Travelers (TRV) to Report Q3 Earnings: What's in Store?
The Travelers Companies, Inc. TRV is set to report third-quarter 2023 earnings on Oct 18. The insurer delivered a negative surprise of 97.36% in the last reported quarter.
Factors to Consider
Travelers’ third-quarter results are likely to benefit from solid performance across its three segments.
Strong retention rates, positive renewal premium changes, new business premiums and better pricing are likely to have favored premiums in the to-be-reported quarter. The Zacks Consensus Estimate for premiums is pegged at $9.6 billion, indicating an 11.3% increase from the year-ago reported number. We estimate premiums to increase 8.7% to $9.4 billion.
Travelers expects after-tax net investment income from the non-fixed income portfolio in the third quarter, including earnings from short-term securities of about $570 million. A better interest rate environment, stronger long-term average yields, a higher average level of fixed maturity investments and improved invested assets are likely to aid investment results in the to-be-reported quarter. The Zacks Consensus Estimate for net investment income is pegged at $724 million, indicating an improvement of 22.1% from the year-ago reported number. We estimate the metric to increase 10.4% to $655 million.
Higher pricing and renewal premium change at the profitable agency auto and homeowners and other business are likely to aid results of the Personal Insurance segment in the quarter to be reported. We estimate earned premiums at Personal Insurance to be $3.6 billion, indicating an improvement of 7.6% from the year-ago reported figure.
Higher net written premiums coupled with an increase in net investment income and other revenues are likely to have boosted the top line in the to-be-reported quarter. The Zacks Consensus Estimate for revenues is currently pegged at $10.5 billion, indicating an 11.7% increase from the year-ago reported figure.
Higher-than-expected cat losses are likely to have weighed on underwriting profitability. Nonetheless, better pricing and increased exposure are likely to have aided the combined ratio in the to-be-reported quarter. The Zacks Consensus Estimate for the combined ratio is pegged at 98, which has remained unchanged from the year-ago reported figure. We estimate the combined ratio to be 99.5.
The continued share buybacks are anticipated to have provided an additional boost to the bottom line.
However, expenses are expected to have risen on higher claims and claim adjustment expenses, amortization of deferred acquisition costs, general and administrative expenses as well as interest expense.
The Zacks Consensus Estimate for third-quarter 2023 earnings per share is pegged at $2.93, suggesting a decline of 33.1% from the year-ago reported figure.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Travelers this time around. This is because a stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). That is not the case here.
Earnings ESP: Travelers has an Earnings ESP of -2.39%. This is because the Most Accurate Estimate is pegged at $2.86, lower than the Zacks Consensus Estimate of $2.93. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
The Travelers Companies, Inc. Price and EPS Surprise
The Travelers Companies, Inc. price-eps-surprise | The Travelers Companies, Inc. Quote
Zacks Rank: Travelers currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
Some insurance stocks with the right combination of elements to come up with an earnings beat this time around are:
Arch Capital Group Ltd. ACGL has an Earnings ESP of +1.37% and a Zacks Rank of 2. The Zacks Consensus Estimate for third-quarter 2023 earnings is pegged at $1.48, indicating an increase of 428.57% from the year-ago reported figure.
ACGL’s earnings beat estimates in each of the last four reported quarters.
Cincinnati Financial Corporation CINF has an Earnings ESP of +3.00% and a Zacks Rank of 2. The Zacks Consensus Estimate for third-quarter 2023 earnings is pegged at $1.07, indicating an increase of 46.58% from the year-ago reported figure.
CINF’s earnings beat estimates in three of the last four reported quarters and missed in one.
Palomar Holdings, Inc. PLMR has an Earnings ESP of +4.58% and a Zacks Rank of 2. The Zacks Consensus Estimate for third-quarter 2023 earnings is pegged at 77 cents, indicating an increase of 165.52% from the year-ago reported figure.
PLMR’s earnings beat estimates in three of the last four reported quarters and missed in one.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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
Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
Palomar Holdings, Inc. (PLMR) : Free Stock Analysis Report
