The Travelers Companies in Saint Paul, Minn., reported a 15 percent jump in third-quarter net income today, with underwriting profits, investment income and favorable prior-year reserve development contributing to the result.

Net income for the quarter was $1.2 billion, or $1.81 per share, compared with $1 billion, or $1.47 per share, for the quarter ended Sept. 30, 2006.

Strong underwriting results were evident in an overall combined ratio of 84.4 for the 2007 third quarter, with each of the company’s business segments–personal, business and professional insurance–hovering near the same figure with combined ratios in the 84-85 range.

Net investment income of $724 million after-tax represented an 8 percent increase from the prior-year third quarter.

Net written premiums of $5.4 billion were up 2 percent from third-quarter 2006, or 3 percent when adjusted for the early 2007 sale of two operations (Mendota and Afianzadora Insurgentes).

Net favorable prior-year reserve development was $145 million after-tax in third-quarter 2007, compared with $55 million in third-quarter 2006, and the company also said there would be no change to its asbestos reserves upon completion of the annual in-depth asbestos claim review and quarterly asbestos reserve review.

During a conference call this morning, Jay Fishman, Travelers’ chairman and chief executive officer, attributed favorable results, in part, to four initiatives launched in recent years.

He mentioned an initiative to improve personal lines claims performance, the rollouts of multivariate pricing programs in personal lines called Quantum Auto and Home, a “state-of-the-art multivariate small business program” known as Travelers Express, and new product development initiatives aimed at middle market customers.

As a result of the claims performance initiative, he said the change in auto severity has outperformed the industry.

Highlighting the commercial lines small-business program, he said it has resulted in a 40 percent increase in the number of agents quoting and a 25 percent jump in the number of quotes per agent.

Commenting on market conditions, he said they “continue to become modestly more competitive.” Recognizing that his statement was someone less pessimistic than other market commentators, Mr. Fishman and other executives noted that Traveler’s focus on small and middle market business, rather than large accounts, explains the different view.

Executives said Travelers rate changes for personal lines in the quarter were increases of 3 percent on average for auto and 9 percent on average for homeowners, while commercial lines rates fell roughly 5 percent on average.

Through nine months, Travelers reported net income of $3.5 billion, or $5.22 per share, and operating income (excluding net realized investment gains) of $3.4 billion, or $5.08 per share.

Travelers revised prior guidance for full-year operating earnings to a range of $6.52 to $6.62 per share, replacing prior guidance or $5.80-to-$6.05 per share.

Providing some limited guidance on the company’s exposure to California wildfires, executives said Travelers’ personal lines market share in California is roughly 2 percent.