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The Travelers Companies, Inc. Message Board

  • harryfuzle harryfuzle Jul 24, 2007 1:09 PM Flag

    Thots on TRV

    What to look for on Thurs and next 6 monts: impact, if any, of UK floods-reserve releases on asbestos (if any, they'd probably wait until year end to do so)-change in reinsurance coverage for current storm season (would be worrisome since they'd be trading risk for improved earnings)-significant reserve releases from PL (if any, they'd be filling a hole in earnings since they don't fully elease them until 4Q). Potential upsides to TRV: benign storm season-possible reserve cushion from asbestos litigation trends-several solid quarters that have given some reasurrance of reliable future performance (not sure management reputation will ever fully recover from obviously known but undisclosured $2B+ SPC reserve deficiency at time of merger). Possible downsides: adverse PL reserve development ala Allstate cat losses-major acquisition (which would kill the stock for 2 years until integration rish passes)-terrorist event or major storms (we've not yet entered historically most active portion of storm season)-acceleration of downward pricing trends in CL-finally, who knows what could bubble up in litigation/reserve development. As long term holder of TRV, performance of last 2 years has been heartening. Forward P/E still has room for improvement, maybe .5 (or $3 on stock price). Stock performance for most periods over last 3 years at or near top of their competitor pack. Current situation: P&C companies essentially down until current storm season passes. (Buying a P&C company now is equivalent to buying tickets on a Carribean cruise during the hurricane season.) If TRV posts good earnings with no adverse surprises for another 2 quarters, it could earn that additional $3 a share or more, getting price up to high 50's or low 60's in the next 12 months. Full disclosure: I'm planning to dump TRV in next 6 months or so since I can't afford to gamble on individual stocks and now have nearly all my money in a balanced portfolio of ETFs. Otherwise, it ain't a bad investment if you want a value stock. That is, while earnings will fluctuate Q to Q as all P&Cs do, it holds good long term prospects for growing book value. Interested in your thots.

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