Back to top

Image: Bigstock

Can Travelers (TRV) Retain Its Surprise Streak in Q4 Earnings?

Read MoreHide Full Article

The Travelers Companies, Inc. (TRV - Free Report) is set to report fourth-quarter 2021 earnings on Jan 20. The company delivered an earnings surprise in each of the reported quarters of 2021.

Factors to Consider

Premium in the to-be-reported quarter is likely to have been driven by a solid renewal rate change, robust retention across all the segments, exposure growth, and improved pricing. The Zacks Consensus Estimate for premiums is pegged at $7.9 billion, indicating a 5.4% increase from the year-ago reported number.

Travelers expects after-tax net investment income from non-fixed income portfolio in the fourth quarter including earnings from short-term securities between $425 million and $435 million. However, given a still-low interest rate environment, a lower average portfolio yield is likely to weigh on the investment results. The Zacks Consensus Estimate for NII is $634 million, indicating a 6.4% decline from the year-ago reported figure.

Continued growth at the profitable agency auto and homeowners business is likely to aid results of the Personal Insurance segment in the quarter to be reported. The Zacks Consensus Estimate for earned premium at Personal Insurance is pegged at $3.1 billion, implying an upside of 7.1% from the year-ago reported figure.

Higher net written premiums and net investment income are likely to have driven the top line in the to-be-reported quarter. The Zacks Consensus Estimate for revenues is currently pegged at $8.7 billion, indicating a 4.4% increase from the year-ago reported figure.

Improved pricing is likely to have aided underwriting profitability.

Continued share buybacks are anticipated to have provided an 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 fourth-quarter 2021 earnings per share is pegged at $3.83, suggesting a decline of 22% from the year-ago reported figure.

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 +3.21%. This is because the Most Accurate Estimate is pegged at $3.95, higher than the Zacks Consensus Estimate of $3.83. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

The Travelers Companies, Inc. Price and EPS Surprise

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

Other Stocks to Consider

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

Arch Capital Group Ltd. (ACGL - Free Report) has an Earnings ESP of +6.06% and a Zacks Rank of 2. 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 +10.42% and a Zacks Rank #3.

Axis Capital Holdings Limited (AXS - Free Report) has an Earnings ESP of +11.09% and a Zacks Rank of 1.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.