Travelers Companies Inc. (NYSE: TRV) reported third-quarter earnings that sharply exceeded analyst forecasts, supported by lower catastrophe losses and higher investment income. However, shares fell about 3% in Thursday trading as investors weighed asbestos-related charges.

The insurer posted adjusted earnings of $8.14 per share, far above the consensus estimate of $6.15. Revenue rose to $12.47 billion, topping expectations of $11.75 billion. The company's consolidated combined ratio improved by 5.9 points year-over-year to a strong 87.3%.

Results benefited from a sharp drop in catastrophe losses to $402 million pre-tax from $939 million a year ago, along with a 15% increase in after-tax investment income to $850 million. However, Travelers recorded a $277 million charge from its annual asbestos reserve review, leading to unfavorable reserve development within its Business Insurance segment.

Net written premiums rose 1% to $11.47 billion, with Business Insurance premiums up 3% to $5.67 billion. The underlying combined ratio, excluding catastrophes and reserve adjustments, improved 1.7 points to 83.9%.

During the quarter, Travelers returned nearly $900 million to shareholders, including $628 million in buybacks. Book value per share climbed 16% year-over-year to $141.72.

Analysts said the strong operational performance was offset by investor concerns over long-term asbestos exposure risks.