Should You Retain Travelers (TRV) Stock in Your Portfolio?
The Travelers Companies, Inc. TRV is well-poised to gain on the back of strong retention rates, positive renewal premium changes, strong returns from the non-fixed income portfolio and sufficient liquidity.
Growth Projections
The Zacks Consensus Estimate for Travelers’ 2024 earnings is pegged at $16.74 per share, indicating a 51.1% increase from the year-ago reported figure on 11.3% higher revenues of $46.10 billion.
Zacks Rank & Price Performance
TRV currently carries a Zacks Rank #3 (Hold). Year to date, the stock has lost 3.7% against the industry’s rise of 11.7%.
Image Source: Zacks Investment Research
Style Score
Travelers has a VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Business Tailwinds
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. Strong retention rates, positive renewal premium changes, higher new business premium in both Domestic Automobile and Domestic Homeowners and other across all the business segments should continue to drive Travelers.
The company’s commercial businesses continue to perform well on the back of stability in the markets where it operates as well as the execution of its strategies. For 2024, the insurer expects renewal premium change to be elevated but moderate into the low-double digits as automatic increase in limit factors returned to more normal levels, in line with stabilizing industry estimates of replacement costs. In Domestic Automobile, TRV expects renewal premium change in auto to remain very strong but begin to move down from here as more of the book reaches rate adequacy on a written basis.
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 net investment income (NII) higher. With interest rates having moved higher during the third quarter, Travelers raised the outlook for fixed income NII, including earnings from short-term securities to approximately $615 million after tax for the fourth quarter. NII should continue to improve as the portfolio gradually turns over and continues to grow.
TRV aims to generate increased earnings and capital, maintain a balanced approach to rightsizing capital and growing book value per share over time as part of its long-term financial strategy. Balance sheet strength driven by scale, profitability and cash flow supports it to invest more than $1 billion annually on technology.
The property & casualty insurer 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.
The Zacks Consensus Estimate for 2024 earnings has moved 0.6% north in the past 30 days. This should instill investors' confidence in the stock.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Arch Capital Group Ltd. ACGL, CNA Financial Corporation CNA and Kinsale Capital Group, Inc. KNSL, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arch Capital has a solid track record of beating earnings estimates in each of the last trailing four quarters, the average being 35.16%. Year to date, ACGL has surged 33.3%.
The Zacks Consensus Estimate for ACGL’s 2023 and 2024 earnings per share is pegged at $7.70 and $7.77, indicating a year-over-year increase of 58.1% and 1%, respectively.
CNA Financial has a solid track record of beating earnings estimates in three of the last four quarters, while missing in one, the average being 9.24%. Year to date, CNA has lost 0.3.
The Zacks Consensus Estimate for CNA’s 2023 and 2024 earnings has moved 2.8% and 5.3% north, respectively, in the past 30 days.
Kinsale Capital beat estimates in each of the last four quarters, the average being 14.25%. Year to date, KNSL has gained 33.9%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 has moved 8.5% and 7.8% north, respectively, in the past 30 days, reflecting analysts’ optimism.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
CNA Financial Corporation (CNA) : Free Stock Analysis Report
Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
