial Average
DJIA,
while Dow futures
YM00,
rallied 228 points, or 0.6%.
Net income nearly doubled to a record $1.63 billion, or $6.99 a share, from $819 million, or $3.44 a share, in the year-ago period. Excluding nonrecurring items, core earnings per share more than doubled to $7.01 from $3.40, well above the FactSet consensus of $5.10.
“Core income, earnings per share and return on equity were all record highs for the quarter, driven by both underwriting and investment results,” said Chief Executive Alan Schnitzer.
Meanwhile, total revenue grew 13.4% to $10.93 billion, below the FactSet consensus of $11.17 billion, as net premiums written increased 13.2% to $9.99 billion to miss expectations of $10.40 billion.
Travelers’ stock has rallied 21% over the past three months through Thursday, while the SPDR S&P Insurance ETF
KIE,
has gained 7.7% and the S&P 500
SPX,
has advanced 11.8%.
