(Reuters) -Property and casualty insurer Travelers beat estimates for fourth-quarter profit on Wednesday, as strength in its underwriting business cushioned a blow from elevated catastrophe losses.

Shares of the company rose nearly 3% to $246.01 before the bell.

Individuals and companies are increasing their spending on insurance in response to rising economic uncertainty and risks, enabling insurers to attract and retain clients even as premiums for policies such as auto and property get pricier.

The strong quarterly performance from Travelers underscores the resilience of the insurer's business model amid volatile weather conditions and fluctuating financial markets.

Net written premiums rose 7% in the quarter to $10.74 billion and hit a full-year record of $43.36 billion.

Core income of Travelers, often seen as a sector bellwether as it typically reports results before peers, increased to $2.13 billion, or $9.15 per share, in the three months ended Dec. 31. That compares with $1.63 billion, or $7.01 per share, a year earlier.

Analysts on average had expected a quarterly profit of $6.63 per share, according to data compiled by LSEG.

Net investment income - earned off an insurer's investment portfolios - came in at $955 million pre-tax, up 23%.

The industry is grappling with a profit squeeze as higher catastrophe losses, fueled by an uptick in severe weather events, weigh on their bottom line.

Rising claims from hurricanes, wildfires, and other natural disasters have significantly eroded underwriting margins, even as premium rates climb to offset escalating risks. The trend underscores growing challenges for insurers navigating an increasingly volatile climate landscape.

Catastrophe losses, net of reinsurance, rose to $175 million for Travelers from $125 million a year earlier, due to Hurricane Milton and Hurricane Helene.

The losses refer to a significant financial hit that insurers incur due to large-scale natural or man-made disasters.

(Reporting by Manya Saini and Niket Nishant in Bengaluru; Editing by Devika Syamnath)