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What's in Store for Travelers (TRV) This Earnings Season?

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The Travelers Companies, Inc. (TRV - Free Report) is set to report fourth-quarter 2019 earnings on Jan 23, 2020. The company delivered negative surprise of 39.92% in the last reported quarter.

Let’s see what’s in store for the company.

Travelers’ to-be-reported quarter’s results are likely to benefit from increase in premiums and improved performances of Personal Lines of business.

High levels of retention, renewal premium change, higher pricing, strong underlying production results and new business are likely to have driven premiums. The Zacks Consensus Estimate for premiums is pegged at $7.2 billion, indicating an increase of 4.3% from fourth-quarter 2018.

Improvements in both agency automobile and homeowners, due to strong production, are likely to have aided personal lines of business.

Travelers estimates net investment income (NII) to increase by $10 million to $15 million per quarter. The company expects after-tax fixed income NII in the fourth quarter to be flat when compared to the fourth quarter of 2018 due to benefit from higher levels of invested assets, largely offset by lower reinvestment rates. The Zacks Consensus Estimate for NII is pegged at $629 million, almost unchanged from the year-ago period reported figure.

Higher net written premiums are likely to have aided the top line in the to-be-reported quarter. The Zacks Consensus Estimate for revenues is currently pegged at $7.9 billion, indicating 3.1% increase from the year-ago period reported figure.

Given a not-so-active catastrophe environment, underwriting income and combined ratio are likely to have improved. Also, the company’s new catastrophe reinsurance treaty for 2019 is expected to have aided underwriting profitability.

Continued share buybacks might have provided additional upside to the bottom line.

The Zacks Consensus Estimate for fourth-quarter earnings per share stands at $3.16, implying an increase of 48.4% from the year-ago quarter reported figure.

What Our Quantitative Model States

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 +1.90%. This is because the Most Accurate Estimate is pegged at $3.22, higher than the Zacks Consensus Estimate of $3.16. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Travelers Companies, Inc. Price and EPS Surprise

Zacks Rank: Travelers carries a Zacks Rank #3.

Other Stocks to Consider

Some stocks from the insurance industry also with the apt combination of elements to surpass estimates this reporting cycle are as follows:

The Allstate Corporation ALL is set to report fourth-quarter earnings on Feb 4. It has an Earnings ESP of +3.17% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

CNA Financial Corporation CNA has an Earnings ESP of +4.56% and is a Zacks #3 Ranked player. The company is slated to announce fourth-quarter earnings on Feb 10.

Palomar Holdings, Inc. PLMR has an Earnings ESP of +9.66% and a Zacks Rank of 3. The company is set to release fourth-quarter earnings on Feb 3.

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