MINNEAPOLIS (AP) — The Travelers Cos. Inc., one of the nation's largest commercial insurers, said its first-quarter profit declined 11 percent as it fought a competitive insurance market and lower investment income.

But the results were better than analysts expected, and it raised its guidance for the year. Travelers shares rose $1.80, or 3.7 percent, to $50.09 in early afternoon trading.

Travelers said yesterday it earned $967 million, or $1.54 per share, compared with $1.09 billion, or $1.56 per share a year earlier. Analysts surveyed by Thomson Financial expected $1.53 per share.

Travelers said investment income fell 12 percent to $650 million from $737 million on smaller gains from real estate and private equity. It also booked $62 million in investment losses. Catastrophe payments more than doubled to $95 million from tornadoes and hail storms in the Midwest and Southeast.

Travelers also raised its 2008 operating income outlook to a range of $5.55 to $5.85 per share, from $5.40 to $5.75 per share previously. Analysts were expecting $5.99. Travelers full-year guidance assumes catastrophe losses of $525 million before taxes.

The company said competition for new business was stronger than a year ago, leading to fewer new customers. It said retention rates for existing customers was good.

Total premiums fell two percent to $5.93 billion. But Travelers also reduced the bill for the insurance it buys to protect it from major losses, meaning its net premiums rose one percent to $5.19 billion.

Travelers' largest segment, business insurance, saw operating profit rise slightly to $683 million. The company was helped by positive developments in cases from prior years.

Its personal insurance segment saw operating profit decline 29 percent to $181 million because of weather losses.