Travelers Cos. Inc. said it would cut jobs and reduce prices ofauto insurance, steps investors took as an indication that rateshad risen too far and competition was increasing.

The company's shares fell 4 percent by midday and shares ofother insurers also fell.

“The concern is that Travelers was among the leaders pushingprice increases, and now they are talking about lowering prices, sothat has broader implications for the entire market,” SandlerO'Neill & Partners analyst Paul Newsome said.

The company, a Dow Jones Industrial Average component, isthe first major insurer to report results and is seen as abellwether for the industry.

The broader Dow Jones Insurance Index, which includes Travelersand peers such as Chubb Corp. and AIG, fell 3 percent.

Travelers had previously been able to hold on to customers andkeep insurance pricing consistent across its businesses to offsetperennially low interest rates.

But increasing competition has resulted in the company writingfewer policies, forcing it to resort to rate cuts.

The personal auto insurance business reported a 7 percent fallin written premiums during the second quarter as the company'sstrategy to increase prices hurt income from premiums. The businesscontributed about 14 percent to the total premiums written duringthe quarter.

In a slide presentation for analysts, the company noted that therate at which it raised premiums across businesses fell from thatin the first quarter.

“Travelers reported a deceleration in its Business Insurancepricing in 2Q13 compared to 1Q13. While still positive, the marketis taking it as the sign that the property and casualty rateimprovements may have peaked,” BMO Capital Markets analyst CharlesSebaski said in an email to Reuters.

The company, however, said renewal rates at its businessinsurance unit were consistent with those in recent quarters.

“Given the environment of low interest rates and volatileweather patterns, we will continue to seek higher margins,” ChiefExecutive Jay Fishman said in a statement.

Travelers reported a strong second-quarter profit that blew pastestimates for the fourth straight quarter, boosted by higher ratesand lower claim payouts.

The company's operating earnings of $2.13 per share was wellabove the average analyst estimate of $1.60, according to ThomsonReuters.

Travelers' earnings often differ substantially from Wall Streetconsensus as the company does not give forecasts.

Analysts' estimates for the insurer's per-share operatingearnings ranged from $1.26 to $1.86 a share, according to ThomsonReuters StarMine.

“This appears to be a quality beat, not dependent on thefavorable prior-period development,” BMO's Sebaski said.

The company said it would cut 450 jobs and take a relatedrestructuring charge of about $16 million, of which $10 millionwould be incurred in the current quarter.

The cost cutting will result in cumulative savings of $140million by 2015, Chief Operating Officer Brian MacLean said on aconference call with analysts.

The company's combined ratio, the percentage of premium revenuean insurer has to pay out in claims, fell to 94.3 percent from100.5 percent last year.

A combined ratio under 100 indicates an underwriting profit.

Travelers last month said it would pay about $1.1 billion to buyDominion of Canada General Insurance Co to boost its presence inthe Canadian market.

Travelers shares were trading down 3.6 percent at $82.33 on theNew York Stock Exchange on Tuesday.