The Travelers Companies, Inc.’s ( TRV Quick Quote TRV - Free Report) strong net earned premiums, high levels of retention, improved pricing, higher average levels of invested assets and sufficient liquidity make it worth retaining in one’s portfolio. Growth Projections
The Zacks Consensus Estimate for Travelers’ 2023 earnings is pegged at $14.11, indicating a 13.6% increase from the year-ago reported figure on 9.1% higher revenues of $40.48 billion. The consensus estimate for 2024 earnings is pegged at $16.45, indicating a 16.5% increase from the year-ago reported figure on 5.5% higher revenues of $42.74 billion.
Northbound Estimate Revision
Estimates for 2023 and 2024 have moved up nearly 0.1% and 0.7%, respectively, in the past 30 days, reflecting investors’ optimism.
Earnings Surprise History
Travelers has a decent earnings surprise history. It beat estimates in each of the last four quarters with the average being 16.71%.
Zacks Rank & Price Performance
Travelers currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 9.5% compared with the
industry’s decline of 13.3%. Image Source: Zacks Investment Research Return on Equity (ROE)
Travelers’ ROE for the trailing 12 months is 13.3%, which compares favorably with the industry average of 6.6%, reflecting efficiency in utilizing shareholders’ fund. TRV targets mid-teens ROE over the long term.
Riding on strong net earned premiums and an aggregate underlying combined ratio for Business Insurance and Bond & Specialty Insurance, strong underwriting results continued in the commercial businesses. High levels of retention, improved pricing, an increase in new business and a positive renewal premium change should continue to drive Travelers.
Given an improving rate environment, the insurer expects after-tax fixed income net investment income, including earnings from short-term securities to average above $535 million per quarter in 2023 with an estimated $515 million in the first quarter. Higher average levels of invested assets, reliable results from the fixed-income portfolio and strong returns from the non-fixed income portfolio are likely to drive the metric higher. The property and casualty insurer maintains a conservative balance sheet among its peers. The debt-to-capital ratio (excluding after-tax net unrealized investment gains included in shareholders’ equity) was within the insurer’s target range of 15% to 25%. Travelers has an impressive dividend history, increasing its dividend for the last 18 years. Its current dividend yield of 2.2% is better than the industry average of 0.3%. This makes TRV an attractive pick for yield-seeking investors. Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are
Selective Insurance Group, Inc. ( SIGI Quick Quote SIGI - Free Report) , Everest Re Group, Ltd. and Kinsale Capital Group, Inc. ( KNSL Quick Quote KNSL - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here. The Zacks Consensus Estimate for Selective Insurance’s 2023 and 2024 earnings per share is pegged at $6.57 and $7.55, indicating a year-over-year increase of 30.6% and 14.9%, respectively. In the past year, SIGI has gained 2.8%. The Zacks Consensus Estimate for SIGI’s 2023 and 2024 earnings has moved 9.8% and 9.7% north, respectively, in the past 60 days. Everest Re beat estimates in each of the last four quarters, the average being 18.41%. The Zacks Consensus Estimate for RE’s 2023 and 2024 earnings per share is pegged at $45.63 and $53.02, indicating a year-over-year increase of 68.5% and 16.1%, respectively. In the past year, RE has gained 15.5%. Kinsale Capital has a solid track record of beating earnings estimates in each of the last four quarters, the average being 13.83%. In the past year, KNSL has gained 27.1%. The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $9.86 and $11.85, indicating a year-over-year increase of 26.4% and 20.2%, respectively.