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The Travelers Companies (TRV - Free Report) reported first-quarter 2021 core income of $2.73 per share, which beat the Zacks Consensus Estimate of $2.44. The bottom line increased 4% year over year.
The improvement was primarily driven by higher net favorable prior year reserve development, a higher underlying underwriting gain and higher net investment income. However, higher catastrophe losses were partial offsets.
Shares of the company gained 3.6% in the pre-market trading session to reflect the outperformance.
The Travelers Companies, Inc. Price, Consensus and EPS Surprise
Travelers’ total revenues increased 5.1% from the year-ago quarter to $8.3 billion, primarily due to higher premiums and net investment income. Moreover, the top-line figure beat the Zacks Consensus Estimate of $8.2 billion.
Net written premiums increased 2.2% year over year to $7.5 billion driven by continued strong renewal rate change and retention across all the segments.
Net investment income increased 14.7% year over year to $701 million pre-tax, primarily due to increase in income in non-fixed income investment portfolio.
Travelers witnessed underwriting gain of $217 million, down 24.7% year over year. Combined ratio deteriorated 110 basis points (bps) year over year to 96.6 due to higher catastrophe losses, partially offset by higher net favorable prior year reserve development and a lower underlying combined ratio.
At the end of the first quarter, statutory capital and surplus were $22.4 billion. Debt-to-capital ratio (excluding after-tax net unrealized investment gains included in shareholders’ equity) was 20.5%, up 20 basis points and within the company’s target range of 15-25%.
Adjusted book value per share was $101.21, up 9% year over year.
Core return on equity was 11%, down 50 bps year over year.
Segment Update
Business Insurance: Net written premiums decreased 2% year over year to about $4.1 billion. The benefits of continued strong retention and higher renewal rate changes were offset by lower net written premiums in the workers’ compensation product line.
Combined ratio deteriorated 130 bps year over year to 103.5 due to higher catastrophe losses, partially offset by a lower underlying combined ratio and higher net favorable prior year reserve development.
Segment income increased 9.7% to $317 million. The upside was due to higher underlying underwriting gain, higher net favorable prior year reserve development and higher net investment income, partially offset by higher catastrophe losses.
Bond & Specialty Insurance: Net written premiums rose 9% year over year to $723 million, primarily driven by continued strong retention and increased levels of renewal premium change in management liability.
Combined ratio improved 70 bps year over year to 85.2 due to due to higher net favorable prior year reserve development and a lower underlying combined ratio, partially offset by higher catastrophe losses.
Segment income improved 16.3% year over year to $107 million, primarily due to higher underlying underwriting gain and net favorable prior year reserve development, partially offset by higher catastrophe losses.
Personal Insurance: Net written premiums of $2.7 billion increased 7% year over year due to solid performance at Domestic Automobile and Domestic Homeowners and Other.
Combined ratio deteriorated 210 bps year over year to 90.3 due to higher catastrophe losses and a higher underlying combined ratio, partially offset by higher net favorable prior year reserve development.
Segment income of $254 million decreased 13.9% from the year-ago quarter’s level, primarily attributable to higher catastrophe losses and a lower underlying underwriting gain, partially offset by higher net favorable prior year reserve development and higher net investment income.
Dividend and Share Repurchase Update
This property & casualty insurer returned $613 million in the reported quarter. It bought back shares worth $397 million. The board of directors approved a $5 billion share repurchase program. This is in addition to the $805 million that remained from previous authorizations as of Mar 31, 2021.
The company’s board also approved a 4% increase in quarterly dividend to 88 cents per share. The dividend will be paid out on Jun 30 to shareholders of record at the close of business as of Jun 10, 2021.
Zacks Rank
Travelers currently carries a Zacks Rank #4 (Sell).
The Progressive Corporation’s (PGR - Free Report) first-quarter 2021 earnings per share of $1.72 missed the Zacks Consensus Estimate of $1.78.
Upcoming Releases
W.R. Berkley Corporation (WRB - Free Report) is set to report first-quarter 2021 results on Apr 20. The Zacks Consensus Estimate for the first quarter is pegged at 89 cents, indicating an improvement of 29% year over year.
RLI Corporation (RLI - Free Report) is set to report first-quarter 2021 results on Apr 21. The Zacks Consensus Estimate for the first quarter is pegged at 74 cents, suggesting growth of 12.1% year over year.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
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Travelers (TRV) Beats Q1 Earnings Estimates, Raises Dividend
The Travelers Companies (TRV - Free Report) reported first-quarter 2021 core income of $2.73 per share, which beat the Zacks Consensus Estimate of $2.44. The bottom line increased 4% year over year.
