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Travelers (TRV) to Report Q4 Earnings: Is a Beat in Store?

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The Travelers Companies (TRV - Free Report) is slated to report fourth-quarter 2020 results on Jan 21, before market open. The company delivered positive earnings surprise in the last reported quarter.

Factors at Play

Travelers’ fourth-quarter premiums are likely to have increased across its segments on better pricing, strong retention level and positive renewal premium change. The Zacks Consensus Estimate for premiums is pegged at $7.3 billion, indicating an upside of 1.3% from fourth-quarter 2019 reported figure.

Successful execution of marketplace strategies and investments are likely to have aided commercial businesses. Growing agency auto and homeowners business is likely to have aided personal lines of business.

In Bond & Specialty Insurance, economic slowdown is expected to have put pressure on pricing. The compnay estimates combined ratio to remain high.

A near-zero low interest rate environment might have weighed on investment income. The company expects fixed income net investment income  to decline $35 million to $40 million in the fourth quarter.

The company is likely to have benefited from lower claims attributable to reduction in the number of vehicles plying on roads due to the COVID-19 pandemic.

The company estimates expenses to remain high. The Zacks Consensus Estimate for underwriting expense ratio stands at 29.83, indicating an increase of 73 basis points.

The Zacks Consensus Estimate for earnings is pegged at $2.98, indicating 10.2% decrease from the year-ago figure.

The Travelers Companies, Inc. Price and EPS Surprise

What Our Quantitative Model Unveils

Our proven model shows that Travelers is likely to beat on earnings in the to-be-reported quarter. This is because the stock has the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP: Travelers has an Earnings ESP of +1.80%. This is because the Most Accurate Estimate of $3.04 is higher than the Zacks Consensus Estimate of $2.98. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Travelers currently carries a Zacks Rank #3.

Other Key Picks

Some insurance stocks also with the right combination of elements to come up with an earnings beat this time around are:

Arch Capital Group (ACGL - Free Report) has an Earnings ESP of +3.13% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Allstate Corporation (ALL - Free Report) has an Earnings ESP of +10.05% and a Zacks Rank #2.

W.R. Berkley Corporation (WRB - Free Report) has an Earnings ESP of +6.75% and a Zacks Rank of 2.

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