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Travelers (TRV) Q1 Earnings Beat, Rise Y/Y, Dividend Up
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The Travelers Corporation, Inc. (TRV - Free Report) reported first-quarter 2022 core income of $4.22 per share, which beat the Zacks Consensus Estimate by 14%. The bottom line increased 54.6% year over year.
The increase was attributable to higher net written premiums and a higher underwriting gain, partially offset by lower net investment income.
The Travelers Companies, Inc. Price, Consensus and EPS Surprise
Travelers’ total revenues increased 6.8% from the year-ago quarter to $8.8 billion, primarily due to higher premiums and fee income. The top-line figure however missed the Zacks Consensus Estimate by 1%.
Net written premiums increased 11% year over year to $8.4 billion, driven by strong retention rates, higher new business premiums and positive renewal premium changes across all the segments.
Net investment income decreased 9.1% year over year to $637 million pre-tax, primarily due to a decrease in income from the non-fixed income investment portfolio.
Underwriting gain of $659 million increased three-fold year over year in the reported quarter. The combined ratio improved 530 basis points (bps) year over year to 91.3 due to lower catastrophe losses, partially offset by lower net favorable prior year reserve development and a higher underlying combined ratio.
At the end of the first quarter, statutory capital and surplus were $24.2 billion. The debt-to-capital ratio (excluding after-tax net unrealized investment gains included in shareholders’ equity) was 21.3% and within the insurer’s target range of 15-25%.
Adjusted book value per share was $112.19, up 11% year over year. Core return on equity was 15.5%, up 440 bps year over year.
Segment Update
Business Insurance: Net written premiums increased 9% year over year to about $4.5 billion. The upside was due to strong renewal premium change and retention as well as higher levels of new business.
The combined ratio improved 1260 bps year over year to 90.9 due to lower catastrophe losses and a lower underlying combined ratio. It was partially offset by lower net favorable prior year reserve development.
Segment income increased two-fold to $669 million. The upside was due to lower catastrophe losses and a higher underlying underwriting gain. It was partially offset by lower net investment income and lower net favorable prior year reserve development.
Bond & Specialty Insurance: Net written premiums rose 22% year over year to $882 million, primarily driven by higher renewal premium change, continued strong retention and growth in new business in management liability business, as well as increased production in surety business.
The combined ratio improved 720 bps year over year to 78 due to lower catastrophe losses, higher net favorable prior year reserve development and lower underlying combined ratio.
Segment income improved 58.4% year over year to $217 million, primarily due to higher underlying underwriting gain, lower catastrophe losses and higher net favorable prior year reserve development.
Personal Insurance: Net written premiums of $2.9 billion increased 12% year over year due to higher renewal premium change in both Auto and Homeowners.
The combined ratio deteriorated 500 bps year over year to 95.3 due to a higher underlying combined ratio and lower net favorable prior year reserve development. It was partially offset by lower catastrophe losses.
Segment income of $225 million decreased 28.3% from the year-ago quarter’s level, primarily attributable to lower underlying underwriting gain and lower net favorable prior year reserve development. It was partially offset by lower catastrophe losses.
Dividend and Share Repurchase Update
This property & casualty insurer returned $773 million in the reported quarter. It bought back shares worth $560 million. It had about $3.5 billion of capacity remaining under its share repurchase authorization as of Mar 31, 2022.
Travelers’ board also approved a 6% increase in the quarterly dividend to 93 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, 2022.
The Progressive Corporation’s (PGR - Free Report) first-quarter 2022 earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.24. Also, the bottom line declined 34.9% from the year-ago quarter.
Net premiums written were $13.2 billion in the quarter, up 12% from $11.7 billion a year ago. The combined ratio deteriorated 520 basis points (bps) from the prior-year quarter to 94.7.
Upcoming Releases
RLI Corporation (RLI - Free Report) will report first-quarter 2022 results on Apr 20. The Zacks Consensus Estimate for the first quarter is pegged at $1.02, suggesting an improvement of 17.2% year over year.
RLI beat estimates in all quarters of 2021.
W.R. Berkley Corporation (WRB - Free Report) will report first-quarter 2022 results on Apr 25. The Zacks Consensus Estimate for the first quarter is pegged at 92 cents, indicating an increase of 27.8% from the year-ago reported figure.
W.R. Berkley beat estimates in all four quarters of 2021.
