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Travelers: Pricing Power Strengthens in Third Quarter

Insurance rates continued to rise in the third quarter for both businesses and individual customers, extending the pricing power that developed late last year, insurer Travelers Cos Inc said on Tuesday.

Sept 11 Insurance rates continued to rise in the third quarter for both businesses and individual customers, extending the pricing power that developed late last year, insurer Travelers Cos Inc said on Tuesday.

Travelers' shares rose 1.4 percent to an all-time high in early trading.

In a slide presentation prepared for a Barclays financial services conference, Chief Executive Jay Fishman said business insurance rates were up an average of 7.7 percent so far in the third quarter, against gains of 7.2 percent last quarter.

Rates have also continued to rise in consumer homeowners and auto insurance, the CEO of the Dow Jones industrial average component said.

"We continue to be successful in achieving rate gains," Fishman said in his presentation accompanying the slides. "We're achieving about what we're attempting to achieve. So far, the competitive environment is allowing us to achieve the rate gains that we are seeking."

Travelers started raising prices last year in response to increased catastrophe losses and persistently low interest rates, both of which squeezed the company and pushed it to start implementing price increases when and where it could.

The company was something of a bellwether in that regard. In recent quarters, analysts have been watching to see whether it could maintain that price momentum, which the industry was looking for after years of falling rates.

Fishman also addressed interest rates, which are a huge concern for insurers that collect premiums and then have to invest them so they have the resources to pay future claims.

If the current rate environment persists and all else remains equal, the company would take a $145 million hit to net income in 2015 compared with 2014, Fishman said.

Its shares rose 92 cents, or 1.4 percent, to an all-time high of $66.24 in early New York Stock Exchange trading. The stock is up 11 percent in 2012, underperforming gains of 13 percent for the broader S&P insurance index.

(Reporting by Ben Berkowitz in Boston; Editing by Lisa Von Ahn and Maureen Bavdek)

Copyright 2010 by Reuters. All rights reserved.

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