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Travelers (TRV) to Report Q2 Earnings: What's in the Offing?

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The Travelers Companies, Inc. (TRV - Free Report) is set to report second-quarter 2022 earnings on Jul 21. The company delivered an earnings surprise in each of the last four reported quarters.

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 $8.3 billion, indicating an 8.9% increase from the year-ago reported number.

Travelers expects after-tax net investment income from non-fixed income portfolio in the second quarter, including earnings from short-term securities of about $440 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 $592 million, indicating a 27.6% 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 $3.3 billion, an improvement of 10.1% from the year-ago reported figure.

Higher net written premiums are likely to have boosted the top line in the to-be-reported quarter. The Zacks Consensus Estimate for revenues is currently pegged at $9.1 billion, indicating a 5.1% increase from the year-ago reported figure.

TRV is expected to have benefited from better pricing coupled with increased exposure, which are likely to have aided underwriting profitability. The Zacks Consensus Estimate for the combined ratio is pegged at 98.

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 second-quarter 2022 earnings per share is pegged at $2.00, suggesting a decline of 42% from the year-ago reported figure.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Travelers this time around. This is because a stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This is not the case here.

Earnings ESP: Travelers has an Earnings ESP of -13.50%. This is because the Most Accurate Estimate is pegged at $1.73, lower than the Zacks Consensus Estimate of $2.00. 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. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

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

Argo Group (ARGO - Free Report) has an Earnings ESP of +2.98% and a Zacks Rank of 3. The Zacks Consensus Estimate for second-quarter 2022 earnings is pegged at $1.12, indicating a decrease of 30% from the year-ago reported figure.

ARGO’s earnings beat estimates in each of the four trailing quarters.

Cincinnati Financial Corporation (CINF - Free Report) has an Earnings ESP of +2.86% and a Zacks Rank #3. The Zacks Consensus Estimate for second-quarter 2022 earnings is pegged at $1.05, down 41.3% from the figure reported in the year-ago quarter.

CINF beat earnings estimates in each of the four trailing quarters.

CCC Intelligent Solutions (CCCS - Free Report) has an Earnings ESP of +13.61% and a Zacks Rank of 2. The Zacks Consensus Estimate for second-quarter 2022 earnings stands at 8 cents, indicating a decline of 99.5% from the year-ago reported figure.

CCCS beat earnings estimates in two of the last four reported quarters while missing the same in the other two.

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

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