(Bloomberg) -- Travelers Cos., the only property-casualtyinsurer in the Dow Jones Industrial Average, said second-quarterprofit advanced 19 percent as natural-disaster costs dropped.

Net income climbed to $812 million, or $2.53 a share, from $683million, or $1.95, a year earlier, the New York-based company saidTuesday in a statement. Operating profit, which excludes someinvestment results, was $2.52 a share, beating the $2.12 averageestimate of 25 analysts surveyed by Bloomberg.

Chief Executive Officer Jay Fishman has focused in recent yearson buying back shares rather than pursuing large takeovers. Thatcontrasts with the approach of Ace Ltd., which announced a dealthis month to buy Chubb Corp. for more than $28 billion.

Travelers is “probably better off being a big cash cow” thanpursuing megadeals, Paul Newsome, an analyst at Sandler O’Neill& Partners, said in an interview before results were announced.“It’s not terribly exciting perhaps, but it can lead to very goodlong-term shareholders’ value.”

Travelers climbed 2.3 percent to $105 in early trading at 7:36a.m. in New York. The insurer had slipped 3.1 percent from Dec. 31through Monday, after rallying at least 17 percent for threestraight years.

The operating return on equity was 14.2 percent, compared with11.4 percent in the second quarter of 2014. Book value, a measureof assets minus liabilities, slipped to $77.51 a share from $77.96at the end of March.

Flat sales

Policy sales were $6.17 billion and little changed from a yearearlier. Travelers charged domestic business insurance customers 1percent more at renewal in the three months ended June 30. Thatcompares with an increase of about 1.3 percent in the first quarterand 3.7 percent in last year’s second quarter.

The insurer posted a combined ratio of 90.8, meaning it retained9.2 cents of each premium dollar after claims and expenses. Thatimproved from a ratio of 95.1 percent in the previous year’s secondquarter. Catastrophe costs were $221 million before tax, comparedwith $436 million a year earlier when hail and windstorms poundedthe U.S. from the Rocky Mountains to the Tennessee Valley.

Energy investments

The gain from reserves widened to $207 million pretax from $183million a year earlier. Insurers regularly reassess the moneythey’ve set aside for future claims and can reduce or increase theamount based on their expectation of losses.

Net investment income fell to $632 million from $695 million ayear earlier. The company, which allocates most of its portfolio tobonds, had lower reinvestment rates on the securities and worseresults in the non-fixed-income assets, fueled by lower valuationsof energy-related holdings.

Travelers repurchased $801 million of its own stock in thesecond quarter.

Fishman, 62, who reported profits through the financial crisis,was diagnosed with a neuromuscular condition last year and has cutback on his commitments aside from leading the insurer. He has beenCEO since 2004, when he engineered a merger with St. Paul Cos.

--With assistance from Sonali Basak in New York.

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