Shares of Travelers Companies Inc. (TRV, +1.02%) experienced a slight increase of 0.4% in premarket trading on Wednesday following the release of their third-quarter earnings report. Although the insurance company’s revenue exceeded expectations, their profit fell short due to higher catastrophe losses.
Financial Performance
Travelers reported a net income of $404 million, or $1.74 per share, for the third quarter, compared to $454 million, or $1.89 per share, in the same period last year. Excluding nonrecurring items, the company’s core earnings per share came in at $1.95, missing the FactSet consensus of $2.99.
Impact of Catastrophe Losses
The insurer faced a significant increase in catastrophe losses, which surged by 66% to reach $850 million. This rise was attributed to severe wind and hail storms in multiple states. As a result, Travelers’ combined ratio increased from 98.2% to 101.0%.
Strong Revenue Growth
Despite the challenges posed by higher catastrophe losses, Travelers delivered impressive revenue growth. Total revenue for the quarter soared by 14.3% to $10.64 billion, surpassing the FactSet consensus of $10.50 billion. Net written premiums also experienced a robust increase of 14.1% to $10.49 billion, beating expectations of $9.64 billion.
Market Performance
Over the past three months, Travelers’ stock has declined by 1%, while the Dow Jones Industrial Average (DJIA, +0.04%) has seen a decrease of 2.7%.
Overall, Travelers Companies Inc. reported mixed results for the third quarter, with lower-than-expected profit due to higher catastrophe losses but stronger-than-anticipated revenue growth.