The improvement was primarily driven by higher net favorable prior year reserve development, a higher underlying underwriting gain and higher net investment income. However, higher catastrophe losses were partial offsets.
Shares of the company gained 3.6% in the pre-market trading session to reflect the outperformance.
The Travelers Companies, Inc. Price, Consensus and EPS Surprise
The Travelers Companies, Inc. price-consensus-eps-surprise-chart | The Travelers Companies, Inc. Quote
Behind Q1 Headlines
Travelers’ total revenues increased 5.1% from the year-ago quarter to $8.3 billion, primarily due to higher premiums and net investment income. Moreover, the top-line figure beat the Zacks Consensus Estimate of $8.2 billion.
Net written premiums increased 2.2% year over year to $7.5 billion driven by continued strong renewal rate change and retention across all the segments.
Net investment income increased 14.7% year over year to $701 million pre-tax, primarily due to increase in income in non-fixed income investment portfolio.
Travelers witnessed underwriting gain of $217 million, down 24.7% year over year. Combined ratio deteriorated 110 basis points (bps) year over year to 96.6 due to higher catastrophe losses, partially offset by higher net favorable prior year reserve development and a lower underlying combined ratio.
At the end of the first quarter, statutory capital and surplus were $22.4 billion. Debt-to-capital ratio (excluding after-tax net unrealized investment gains included in shareholders’ equity) was 20.5%, up 20 basis points and within the company’s target range of 15-25%.
Adjusted book value per share was $101.21, up 9% year over year.
Core return on equity was 11%, down 50 bps year over year.
Segment Update
Business Insurance: Net written premiums decreased 2% year over year to about $4.1 billion. The benefits of continued strong retention and higher renewal rate changes were offset by lower net written premiums in the workers’ compensation product line.
Combined ratio deteriorated 130 bps year over year to 103.5 due to higher catastrophe losses, partially offset by a lower underlying combined ratio and higher net favorable prior year reserve development.
Segment income increased 9.7% to $317 million. The upside was due to higher underlying underwriting gain, higher net favorable prior year reserve development and higher net investment income, partially offset by higher catastrophe losses.
Bond & Specialty Insurance: Net written premiums rose 9% year over year to $723 million, primarily driven by continued strong retention and increased levels of renewal premium change in management liability.
Combined ratio improved 70 bps year over year to 85.2 due to due to higher net favorable prior year reserve development and a lower underlying combined ratio, partially offset by higher catastrophe losses.
Segment income improved 16.3% year over year to $107 million, primarily due to higher underlying underwriting gain and net favorable prior year reserve development, partially offset by higher catastrophe losses.
Personal Insurance: Net written premiums of $2.7 billion increased 7% year over year due to solid performance at Domestic Automobile and Domestic Homeowners and Other.
Combined ratio deteriorated 210 bps year over year to 90.3 due to higher catastrophe losses and a higher underlying combined ratio, partially offset by higher net favorable prior year reserve development.
Segment income of $254 million decreased 13.9% from the year-ago quarter’s level, primarily attributable to higher catastrophe losses and a lower underlying underwriting gain, partially offset by higher net favorable prior year reserve development and higher net investment income.
Dividend and Share Repurchase Update
This property & casualty insurer returned $613 million in the reported quarter. It bought back shares worth $397 million. The board of directors approved a $5 billion share repurchase program. This is in addition to the $805 million that remained from previous authorizations as of Mar 31, 2021.
The company’s board also approved a 4% increase in quarterly dividend to 88 cents per share. The dividend will be paid out on Jun 30 to shareholders of record at the close of business as of Jun 10, 2021.
Zacks Rank
Travelers currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Another Insurer
The Progressive Corporation’s (PGR - Free Report) first-quarter 2021 earnings per share of $1.72 missed the Zacks Consensus Estimate of $1.78.
Upcoming Releases
W.R. Berkley Corporation (WRB - Free Report) is set to report first-quarter 2021 results on Apr 20. The Zacks Consensus Estimate for the first quarter is pegged at 89 cents, indicating an improvement of 29% year over year.
RLI Corporation (RLI - Free Report) is set to report first-quarter 2021 results on Apr 21. The Zacks Consensus Estimate for the first quarter is pegged at 74 cents, suggesting growth of 12.1% year over year.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>