On Sep 28, 2016, we issued an updated research report on The Travelers Companies, Inc. (TRV - Analyst Report) .
Travelers is one of the leading writers of auto and homeowners’ insurance and commercial U.S. property-casualty (P&C) insurance and boasts a strong market position. With a wide array of diversified product offerings, the insurer remains well positioned to reap economies of scale. The company continues to experience solid retention and a positive renewal rate change. Travelers’ prudent implementation of pricing actions should continue to increase returns. Also, the insurer’s compelling inorganic growth is supported by strategic acquisitions.
The insurer’s solid operational performance enables it to maintain a healthy balance sheet. While book value has been improving, statutory surplus levels remain strong. The company regularly engages in shareholder friendly moves, thereby retaining investor confidence and attracting potential investors.
However, macroeconomic uncertainty and a competitive P&C insurance market limit Travelers’ growth prospects. A low interest rate environment and adverse foreign currency movements continue to weigh on written premiums, while exposure to catastrophe losses pose risks for underwriting results.
Given the absence of any near-term catalysts, the Zacks Consensus Estimate for 2016 remained unchanged. However, for 2017, the same has been declining over the last 60 days.
Stocks that Warrant a Look
National Interstate Corporation (NATL - Snapshot Report) , a specialty P&C insurance provider, has delivered positive surprise in two of the last four quarters with an average beat of 7.6%.
NMI Holdings, Inc. (NMIH - Snapshot Report) , a provider of private mortgage guaranty insurance services in the United States, has delivered positive surprise in the last four quarters with an average beat of 60.4%.
Everest Re Group Ltd. (RE - Analyst Report) , a writer of P&C, reinsurance and insurance in the U.S, Bermuda and international markets, has delivered positive surprise in three of the last four quarters with an average beat of 16.5%.
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