Travelers Insurance ( TRV) Wednesday reported $682 million in catastrophe losses during the third quarter, driving earnings down 82% compared to the same period last year. The company earned $214 million for the quarter compared to $1.2 billion a year ago. The catastrophe losses were primarily caused by Hurricanes Ike, Gustav and Dolly. Chairman and CEO Jay Fishman stated that "the losses from these storms were consistent overall with our risk models and pricing assumptions and, given our size, storm losses such as these will occur from time to time." Contributing to the earnings decline was a $137 million, or 19%, year-over-year decrease in investment income coupled with the $208 million underwriting loss. Offsetting the decline was a $210 million favorable prior-year reserve development indicating that the company had set aside more reserves than it ultimately needed to pay claims and thus was able to release the excess reserves. As a result, earnings came to only 36 cents a share for the quarter, significantly below the consensus estimate of $1.26. The company lowered its annual per-share-earnings guidance to a range of $4.90-$5.10, down from its previous range of $5.55-$5.85 a share. Lowering the guidance was based on estimated full-year after-tax catastrophe losses of $1.04 billion, no additional prior-year reserve development and no significant change in average invested assets. Despite the morning earnings report, Travelers stock is up about 4.5% at $37.98 -- possibly due to the relatively good news that the company only realized $116 million in investment losses for the quarter, its first reported investment loss this year. The realized loss was partially due to a $44 million impairment for investments in Lehman Brothers.