Travelers, a property and liability insurer, announced a record quarterly profit on Thursday, as stronger investment returns offset the impact of a surge in catastrophe-related claims.

The New York-based corporation, which is part of the Dow Jones Industrial Average Index, is seen as a bellwether for the insurance industry because it reports ahead of its peers.Travelers Insurance Agents | The CIB Group | Insurance Recruiters

In the fourth quarter ended Dec. 31, the insurer generated $1.29 billion in core income, or $5.20 per share, compared to $1.26 billion, or $4.91 per share, a year earlier.

According to Refinitiv IBES data, analysts predicted a profit of $3.86 per share on average.

Travelers' pre-tax net investment income increased 10% to $743 million, owing to stronger returns on private equity and real estate partnership investments. Net written premiums increased 10% to $7.9 billion.

Tornadoes in Kentucky, windstorms across the United States, and a wildfire in Colorado were the top causes of Travelers' catastrophe losses in the third quarter, according to the company. According to industry experts, the devastation caused by tornadoes that struck areas of the United States in December is projected to increase the insurance industry's 2021 bill for weather-related claims well above the predicted $105 billion.

Travelers reported an 88 % combined ratio, up from 86.7 % a year before. If the ratio is less than 100 %, the insurer made more money in premiums than it paid out in claims.