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Travelers (TRV) Q1 Earnings Beat, Rise Y/Y, Dividend Up
The Travelers Corporation, Inc. (TRV - Free Report) reported first-quarter 2022 core income of $4.22 per share, which beat the Zacks Consensus Estimate by 14%. The bottom line increased 54.6% year over year.
The increase was attributable to higher net written premiums and a higher underwriting gain, partially offset by lower net investment income.
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 6.8% from the year-ago quarter to $8.8 billion, primarily due to higher premiums and fee income. The top-line figure however missed the Zacks Consensus Estimate by 1%.
Net written premiums increased 11% year over year to $8.4 billion, driven by strong retention rates, higher new business premiums and positive renewal premium changes across all the segments.
Net investment income decreased 9.1% year over year to $637 million pre-tax, primarily due to a decrease in income from the non-fixed income investment portfolio.
Underwriting gain of $659 million increased three-fold year over year in the reported quarter. The combined ratio improved 530 basis points (bps) year over year to 91.3 due to lower catastrophe losses, partially offset by lower net favorable prior year reserve development and a higher underlying combined ratio.
At the end of the first quarter, statutory capital and surplus were $24.2 billion. The debt-to-capital ratio (excluding after-tax net unrealized investment gains included in shareholders’ equity) was 21.3% and within the insurer’s target range of 15-25%.
Adjusted book value per share was $112.19, up 11% year over year. Core return on equity was 15.5%, up 440 bps year over year.
Segment Update
Business Insurance: Net written premiums increased 9% year over year to about $4.5 billion. The upside was due to strong renewal premium change and retention as well as higher levels of new business.
The combined ratio improved 1260 bps year over year to 90.9 due to lower catastrophe losses and a lower underlying combined ratio. It was partially offset by lower net favorable prior year reserve development.
Segment income increased two-fold to $669 million. The upside was due to lower catastrophe losses and a higher underlying underwriting gain. It was partially offset by lower net investment income and lower net favorable prior year reserve development.
Bond & Specialty Insurance: Net written premiums rose 22% year over year to $882 million, primarily driven by higher renewal premium change, continued strong retention and growth in new business in management liability business, as well as increased production in surety business.
The combined ratio improved 720 bps year over year to 78 due to lower catastrophe losses, higher net favorable prior year reserve development and lower underlying combined ratio.
Segment income improved 58.4% year over year to $217 million, primarily due to higher underlying underwriting gain, lower catastrophe losses and higher net favorable prior year reserve development.
Personal Insurance: Net written premiums of $2.9 billion increased 12% year over year due to higher renewal premium change in both Auto and Homeowners.
The combined ratio deteriorated 500 bps year over year to 95.3 due to a higher underlying combined ratio and lower net favorable prior year reserve development. It was partially offset by lower catastrophe losses.
Segment income of $225 million decreased 28.3% from the year-ago quarter’s level, primarily attributable to lower underlying underwriting gain and lower net favorable prior year reserve development. It was partially offset by lower catastrophe losses.
Dividend and Share Repurchase Update
This property & casualty insurer returned $773 million in the reported quarter. It bought back shares worth $560 million. It had about $3.5 billion of capacity remaining under its share repurchase authorization as of Mar 31, 2022.
Travelers’ board also approved a 6% increase in the quarterly dividend to 93 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, 2022.
Zacks Rank
Travelers currently carries a Zacks Rank #3 (Hold). 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 2022 earnings per share of $1.12 missed the Zacks Consensus Estimate of $1.24. Also, the bottom line declined 34.9% from the year-ago quarter.
Net premiums written were $13.2 billion in the quarter, up 12% from $11.7 billion a year ago. The combined ratio deteriorated 520 basis points (bps) from the prior-year quarter to 94.7.
Upcoming Releases
RLI Corporation (RLI - Free Report) will report first-quarter 2022 results on Apr 20. The Zacks Consensus Estimate for the first quarter is pegged at $1.02, suggesting an improvement of 17.2% year over year.
RLI beat estimates in all quarters of 2021.
W.R. Berkley Corporation (WRB - Free Report) will report first-quarter 2022 results on Apr 25. The Zacks Consensus Estimate for the first quarter is pegged at 92 cents, indicating an increase of 27.8% from the year-ago reported figure.
W.R. Berkley beat estimates in all four quarters of 2021.