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Can Travelers (TRV) Retain Its Beat Streak in Q2 Earnings?

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The Travelers Companies, Inc. (TRV - Free Report) is set to report second-quarter 2021 earnings on Jul 20. The company delivered an earnings surprise of 63.67% in the last reported quarter.

Factors to Note

Travelers’ second-quarter premiums are likely to have improved on strong renewal rate change, robust retention across all the segments and new businesses. Improved pricing might have contributed to the performance. The Zacks Consensus Estimate for premiums is pegged at $7.5 billion, indicating an improvement of 8.3% from second-quarter 2020.

Travelers estimates net investment income from non-fixed income portfolio in the range of $420 million to $430 million in the to-be-reported quarter. Given a low interest rate environment, benefits of higher average levels of invested assets are likely to be offset by a lower average yield on the portfolio.

The Zacks Consensus Estimate for NII is pegged at $565 million, indicating a more than two-fold increase from the year-ago reported figure.

Strong renewal premium change in the Agency Homeowners business, solid retention, and new business in both Agency Auto and Agency Homeowners might have aided the Personal Insurance segment in the quarter to be reported.

Higher net written premiums are likely to have driven the top line in the to-be-reported quarter. The Zacks Consensus Estimate for revenues is currently pegged at $8.3 billion, indicating a 12% increase from the year-ago reported figure.

Combined ratio may have improved given not so active catastrophe environment.

Continued share buybacks are anticipated to have provided additional boost to the bottom line.

However, expenses are expected to have risen on higher amortization of deferred acquisition costs, general and administrative expenses.

The Zacks Consensus Estimate for second-quarter 2021 earnings per share is pegged at $2.35, indicating a rebound from loss of 20 cents reported in the year-ago quarter.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Travelers this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Travelers has an Earnings ESP of +3.25%. This is because the Most Accurate Estimate is pegged at $2.42, higher than the Zacks Consensus Estimate of $2.35. 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 Stocks to Consider

Some other insurance stocks with the right combination of elements to deliver an earnings beat this time around are:

Axis Capital Holdings (AXS - Free Report) currently has an Earnings ESP of +7.20% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Chubb Limited (CB - Free Report) presently has an Earnings ESP of +4.83% and a Zacks Rank #3.

W.R. Berkley Corporation (WRB - Free Report) has an Earnings ESP of +10.53% and a Zacks Rank #3.

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